A reactor vessel being shipped to the North West Upgrading project near Redwater before work on the facility stalled.

EDMONTON — The Alberta government’s decision to start negotiations with North West Upgrading could see construction start next spring on a $4 billion bitumen refinery northeast of Edmonton, the first of three planned phases.

“This is the most significant good news for this region since 2007. After all the upgrader projects pulled out, this means we may have finally turned the corner,” said Neil Shelly, executive director of Alberta’s Industrial Heartland, an association of municipalities which includes Edmonton.

“And with the end this year of major construction projects like Shell’s Scotford upgrader, it is really important that we have a major project like this.”

Alberta Energy Minister Ron Liepert said the province and private backers of North West will now sit down for detailed talks.

“This project has significant potential for Alberta to support the provincial energy strategy goals of increased value-added production and clean energy production,” he said.

“But I don’t want to overplay this. It’s not a done deal, but rather the selection of the company we are going to negotiate with.”

The initiative is part of the province’s plan to use bitumen that will become available under the new Bitumen Royalty in Kind (BRIK) program. Other firms also applied for a supply of bitumen, but Liepert said the North West proposal was “a very complete one” which combined the collection of carbon dioxide for the proposed Enhance Energy Alberta Carbon Trunk Line that will bring the greenhouse gas to central Alberta for enhanced oil recovery.

The proposed North West upgrader near Redwater would be built in three stages, eventually reaching capacity of 150,000 barrels per day. It would process 75,000 bpd of bitumen received by the province in lieu of royalties. Canadian Natural Resources agreed in January to provide 25,000 bpd of bitumen and financial support in a 50/50 joint venture.

The project would employ about 3,000 construction workers in each of its three planned phases.

North West chairman Ian MacGregor said his firm still has six to 10 months of more engineering to do on the project, and expects work to begin in the spring of 2011 with an opening in 2013.

North West has already completed site preparation work, and has a critical module sitting in storage in Wisconsin. had said in a Jan. 28 interview that the project was almost ready to go.

The facility will be a mini-refinery, upgrading bitumen to synthetic crude oil and then to high quality diesel fuel.

North West Upgrading has already spent about $300 million on the project.