Should crude oil from Alberta be refined in Alberta?
Shortly before the demise of the Alberta Conservative dynasty when they were morphed out – or is it smurfed out – of office by a then and still now palpitating NDP political offering, it was decided that Alberta oil sands crude should be refined in Alberta and thus the Sturgeon refinery.
This facility would process 78,000 bpd of bitumen into diesel fuel only with the bitumen supplied by the Alberta government on a royalty-in-kind basis, and then the same government would pay a tolling fee to refine it which amounts to $26 billion over 30 years.
The “plan” concludes with the diesel fuel being sold locally at market prices, forgetting that the Edmonton and Alberta market is over supplied already and light miles from the U.S. Midwest market.
At the announcement of the refinery launch in 2013, the chief executive of the project was adamant that the cost would max out at $5.7 billion. As of June 27, 2017, that cost has now stratosphered to $9.3 billion (remember that number), which has that same executive and most of the government scrambling for the delete key, which has become as elusive as the lost-in- the-cushions remote.
Things get really embarrassing when this week foreign owned but Calgary based Husky Energy announced the purchase of the 50,000 bpd Calumet refinery in Superior Wisconsin for, wait for it…. $435 million or a fraction of today’s estimated cost of the still under construction Sturgeon refinery.
The Wisconsin facility actively produces (note not will produce or is thought to produce) not just diesel but also gasoline, asphalt, and heavy fuel oils. The feedstock, which is Alberta’s Western Canadian Select will come in direct via the Enbridge line from Hardisty, Alberta.
Other than Husky Energy funding, there is no financial encumbrance from any level of government, resulting in no burden on the tax paying electorate of the state of Wisconsin.
Finally, this refinery is near the U.S. agricultural and industrial heartland with delivery to their customer base by rail car or tanker truck so the infrastructure puzzle isn’t a puzzle at all – it’s already solved.
I am often asked by media why our government doesn’t nationalize our oil industry as it’s claimed that we, the taxpaying consumers, are being shafted by the oil companies.
My past answer used to be, “just look at the economic basket cases Mexico and Venezuela.” The response was “yeah but that’s nothing like what it’s like here in Canada.”
My answer now would be go to the top of this page and start reading again because it’s what happens when the government of the people are the ones that shaft the people.
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We are not the same as Venezuela and Mexico because the government is not running business (or at least it wasn’t until Trudeau took over. If you want Venezuela move there.
let’s hope post explosion repairs, Husky will double or triple capacity at Calumet, if possible!