Alberta has requested a detailed proposal for Sturgeon Refinery Phase 2

Image: Deborah Jaremko/JWN

As construction of the Sturgeon Refinery progresses towards completion, the company behind the facility says it has been asked by the Government of Alberta to submit a detailed proposal for public involvement in the project’s second phase.

Ian MacGregor, chairman and CEO Of North West Refining, says the province requested the document “about three or four weeks ago.”

The Sturgeon Refinery has regulatory approval for three 50,000 bbl/d phases.

MacGregor has been arguing since earlier this year that a delay in moving ahead with the second phase would lead to potentially costly re-engineering as well as construction job losses at the site northeast of Edmonton.

The first phase is expected to start operating by early next year.

Alberta is a partner in the $8.6 billion first phase of the project. The facility will receive 75 percent of its feedstock through the government’s royalty-in-kind program, while the remainder will come from partner Canadian Natural Resources.

There are about 5,000 construction workers on the site now, MacGregor says, but once all six process units that are needed for the refinery are in place, likely by later this year, that will be down to hundreds. The peak workforce was about 7,500.

Given a lack of major projects being built in Alberta, labour leaders have expressed support for the Sturgeon Refinery.

Gil McGowan, president of the Alberta Federation of Labour, has left no doubt where he stands, despite being in what he called “an awkward position.”

He told the Daily Oil Bulletin in mid-February he strongly supports Sturgeon, which he called “a great project.”

His “awkward” stance on the project is a result of the fact he is co-chair of a committee Energy Minister Marg McCuaig-Boyd created last October, which is to submit its recommendations later this year of projects which would lead to value-added ways to enhance Alberta’s resources.

McCuaig-Boyd’s department has said it won’t commit to the next phase until the initial plant is operating.

“We’re aware there’s a desire for Phase 2, but at this point we think it’s important to see the refinery in full operation before decisions are made,” the minister told a recent oil summit in Calgary. “This is the most thoughtful course, we believe, of action for everyone involved, including Albertans.”

MacGregor says the government’s insistence that it needs to wait until phase one is operating makes little sense, since Sturgeon is utilizing proven technology that is used in refineries worldwide.

Mike McKinnon, McCuaig-Boyd’s press secretary, did not respond to an email asking for confirmation that the province has asked for the proposal.

However, MacGregor suggested negotiations have been ongoing.

“I believe the government is behaving in a prudent way,” he says. “I think we’re coming along well [and] that bodes well for the future.”

The results of last week’s provincial election in British Columbia might add some weight to his argument that Alberta needs to set its own course in processing its bitumen.

The B.C. election results do not bode well for fossil fuel development, since the incumbent B.C. Liberal government, which had strongly supported LNG development and also gave its qualified support to Kinder Morgan Canada’s Trans Mountain Pipeline expansion, faces the prospect of being a minority government.

Worse yet for the fossil fuel sector, both the opposition New Democrats and the Green Party, which currently holds the balance of power with three seats, oppose Trans Mountain (the New Democrats might support some LNG growth).

“I think it’s really bad when you can’t export what you make… After the B.C. election every Albertan should be concerned,” MacGregor says, adding that “making Alberta crude a lighter product by refining it is the way of the future.”

Sturgeon, which will produce diesel and marine fuel that can be transported economically by rail or even trucks to the West Coast and other markets, offers a logical alternative to pipelines, he says.

“We [Alberta] have to go to higher-value products, with lower CO2 content and that can move with existing infrastructure.”

MacGregor says the proposal will be submitted “within weeks, not months.”