Alberta Govt offers $440 million loan for $2 billion oil sands partial upgrader

The government of Alberta has offered a $440 million loan guarantee to a Calgary-based company planning to build a 77,500 barrel per day partial upgrading facility near Edmonton.  Twitter photo.

Oil sands upgrader will create 2,000 construction jobs, 300 full-time positions

On Tuesday, the Alberta government announced it will offer a $440 million loan guarantee to Calgary-based Value Creation Inc., the company planning to build a $2 billion oil sands upgrader near Edmonton.

“We’re taking the bull by the horns and fighting to get full value for our oil. Albertans have been talking about this for decades, and we’re not content to sit on the sidelines and let good jobs and investment pass Alberta by for places like Louisiana. That has happened for too long and it has got to stop. We’re making sure the next generation of Albertans have the opportunities they deserve in a stronger, more resilient, more diversified province,” Premier Rachel Notley said.

Financial support for partial upgrading was one of the recommendation of the Energy Diversification Advisory Committee, released a year ago, and it was followed soon after by a $1 billion partial upgrading support program from the Notley government.

The new facility, on track for its final investment decision within six months, is expected to process 77,500 barrels per day at the partial upgrading facility.  The facility will be financed through a combination of debt and equity said Value Creation chair and CEO Columba Yeung.

According to Yeung, the company has already spent $700 million on the new upgrading facility.

If built, it will be the first fully commercial-scale partial upgrader in Alberta and would process bitumen into medium-grade oil that can then be processed at most refineries in North America.

For oil sands producers, the facility eliminates the need for blending agents like diluent which lighten their heavy oil prior to shipping it on pipelines.

“We are fully committed to realize our vision in totality,” Yeung told the Edmonton Journal.  He added Value Creation has plans to expand the facility in 77,500 b/d phases to over 500,000 b/d in total.

Yeung said his company may partner with “major bitumen producers” to finance the new facility and future projects.

Kevin Birn, vice-president of North American crude markets at IHS Markit told the Edmonton Journal that “there is a lot of promising technologies and every producer seems to have their technology”.

Companies are looking for new ways to cut and possibly reduce oil processing costs associated with blending agents.  Dilbit, or diluted bitumen, is about 70 per cent bitumen and 30 per cent diluent.  High-cost diluent is imported from the United States.

“This may be the first one that gets there but it’s not the only technology in the horse race for the future,” Birn said of the Value Creation project.

Last year, the Notley government announced it would provide up to $200 million in grants and up to $800 million in loan guarantees for Alberta partial upgrading.  The Value Creation project uses up about half of the total funding.

“Our government is committed to diversification,” said Notley.

Opposition energy critic Prasad Panda said the UCP agrees that “Alberta needs to pursue more upgrading, refining and petrochemical developments”.

“The question is, how best to achieve that,” said Panda, adding that the Alberta government should provide a complete economic assessment.

Value Creation is not the only company the Notley government is speaking with concerning other partial upgrading projects.  She did not offer any details.

Peter Tertzakian, ARC Energy Research Institute’s executive director, told the Edmonton Journal that partial upgrading technology is a possible game changer for the oil sands because it would “diversify our product range and alleviate some of the challenges facing the marketing of our oil sands resources”.



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