The North West Redwater Partnership wants the province to commit to the second phase of its refinery project before processing even a single barrel of crude.
The Sturgeon County refinery is slated to begin processing 80,000 barrels of diluted bitumen per day in September 2017.
Far from the $26-billion boondoggle it was once dubbed, vice-president of regulatory affairs Doug Bertsch told the St. Albert Chamber of commerce that the project is more appropriate today than when it was first brought to the table in the early 2000s, given the difficulty the province is experiencing in getting its crude oil to tide-water markets.
NWR wants to get started with Phase 2 as soon as possible to maintain efficiencies. Construction of Phase 1 has nearly reached its peak and the company wants to keep construction crews and design teams on the ground.
But Bertsch also told the Chamber that now was the perfect time for the province, which suffering the worst unemployment rate and economic slump in two decades.
The partnership currently has the regulatory approval, design plans and land needed for three phases, but is missing the feedstock needed to justify breaking ground.
Although the risks are held by the feedstock providers, so are the benefits, said Bertsch, who pointed out that the margin between the price of bitumen and the price of diesel fuel has held steady over the years.
“Even in these hard times this would make probably $200 million for the province,” he said. “That will pay for health care, that will pay for schools, for infrastructure.”
The province has committed to processing 37,500 barrels of bitumen per day for the next 30 years at the NWR refinery. Bertsch says the province’s capacity is 10 times that.
According to 2014 numbers, the province sells 411,000 barrels per day, making the province one of the largest producers in the world.
“If you look at large scale producers, only the province of Alberta and Canadian Natural, don’t have an integrated solution. Every other producer has an upgrader or a refinery, and many of them have downstream gas stations that are vertically integrated,” said Bertsch. “The province for some reason has been satisfied being a hewer of wood, drawer of water, when every other company has shown that that vertical integration is essential.”
The majority of Alberta’s crude oil is currently shipped to the Gulf Coast for refining via pipelines – a market that has been shrinking since the discovery of unconventional oil extraction methods, such as fracking.
“U.S. is not where growth is,” said Bertsch, who pointed out that the low-carbon diesel the refinery will produce is exactly what the world expects.
The refinery’s carbon capture process in Phase 1 alone is equivalent to taking 300,000 cars off the road and 70 per cent of the captured CO2 will be used in enhanced oil recovery that will revive depleted oilfields in central Alberta.
“This will absolutely recharge that business. Recharge Alberta’s economy as well,” said Bertsch.
Bertsch understands the hesitation of the NDP government. “In the world of politics there typically isn’t much reward for doing the right thing, but there’s a heavy penalty for doing something that turns out wrong,” he said.
But he wants the province to think about the number of jobs it will be creating by supporting the next phase of the refinery.
NWR currently employs 8,000 workers and will retain 500 full-time employees once the facility is operational.
He also pointed out that diesel fuel can access tide-water a lot easier than crude oil. “It’s not resisted the same way that bitumen is resisted,” said Bertsch.