Boom talk downgraded
Shelving of heavy-oil upgrader raises economic 'storm flags'
Dave Cooper, With files from Archie McLean, Journal staff
The Edmonton Journal
Friday, September 26, 2008
EDMONTON - "The storm flags are up, people have to pay attention to what is happening here."
That's the warning from a Sturgeon county councillor after the potential $5-billion BA Energy Heartland bitumen upgrader was shelved this week.
"There is growing apprehension in this region, and we have to realize that these upgrader projects are not a done deal," Coun. Karen Shaw said.
Her fears are shared by Strathcona County Mayor Cathy Olesen.
"What I find really disturbing is that this project was started, and they have already spent a lot of money on this," Olesen said.
County officials figured something was up when most work stopped at the site last winter, Olesen said. But nothing was said by the owners.
The upgrader project was taken over in March by a private Calgary-based company, Value Creation Inc. At the time, the company said it would complete the upgrader.
Company officials this week haven't commented on their mothballing of their construction site.
Premier Ed Stelmach said Thursday that despite the closure, he was not concerned about the Alberta economy.
"But I am concerned about costs that are continuing to double, triple for our projects, especially the massive upgrader projects. And when you can't commit to a scheduled completion time, nor to the labour, you're going to create some uncertainty in the investment climate," he said.
"The other uncertainty is, quite frankly, we need certainty and predictability once the federal election is done, because there isn't a national policy on greenhouse gas emissions. So that's another consideration."
Liberal Leader Kevin Taft says the province has a role to play in stabilizing the marketplace.
"This kind of closure bodes badly for the future for Alberta. The province has a role here to take their bitumen royalty-in-kind and use it to create a win-win," he said, adding that using bitumen will allow the province to participate in and profit from the oil resource.
Alberta will begin receiving bitumen when the new royalty arrangement kicks in after Jan. 1.
Shaw and Olesen both worry too much raw bitumen will be shipped to upgraders in the U.S., bypassing the Heartland industrial region, which already boasts an expanding Shell upgrader and a planned a Petro-Canada upgrader. Three others projects are in the design or pre-construction phase.
"Shipping bitumen south is a national issue, not just an Alberta issue. We just can't let this all flow by," Olesen said.
Two U.S. refineries are being retooled and expanded to handle Alberta bitumen, and several others are pondering the move.
"The governments have our destiny in their hands. We are in a precarious position if this kind of thing continues," said Shaw.
"The federal government has to stop approving new bitumen pipelines to the U.S."
Taft said news of the mothballing of the BA Energy upgrader came the same day as EnCana and ConocoPhillips announced they would begin construction of a $3.6-billion expansion of the Wood River refinery in Roxana, Ill.
The small refinery will be enlarged to handle 356,000 barrels per day of Alberta bitumen.
"I find the timing ironic," he said.
