Skip to main content
Complete Olympic Games coverage at your fingertips
Your inside track on the Olympic Games
Enjoy unlimited digital access
$1.99
per week for 24 weeks
Complete Olympic Games coverage at your fingertips
Your inside track onthe Olympics Games
$1.99
per week
for 24 weeks
// //

The Sturgeon Refinery, located northeast of Edmonton, is designed to process about 79,000 barrels a day of diluted bitumen from Alberta’s oil sands.

Amber Bracken/The Globe and Mail

Alberta taxpayers will soon own half of the Sturgeon Refinery, acquiring an equity stake in a project that had billions of dollars in cost overruns and numerous construction delays before it finally began commercial operations in June, 2020.

The move is the result of 18 months of negotiations between the Alberta Petroleum Marketing Commission or APMC, a Crown corporation, and a group called North West Redwater Partnership, or NWRP, which until Monday owned and operated the refinery. The government says the deal, worth $825-million, will cost taxpayers $2-billion less than the original contract signed in 2011 – a time when oil hit north of US$110 a barrel, filling Alberta’s coffers to the brim.

The Sturgeon Refinery, located northeast of Edmonton, is designed to process about 79,000 barrels a day of diluted bitumen from Alberta’s oil sands into low-sulphur diesel and other products.

Story continues below advertisement

In 2012, the cost of the refinery was pegged at around $5.7-billion. A year later, that had increased to $8.5-billion. It eventually ballooned to around $10-billion. The government also committed $25-billion in public dollars for toll payments (fees to have bitumen processed into diesel) to the project over 30 years.

The refinery incurred a $500-million operating loss last year, according to Alberta’s fiscal update last week.

The new deal is a complex arrangement that even government officials had trouble explaining in a technical briefing Monday. NWRP, owned by North West Refining Inc. and CNR Redwater Ltd., a subsidiary of Canadian Natural Resources Ltd., transferred $400-million to CNRL and $425-million to North West. The province, through APMC, then acquired North West’s ownership stake.

The $825-million will be repaid to the partnership over the next 37 years by CNRL and APMC (instead of the original $1.02-billion due over 27 years), with the province responsible for 75 per cent of it. The restructured deal also reduces the previous operational risks by streamlining ownership of the refinery.

Energy Minister Sonya Savage wouldn’t comment on whether her government jumped in because of the way NWRP was operating the refinery, but said the project had “enormous cost overruns” and was four years late coming into service.

“During all of that time, the taxpayers of Alberta were on the hook, with no way to get out of the contract and no way to really have a say in cost controls or in the operations of the refinery,” she said in an interview.

The change means APMC will now have a seat at the table to be involved in operational decisions at the refinery, and down the road will have the option to sell its ownership stake.

Story continues below advertisement

“Over the past year or so, it’s been costing Alberta taxpayers to the tune of $28-million a month just by the way the deal was structured,” Ms. Savage said.

“There’s no question that we inherited a bad deal – Albertans inherited a bad deal,” she said, and there was “zero way out of that bad deal without taking a jump in.”

Buying into a refinery is a politically charged decision for the United Conservative Party government, whose party was founded partly on the principle of embracing the free market. During a party leadership debate in 2017, for instance, now-Premier Jason Kenney declared he would get the Alberta government “out of the losing business of picking winners and losers.”

“When politicians are risking your money instead of their own, you might as well send them to the casino. I mean, they have no incentive to get it right,” he said at the time.

The government has since lost $1.3-billion on the Keystone XL pipeline, which died after U.S. President Joe Biden cancelled a key construction permit. It has also failed to claw back cash it said it would by unloading crude-by-rail contracts signed by the previous NDP government.

But Ms. Savage said taking part-ownership of the refinery means taxpayers are now less exposed to risk, because the province will have a say in how the facility operates.

Story continues below advertisement

“Under the previous deal, we had no way out. We just paid, paid, paid, paid. We were on the hook for the tolls with no way out. So this does give some options,” she said.

“There wasn’t an absolute guarantee going into renegotiations that we would get a better deal, but after a year-and-a-half and a lot of complicated negotiations, we were able to get that.”

Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow the author of this article:

Follow topics related to this article:

View more suggestions in Following Read more about following topics and authors
Report an error Editorial code of conduct
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

UPDATED: Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies