Stalled upgrader receives approval
By Dan Healing And Dina O'Meara, Calgary Herald
January 21, 2009
Provincial energy regulators have approved plans for an Edmonton-area upgrader associated with Petro-Canada's proposed $24-billion Fort Hills integrated oilsands project--even though the company has deferred the project indefinitely.
In a news release Tuesday, the Alberta Energy Resources Conservation Board announced it had conditionally approved the plan by Petro-Canada Oil Sands Inc. to build and operate the upgrader in Sturgeon County north of Edmonton.
The announcement came almost two months after Petro-Canada and minority partners Teck Cominco Ltd. and UTS Energy Corp. shelved the upgrader, citing deteriorating global economic conditions and tight credit markets.
One of the conditions outlined by the board in Tuesday's release is the company"satisfy the ERCB by Dec. 31, 2010, that the project will proceed."
Petro-Canada spokeswoman Kelli Stevens said there's no guarantee the partnership can meet that deadline.
"We're pleased today that the ERCB has granted approval,"she said, adding a decision must first be made this year on whether to proceed with a planned oilsands mine near Fort McMurray. The mine would supply the upgrader with raw bitumen. "
Any decision on the upgrader would follow some time after that," said Stevens.
Petro-Canada chief executive Ron Brenneman had suggested recently the partnership might ship bitumen from the mine to refiners in the United States for processing or they may invest in or buy a refiner.
The company is negotiating with the provincial government to extend its Fort Hills leases beyond their production deadline date in 2011.
Crashing commodity prices and disappearing access to credit and equity have seen oilsands players cut billions of dollars in capital spending.
Petro-Canada can apply to extend the 2010 deadline to meet board conditions on the upgrader, ERCB spokesman Darin Barter said. Otherwise, the conditional approval will be terminated.
"We need to have certainty that this considerable project will or will not move forward," Barter said.
Petro-Canada's application is the only remaining one in front of the board, Barter said.
dhealing@theherald.canwest.com
domeara@theherald.canwest.com
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