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Inter Pipeline's Heartland Petrochemical Complex is shown under construction in Fort Saskatchewan, Alta., on Thursday, Jan. 10, 2019.JASON FRANSON/The Canadian Press

Alberta is providing $440-million in loan guarantees to a partial crude upgrading facility near Edmonton, the first project approved under a program designed to increase pipeline capacity and expand the number of refineries that can process the province’s oil.

But the future of the facility, proposed by Calgary-based Value Creation Inc., could depend on the outcome of the spring election. The United Conservative Party criticized the announcement as short on specifics and said a UCP government would immediately launch a review to assess its viability.

The $2-billion Heartland Complex project, which received approval from the province’s energy regulator last year, would convert 77,500 barrels of diluted bitumen a day into medium-grade synthetic crude and ultralow-sulphur diesel. Partially upgraded crude is easier to transport than raw bitumen because it requires less diluent to allow it to flow through already overcrowded pipelines. It can also be processed at a greater number of refineries.

Premier Rachel Notley said the Value Creation project is one of several proposals received under the province’s partial upgrading program, which was announced last year to provide $1-billion in loan guarantees and grants for two to five new facilities.

“Our government is committed to diversification," Ms. Notley said. “We know that we have to get off the roller coaster, we have to make our economy more resilient.”

Ms. Notley said she expects more announcements in the coming weeks, but did not say how many additional upgrading projects are expected to receive government support.

Alberta has also asked for proposals to build a full refinery in the province, although it has not said what assistance it would offer. The deadline for refinery proposals is Feb. 8.

The Opposition UCP used the announcement to attack the NDP government’s record on energy policy and promised to review the Value Creation deal if the party wins the spring election.

UCP energy critic Prasad Panda, who did not make himself available for an interview, said in a written statement that the Premier is putting taxpayers at risk without releasing details about the agreement.

"If elected, we will immediately review this proposed loan guarantee to assess its viability, and whether it is a prudent risk for Alberta taxpayers,” the statement said.

The statement also said the UCP agrees that the province needs more upgrading and refining but did not say what new policies the party would propose. Instead, the statement said the UCP platform will be released later on.

The project was first proposed in 2004 and suspended in 2009 by BA Energy Inc., which later amalgamated with Value Creation. The company revived the proposal in 2016 and received approval from the Alberta Energy Regulator in May of last year.

Value Creation has yet to make a final investment decision, but chief executive Columba Yeung said the company would be working on that in the coming months.

He declined to wade into the politics of the spring election, but he said there would be no reason for a new government to change course.

“This is a very good initiative,” Mr. Yeung told reporters. “I do not see [how] any government, in good faith, would object to revitalizing the industry. I believe this is not affected by politics."

Dr. Kent Fellows, a research associate at the University of Calgary’s School of Public Policy, said partial upgrading will help the province’s oil sector with or without new pipelines. He noted that most oil produced elsewhere in the world does not need to be diluted to ship through pipelines.

“The companies that are developing these technologies tend to be investing in R&D in Alberta,” he said in an interview. “So the rhetoric isn’t empty, it really is an Alberta solution to an Alberta problem.”

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