$8.5B bitumen refinery nixed in 2012 back on the table
A proposed bitumen refinery that was kiboshed by the provincial government in 2012 has been revived after a consortium of Alberta First Nations inked a deal with Chinese investors.
“It’s a project that’s much needed for many reasons,” said Ken Horn, president of Teedrum Inc., the company pushing the project forward.
“There’s a lot of money left on the table when our resources are shipped out ... this creates a lot of economic development not only for Edmonton but for the country,” he said in an interview Thursday.
The Alberta First Nations Energy Centre (AFNEC), of which Teedrum is managing partner, plans to build a bitumen upgrading and petrochemical refining facility near Edmonton that will process 167,000 barrels of diluted bitumen per day, Horn said.
He pegged the project at around $8.5 billion, although he noted that’s an early estimate.
In 2012, the former Progressive Conservative government under Alison Redford pulled provincial support for the refinery, then priced at $6.6 billion. Provincial officials argued at the time that the project was too risky.
“Since that time we’ve been trying to identify a viable partner that can be strategic and get us across the finish line,” Horn said.
When it was cancelled, Horn called the government’s decision “bad-faith dealing” after four years of work. That deal would have seen the province contribute 75 per cent of the bitumen for 30 years under the bitumen royaltyin-kind program.
But Redford’s government had said it wasn’t satisfied with frontend work Teedrum had done to establish the refinery.
Now Teedrum has partnered with foreign investors including Sinopec Luoyang Engineering Co. Ltd., a subsidiary of giant Chinese energy company Sinopec, which is state-owned.
“We wanted to make just a pure commercial deal and that’s what our partners from China brought,” Horn said. “Next steps are to complete our scoping for the next 24 months and get started straight away.”
Former Samson Cree Nation Chief Victor Buffalo said he first drafted the refinery plan 11 years ago and said getting to this point has been an exhaustive process.
“It gives First Nations a second chance to get involved in economic development,” he said in an interview. “I’m very excited. It finally gets something substantial. It’s been a real struggle.”
The Alberta First Nations Energy Development fund will hold an equity stake in the project, said Horn.
He said construction is slated to start in 2021 with commissioning set for 2025. The project already has a 2,400-acre site in Lamont County northeast of Edmonton, he added.
Horn said he has reassured foreign investors amid ongoing Trans Mountain pipeline controversy.
“It’s been a big concern and hurdle to get over but we continue to try to assure them that we can get this process done,” he said. “Being aligned with First Nations on this project certainly helps our outcomes on the approval process.”
Buffalo also said he was disappointed with the recent Federal Court of Appeal ruling against Trans Mountain, which threw the pipeline expansion into uncertainty and has halted construction.
On Thursday, project partners held a signing ceremony for the refinery project at the Westin Hotel in downtown Edmonton.
We’ve been trying to identify a viable partner that can be strategic and get us across the finish line.
“Edmonton is a famous oil city. Oil refinery projects have brought our company and this city together. We also sense ... the great responsibility,” said Zhou Chengping, president of Sinopec Luoyang Engineering Co. Ltd. in a speech through an interpreter.
Staff from Invest Alberta attended the ceremony, but currently no government funding is tied to the project.
Stantec has been brought on board to complete the environmental permitting and regulatory review processes.
The partnership between Sinopec, China Construction Installation Engineering Co. Ltd., which is a subsidiary of China Construction Group, and Middle East Gulf Huatong Jinggang Chemical Co. Ltd. to build the refinery is dubbed SinoCan Global.