Alberta hands new upgrader $440M loan guarantee

CALGARY The Alberta government is offering a $440-million loan guarantee for a new $2-billion oilsands upgrader, and is eyeing more funding opportunities to boost oil processed in the province.

“We have been spending decades sitting around wringing our hands because we are not getting full value for our resources,” Alberta Premier Rachel Notley said Tuesday, adding that few new refineries or upgraders have been built in the province since the 1980s.

The province is providing the loan guarantees for Calgary-based Value Creation Inc., which plans to build a 77,500-barrel-per-day partial upgrading facility near Edmonton.

The project is on track to reach a final investment decision within six months and is expected to be financed through a combination of debt and equity, said Columba Yeung, Value Creation chair and CEO.

Yeung said the privately held company has already spent $700 million on the facility, which would be the first fully commercial-scale partial upgrader in the province.

Value Creation’s facility would process bitumen into medium-grade oil that can then be processed at most North American refineries. The project would also eliminate the need for oilsands companies to use expensive blending agents such as diluent to lighten their crude before shipping it on pipelines.

“We are fully committed to realize our vision in totality,” Yeung said, adding the company intends to build additional 77,500-bpd phases that would eventually expand the size of the facility to over 500,000 bpd in total.

Value Creation may partner with “major bitumen producers” to finance the facility and future projects, Yeung said.

The company is looking at debt financing, financing based on supply contracts and eventually some equity financing to develop the complex.

“There is a lot of promising technologies and every producer seems to have their technology,” said Kevin Birn, vice-president of North American crude oil markets at IHS Markit.

Notley has announced a series of loan guarantees and other incentives in an attempt to spur investment in downstream facilities that would process Alberta’s crude oil and raw natural gas into higher value products.