business

Alberta Refinery to Lower CO2 for Diesel Below U.S. Average

  • North West Upgrading unit to extract gas during refining
  • Project seeks to improve image of Canadian oil sands

North West Upgrading Inc., which refines Canadian bitumen into diesel, aims to lower emissions of the fuel below the average of U.S. producers in a bid to help the oil sands overcome its negative image, Chief Executive Officer Ian MacGregor said.  

Diesel refined at the C$8.5 billion ($6.5 billion) Sturgeon plant in Alberta will boast 5 percent to 10 percent fewer emissions than fuel refined from conventional U.S. oil production, MacGregor said Wednesday in Calgary. That advantage will help Alberta as more jurisdictions impose prices for carbon and standards for fuels, he said.  

“What’s going to protect our economy is refining and carbon capture,” MacGregor said in a briefing. “If not, we’re going to be rolling up the sidewalks.”  

Alberta’s economy is likely in a recession this year as the price of crude plummeted and curtailed investment in new oil-sands projects that have fueled jobs and growth in recent years. The province has struggled to win approval for pipelines such as TransCanada Corp.’s Keystone XL and Enbridge Inc.’s Northern Gateway as opponents highlight the environmental risks associated with bitumen.  

The Sturgeon refinery’s first phase, with a capacity to process 80,000 barrels a day of bitumen and diluent, is on track to begin operations in late 2017, MacGregor said. He doesn’t expect the cost of the project to rise and sees the unit being profitable even at current prices.  

The plant will extract carbon dioxide from the refining process and transport it via pipeline to oil fields in central Alberta that use the gas for enhanced oil recovery. Diesel produced at the plant will supply the western Canadian market and later phases of the project could ship the fuel to other markets, MacGregor said.

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