Alberta Looking at Options for its Stake in Sturgeon Refinery

Sanctioned in 2012, the $10-billion Sturgeon Refinery development was the first refinery built in Canada in more than 30 years, part of ongoing provincial efforts to add value to Alberta’s growing supply of bitumen. The refinery was designed to process about 79,000 barrels per day of diluted bitumen into ultra-low sulphur diesel and other products. It also includes a carbon capture and storage component.

At the time, the former PC government agreed to a 30-year deal to supply 75 percent of the bitumen feedstock to the refinery, which would be turned into higher-value products like diesel. It agreed to pay a processing toll to the owner and operator North West Redwater Partnership, then jointly owned by North West Refining and Canadian Natural Resources. The province is obligated to pay a monthly toll, which is made up of debt repayment, debt servicing costs, and an operating component. In 2017, the facility began producing diesel from synthetic crude. It started processing bitumen for the government in June 2020. However, higher capital costs led to higher tolls, making it more difficult for the province to make a profit.

In 2021, the Kenney government announced it would acquire a 50 percent equity share in the refinery through the Alberta Petroleum Marketing Commission (APMC), holding the stake previously owned by North West Refining. As part of that agreement, the province extended the bitumen processing agreement by another 10 years to 2058.

During Alberta’s mid-year update in November, the government forecasted its net loss from the refinery at $283 million this fiscal year, instead of $31 million of net income initially estimated in last February’s budget. It cited a drop in forecast refined product prices and higher feedstock costs.

“We are having ongoing conversations with . . . our operating partner on Sturgeon to do everything we can to improve the efficiency and profitability of the refinery,” Energy Minister Brian Jean said Tuesday in a statement.

However, Premier Danielle Smith recently said "one alternative she’d like to explore is the province selling its 50 percent stake in the refinery."