Alberta is searching for a company willing to build a new oil refinery in the energy-rich province as a way of squeezing more money out of persistently low Canadian oil prices.
Energy companies in Alberta are interested in building new refineries, according to Premier Rachel Notley, who told reporters Tuesday in Edmonton that no provincial money has yet to be allocated for the project. The Alberta government is looking for expressions of interest over the next two months from companies willing to build a new refinery or expand an existing one.
The call from the province comes after weeks of dramatic moves by Ms. Notley’s government to help an energy industry that has suffered over the past two months from a steep discount on the price of Canadian oil. The Premier has already announced an 8.7-per-cent cut to oil production next year as well as a plan to buy 7,000 rail cars in a bid to clear pipeline bottlenecks and increase prices.
Ms. Notley now says the construction of additional refineries will help Alberta get full value for its energy resources. Most of the province’s oil production is shipped to the United States, where it is refined.
“Let’s stop the talk and start acting, let's start making more of the product that the world needs right here at home,” said Ms. Notley, who added that any new refining project will need to satisfy both corporate interests and the province’s taxpayers.
“The project must make sense for Alberta. It must have a return on investment for Albertans and it must diversify the way we use the energy resources that we as Albertans all own. We need to see jobs for Albertans,” Ms. Notley said.
Any proposal, which would be the first in a long series of steps before a project were to begin construction, will need to include specifics on financing, technical process and timelines. Any project proposed to the government will need to use Alberta-produced oil. The deadline for sending the expressions of interest is Feb. 8.
Alberta already has four refineries, including one near Edmonton that recently opened and received substantial government support.
The Premier declined to say what specifically the province might be considering in terms of its financial commitment, but right now it is looking to see what its options are. Alberta’s next provincial election could be called as early as March.
According to Richard Masson, a fellow at the School of Public Policy at the University of Calgary and a former head of the Alberta Petroleum Marketing Commission, there aren’t a lot of companies waiting on the sidelines to build a refinery in Alberta.
“Building a refinery is hard, it’s not an easy thing to accomplish,” he said, citing the province’s harsh climate and distance from the West Coast as complicating factors. “The challenge is that in North America we already have all the refinery capacity we need.”
Any new refinery in Alberta would need to compete with an existing refinery built on the Pacific Rim and he said it’s not clear what business case a company could make to sell that new capacity. The price of oil is currently heavily discounted in Alberta, however it’s unclear how long that will last, he added.
Drew Barnes, the finance critic for Alberta’s United Conservative Party, said he believes that the Premier’s announcement showed her plan to expand pipeline capacity to export the province’s oil is in doubt.