Premier wants new oil refinery built in province

The Alberta government is issuing a request for expressions of interest from the private sector to build a refinery in the province that would use oil extracted here.

Premier Rachel Notley said Tuesday that a new refinery is one way to reduce the oil price differential that is battering the Alberta treasury.

"Let's stop the talk and start acting," she said.

"Let's start making more of the products that the world needs right here at home."

Submissions will be accepted until Feb. 8, 2019. Depending on interest, the government may issue a request for proposals.

The refinery can be new or an expansion of an existing facility.

Proponents will have to submit engineering designs, a technical feasibility, and financing and revenue estimates.

"The project must make sense for Alberta," Notley said. "It must have a return on investment for Albertans."

Notley said it is too soon to talk about possible incentives or how the government will be involved. She said the government will look at what is proposed and decide what gives Albertans the best return on investment.

She said the business case for building a refinery in Alberta has changed since it was last considered about a decade ago.

Alberta sells its oil at a discount due to a lack of pipeline capacity to get its oil to market, leading to a loss of $80 million a day, according to the government.

The difference in the price of Western Canadian Select oil relative to the benchmark West Texas Intermediate climbed above $50 in late October.

Last week Notley announced a temporary 8.7-per-cent oil production cut, a decrease of 325,000 barrels a day, in the production of raw crude oil and bitumen. The production cut will take effect Jan. 1.

The Alberta government also expects to acquire locomotives and rail cars by the end of next year to transport 120,000 barrels of oil and bitumen to market each day.

Alberta Party energy critic Rick Fraser criticized the announcement saying the government should instead support the construction of phases 2 and 3 of the North West Sturgeon Refinery.

"If the Notley NDP were serious about investing in Alberta and expanding our oil refining capability, they would have already moved on the North West Refinery, instead of sending mixed signals that create uncertainty," Fraser said in a statement.

"The Alberta Party caucus calls on the Notley NDP government to throw the full weight of its support behind this already-approved project, rather than dithering and starting all over again, putting Alberta years further behind."

The refinery, the first built in Alberta in 30 years, is a venture between North West Refining and Canadian Natural Resources Ltd.

The refinery produces diesel from synthetic crude. But the part of the project that will upgrade bitumen has been delayed several months due to equipment failures.

The Alberta government helped out the first phase of the project with a 30-year bitumen-royalty-in-kind agreement.