Sturgeon Refinery project nears completion of phase one in Canada
OTTAWA -- Phase one of the Sturgeon Refinery, which will process bitumen and produce primarily diesel fuel in Alberta, is nearing completion. The project shows that additional economic value can be generated within the province, according to a Conference Board of Canada report, “Is There Value in Adding Value?” an assessment of the Sturgeon Refinery.
"Alberta is considering its options to add value to its resources and to diversify its economic base. Adding value to bitumen by refining it within Alberta at the Sturgeon Refinery clearly creates benefits," said Len Coad, Research Director, Public Policy. "Over a broad range of pricing assumptions, the refinery would be able to recover its investment as well as return a profit to both the shareholders and toll payers. The Sturgeon Refinery creates value because of a combination of guaranteed supply, risk allocation, revenue sharing, cost recovery, and financing."
The report says that long-term supply commitments and long-term cost of service processing agreements are two of the main reasons that the project has been able to achieve a low cost of capital, using only 20% equity and debt rates below 5%. The unique financial and processing agreement structures are fundamental to the value proposition of the refinery.
The Sturgeon Refinery has been designed to capture approximately 1.2 MMtpy of CO2 per phase. This CO2 will be sold to Enhance Energy Inc. and injected into depleted oil reservoirs for enhanced oil recovery.
The refinery is designed to ultimately consist of three identical phases. The first phase is to be completed and brought into operation in late 2017.
The Alberta Petroleum Marketing Commission and Canadian Natural Resources Limited will supply the first phase of the refinery with feedstock for a period of 30 years. The initial phase of the Sturgeon Refinery is designed to process 78,630 bpd of diluted bitumen, which will contain a minimum of 50,000 barrels of raw bitumen.
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