Rising costs delay Alberta refinery project

Partners in the North West Redwater Partnership have postponed construction of the first phase of the Sturgeon bitumen refinery in the Industrial Heartland area of Alberta due to rising capital costs (OGJ Online, Jan. 28, 2010).

While the scope of Phase 1 has not changed, due to a combination of cost inflation and the inability to fully capture certain cost savings initiatives, the cost estimate has been revised to $8.5 billion from $5.7 billion in 2012, project partners North West Upgrading Inc. (NWU) and Canadian Natural Upgrading Ltd., a wholly owned subsidiary of Canadian Natural Resources Ltd. (CNRL), said.

Commissioning of Phase 1 commercial operations has been revised to September 2017 from an initial target of mid-2016 in order to optimize work force productivity and ensure that the project remains cost-focused, according to NWR.

Despite the delay, work on the project has progressed over the past year, including detailed engineering on many process units as well as the commencement of site preparation activities, NWR said.

The project obtained final project sanction in November 2012 based on the capital cost estimate at that time (OGJ Online, Nov. 13, 2012).

Once completed, Phase 1 of the project will be 50,000 b/d and will capture 1.2 million tonnes/year of carbon dioxide to be sold for use in enhanced oil recovery. Two further phases with capacities of 50,000 b/d each also are planned for the refinery, near Redwater in Sturgeon County, about 45 km northeast of Edmonton.

Under 30-year processing agreements, Alberta Petroleum Marketing Commission, an agent of the province of Alberta, will supply 75% of the feedstock. CNRL will supply the rest. The suppliers will receive proportionate shares of the products.

The main product will be ultralow-sulfur diesel. CO2 capture is planned in each phase.

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