EDMONTON - North West Upgrading has almost doubled the size of its site near FortSaskatchewan, waiting for the day when its $4 billion project will fly.
"This is progress, and we've got to keep moving. We have confidence that this project is a great opportunity for Alberta to add value to its bitumen," said Rob Pearce, the privately owned firm's chief financial officer on Thursday.
North West swapped land with neighbour Access Pipeline, allowing the upgrader site to expand to 1,200 acres from its original 675 acres to meet future growth requirements.
The land acquisition was good news to Neil Shelly, executive director of Alberta's Industrial Heartland, a group of municipal governments co-ordinating growth north of FortSaskatchewan.
"It is very positive, it's a great sign. North West is here to stay and this shows they have a good plan in place," he said.
The new land, on the west side of the North Saskatchewan River adjacent to the Agrium fertilizer facility, will give North West direct access to river frontage providing a strategic interconnection with pipelines and other facilities. Shell's Scotford complex, for example, is directly across the river.
North West also hopes to capture its carbon dioxide emissions, and together with those from Agrium, ship them in the proposed Enhance CO2 pipeline to central Alberta for enhanced oil recovery.
Currently, North West is working to line up customers for its plant. Pearce said financial arrangements will follow. The firm hopes to obtain raw bitumen from the provincial government's bitumen royalty in kind (BRIK) program, under which Alberta will take its share of royalties as bitumen and sell it to upgraders.
Site preparation work has been completed, but installing underground infrastructure must await financing, Pearce said.
Giant pressure vessels ordered two years ago from Japan are now in Minnesota, and will stay there until the underground work is complete.
"They are wrapped and safe in Duluth, Minn., and won't come here until we are ready. We don't want to move them around too much," said Pearce. "We are keen to get going on this."
But that won't happen until oil prices rise and the credit crisis ends, he said.
Construction of the first phase of the upgrader, which will process 70,000 barrels of bitumen a day, was originally planned to begin last spring. Steep cost increases forced the project onto the shelf.
Meanwhile, the situation got a little better for UTS Energy, one of the partners in the Fort Hills project -- a mine 90 kilometres north of Fort McMurray and upgrader near FortSaskatchewan.
UTS has struggled in the past, but UBS Investment Research said Thursday in a research note that the firm is now fully funded through the first quarter of 2011 instead of needing new financing by the end of 2009.
The Fort Hills Partnership has proposed a budget of $540 million for 2009, of which $24.5 million is UTS's share, and approved the first quarter 2009 expenditures of $215 million, of which $8.6 million is UTS's share.
Petro-Canada as operator of the project is currently reassessing the scope, budget and schedule in parallel with negotiating a lease extension agreement with the Alberta government.
"The Fort Hills budget is designed to provide the Fort Hills Partnership sufficient time to work together, and with the Alberta government, to come to agreement on the best size and schedule for the Fort Hills Project," CEO William Roach said in a statement.
