Sturgeon costs swell again to $9.7 billion after series of delays

EDMONTON The cost of the Sturgeon Refinery has ballooned yet again, rising by $300 million to $9.7 billion.

The latest increase follows a set of delays and gradual bumping up of project costs over the last few years. Last month, a proposal to build the second phase of the refinery was withdrawn.

The refinery is the first in three decades to be built in Alberta, located northeast of Edmonton in the Industrial Heartland. It’s supported by the Alberta government through loan guarantees and a royalty-in-kind program.

The cost hike was revealed in budget estimates Tuesday morning in response to questions by Alberta Party energy critic Greg Clark.

He was unimpressed it took almost six hours of estimates hearings to draw the information from the ministry.

The project has had cost overruns from the very beginning, he said in an interview, and is running well behind schedule.

“When we asked about this in estimates last year, it was supposed to be by the end of 2017. Now they ’re talking about summer 2018. The longer it goes, the higher the costs go, the longer any return to taxpayers is,” Clark said.

Alberta Energy assistant deputy minister Mike Eklund told MLAs the price increase will escalate the amount of equity and debt required for the project. He hadn’t done a calculation on the end result.

Risks will remain with potentially volatile commodity prices, Eklund said, but “at this point, my assessment is there is very little process for terminating an agreement.”

Energy Minister Margaret McCuaig-Boyd said in an interview she’s confident the refinery will be profitable.

“We’re almost there. We’re starting to commission up and we’ll be in production soon,” she said.

“At the end of the day, we inherited this project, so we have to manage it and ... see it to completion.”