Oil sands ambition shows staying power
By early 2009, setbacks dealt out to Alberta’s oil sands looked crushing. Project delays became routine
“We don’t know how long we’ll have to wait,” Pearce says when asked about North West’s schedule, adding that time could be on its side. He hopes to reverse some of the bygone boom’s inflation of forecast plant construction costs to $4.2 billion, or nearly triple the original estimate of $1.6 billion.
“This project is in the public interest. That’s the Alberta energy board’s decision. That doesn’t go away,” Pearce points out.
Oil sands developers stand to regain popular support as the faltering economy changes the political scene. North West built up a reservoir of goodwill well before the global slump revived job creation as a public priority at least equal to environmental criticism of industry.
“An open house we had in Redwater, the nearest community to our site, was terrific,” Pearce says. Environmental critics attended regulatory hearings on the project, but they never owned the industrial region around Edmonton.
“A high school teacher came up to us and said, ‘This is just great. I am telling my students they’re not going to have to leave Redwater to find jobs,’” Pearce recalls. “We’ve got a lot of boosters out there.”
His firm showed signs of life during the darkest period of the oil price slide. Besides hiring a new president, North West about doubled its industrial land holdings to nearly five square kilometers for future plant expansions. The upgrader project also took steps to participate in Alberta’s planned “royalty in kind.” The program will collect the government’s share in oil sands production as bitumen instead of cash.
As the crudest oil sands product, bitumen only fetches about half the price of the refinery-ready benchmark grades, West Texas Intermediate and Edmonton Par. North West predicts its output of low-sulphur diesel and other light petroleum liquids will earn premium prices averaging 10 per cent to 15 per cent more than the best conventional liquid oil.
“The opportunity is now,” Pearce says in explaining why his firm persisted in recruiting and working on deals for its project. “We’re competing [for raw material] with refineries in the United States. We need to put these things in place now to build for growth in the future.”
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