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Alberta Petroleum Marketing Commission

loses $1.4bn on Sturgeon refinery

ALBERTA THE Alberta Petroleum Marketing Commission a processing fee under this deal. The finished
has disclosed that it lost CAD1.88bn ($1.43bn) product that the government receives is then
in 2019 on the Sturgeon refinery, which suffered sold by the petroleum marketing commission.
from delays and cost overruns. The Alberta Energy annual report describes
The commission – a marketing arm of the value of the processing agreement as a “snap-
Alberta Energy, the provincial energy depart- shot in time” that varies according to commod-
ment – reported a CAD163 ($124mn) loss in ity price fluctuations. The commission reviews
2018. The figures are shown in Alberta Energy’s the processing agreement on an annual basis.
annual reports, the latest of which was released Illustrating the severity of this year’s oil indus-
in late August. try downturn, Alberta Energy’s latest financial
Sturgeon is the first refinery to be built in statements showed the value of the agreement
Canada in over 35 years. It is the only refinery to have a negative net present value (NPV) of
in the world to incorporate carbon capture and CAD2.52bn ($1.91bn) as of the end of the 2019- The bulk of
storage (CCS) from the beginning of its opera- 20 fiscal year, which fell on March 31.
tional life as it processes bitumen. It is operated In a written statement, Alberta Energy Minis- the Petroleum
by the North West Redwater Partnership – a ter Sonya Savage said the provincial government
joint venture between North West Refining and expected the refinery’s financial performance to Marketing
Canadian Natural Resources Ltd (CNRL). improve in the future.
After two years of delays that were largely “While we do not operate the refinery, we Commission’s
attributed to equipment failures, the partners are engaging with the North West Redwater loss consisted
announced in May 2020 that the refinery was Partnership to ensure that this project, and our
processing bitumen as designed, having made involvement in the project, are optimised for the of a CAD1.7bn
the switch to bitumen feedstock. However, costs benefit of Alberta taxpayers,” Savage said. “We
overran considerably in the process of develop- continue to take a close look at our contractual ($1.3bn) loss on
ing the project and switching it from initially relationship with the refinery to protect Alberta
running on synthetic crude feedstock. Stur- taxpayers and to ensure that they benefit over the the processing
geon was initially estimated to cost CAD5.7bn long term.” agreement.
($4.3bn) when construction began in 2013, but In 2019, the bulk of the Petroleum Mar-
costs have now reached roughly CAD10.1bn keting Commission’s loss consisted of a
($7.7bn). CAD1.7bn ($1.3bn) loss on the processing
The Alberta government has a 30-year agree- agreement, with the commission also pay-
ment with the North West Redwater Partner- ing CAD200mn ($152mn) in “debt tolls” and
ship to provide 37,500 barrels per day (bpd) of almost CAD15mn ($11mn) in finance costs
bitumen, which accounts for around 75% of the at the refinery. The facility reported finance
refinery’s daily processing capacity, and pays income of CAD62mn ($47mn).™

P14 www. NEWSBASE .com Week 36 10•September•2020