The Sturgeon Refinery that’s about 60% complete and located 45 km away from Edmonton, is looking more and more like a government boondoggle.
The refinery is expected to process bitumen to convert to diesel fuel and other products.
Initially backed by the Progressive Conservatives as a joint venture between CNRL, North West Upgrading and the Government of Alberta, it was quietly announced that an additional $2 billion would be committed to the project, bringing total costs to $8.5 billion.
Now the NDP has increased its borrowing limit for the project from $300 million to $400 million, raising concerns over the risks to the Alberta tax payer as a result of the governments continued financial contributions to the endeavour.
There are also concerns about the profitability of the project and Moody’s is considering a credit downgrade. It’s recently come out that the profits from the refinery over 30 years will be $200 to $700 million – for a $8.5 billion investment.
So not only is the government taking the most risk since CNRL and North West Upgrading will operate the refinery, but the profit margins on this are razor thin.
In all reality, Albertans stand to lose billions of dollars on this project just as a result of variable market trends. And the Alberta tax payer will be on the line for an estimated $26 billion in toll fees.
There’s a reason why no new refineries have been built in Canada in over 25 years. They aren’t profitable, nor do they add value and they’re a burden on the tax payer.
Greg Clark of the Alberta Party and Brian Jean of the Wildrose Party have come out and criticized this project for being such a burden on Alberta tax payers. And it looks like the NDP want to do more refining in Alberta, as per their election platform.
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