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Globe & Mail: Alberta okays plans for North West upgrader

NORVAL SCOTT
August 8, 2007

CALGARY — Alberta’s energy regulator yesterday approved an application by North West Upgrading Inc. to build a new upgrader northeast of Edmonton that could eventually process 231,000 barrels a day of bitumen blend.

The province has seen a recent wave of upgrader-related announcements. Last week, Royal Dutch Shell PLC said it will build a 400,000 b/d facility that could ultimately cost $27 -billion.

North West’s project is unusual, in that the privately held Calgary-based company doesn’t plan to produce any oil itself, but will instead process bitumen from other producers eager to realize better prices for their output.

“We’re highly confident that this is a project whose time has come,” Robert Pearce, president of North West, said in an interview. “There’s a very clear need for it with the amount of bitumen coming on stream in Alberta.”

Not only is crude from Alberta’s oil sands – also known as bitumen – heavy and difficult to refine, but its main market, the U.S. Midwest, is largely saturated. As a result, a barrel of Canadian heavy crude typically fetches a price that’s substantially lower than that of light, sweet crude.

North West expects to develop the project in three phases, with construction at the first stage, which would process 77,000 barrels per day of bitumen blend into synthetic crude oil, diluent, and other light hydrocarbon products, starting later this year or early 2008, with first production expected as soon as late 2010. The company has previously estimated that the first phase will cost $2.95-billion to construct, but that number is being revised and a new figure will likely be “substantially” higher, Mr. Pearce said.

The company has already reached a deal with Canadian Natural Resources Ltd., whereby the producer will supply North West with 25,000 barrels of crude a day for a five-year period.

http://www.theglobeandmail.com/servlet/story/LAC.20070808.REUB08/TPStory/National

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