The North West Redwater Sturgeon Refinery is in phase 1 of construction. Learn more about its CCS solution for bitumen removal.
A new oil refinery has not been built in Canada since 1984, and the U.S. hasn’t had a new refinery since 1977. While smaller facilities have been constructed, these are not up to the heavy lifting a full refinery can perform.
Ian MacGregor and his partners at North West Refining—previously called North West Upgrading—had been studying the marketplace, and realized that it was the right time price-wise to begin investing in a new refinery in Western Canada.
They felt a new refinery, with a new environmental approach, could solve the three big problems of bitumen: low value, high CO2, and one market and be profitable. They also liked the idea that everyone said: “it can’t be done”.
“We’re interested in two main things when it comes to investments: the opportunity for untangling technical complexity, and big projects with equally big returns,” the CEO and Chairman of North West Refining Inc. said.
The NWR Sturgeon Refinery, which will refine bitumen, is a joint venture between North West Refining and Canadian Natural Resources Limited. When MacGregor and the team at North West Refining started on this journey, they realized they needed a partner with a big investment capacity, and the folks at CNRL, whom MacGregor knew well, were the perfect solution.
The project is enormous: the refinery will be completed in three phases, each phase costing $8 billion. For perspective—and considering inflation—the total cost of the project is equivalent to the cost of the construction of three Panama Canals.
But MacGregor believes it’s more than worth it.
“Western Canada is a long way away from the world market,” he said. “Producers for many years have had to send bitumen away to be refined. Often 50 to 60 percent of the cost for refining was transportation and the refineries are owned by competitors.”
It’s getting more difficult to build the new refineries that are required if Alberta’s production is to grow. Permits are harder to secure, and Canada is having the same opposition to the creation of pipelines the U.S. is.
It’s important to understand, too, that the economic environment in Canada is a lot different from the U.S.
Long ago, the Canadian government bought all the mineral rights off of the people who owned the land. Where the U.S. has hundreds of private owners, private mineral owners are few and far between in Canada, the provinces own the bulk of the minerals.
For example, in Alberta, the government owns the mineral rights and acts like a big oil company, renting out mineral deposits to the best bid and charging royalties on profits.
The Alberta Government recognized this fact a few years ago, and decided to start acting like an owner rather than a rent collector. It had a tender for adding value to the bitumen.
There were several bids when the Alberta government announced its interest in adding more value to the oil it was producing but NWR’s strong tech and environmental proposal won the tender.
“The big challenge with bitumen in Canada is that it’s low quality: it’s thick, with high metals and high sulfur. This makes it much lower in value compared to light oil from shale plays,” MacGregor said.
In order to extract the bitumen, the oil must be heated; this process takes a lot of energy, and releases a lot of CO2. When the bitumen is refined it needs the addition of more hydrogen than light oil; when you make hydrogen you make a lot of CO2.
But with NWR Sturgeon Refinery’s carbon capture and storage (CSS) solution, 1.2 million tonnes for CO2 will be captured each year.
This is the equivalent to taking nearly 300,000 cars off the road, and that is just for phase 1. When the entire project is complete, that figure reaches nearly one million.
The captured CO2 is safely sequestered by injecting it into depleted geological formations deep beneath the earth’s surface. This strategy will also turn what is essentially a waste product into a valuable commodity, while still responsibly and safely sequestering the emissions.
This will occur through a proven process known as enhanced oil recovery (EOR), and MacGregor has just the company to take care of that, too.
Enhance Energy Inc. is an EOR company founded at the same time as the NWR Sturgeon Refinery project and has a handful of the same shareholders.
“There are two costs we have to pay attention to for the future if the bitumen industry we have is going to continue to grow: the economic cost, and the CO2 cost,” shared MacGregor. “The bitumen we produce has a 20 percent higher CO2 cost than the average refinery in the U.S. With the help of Enhance Energy, NWR Sturgeon Refinery will run seven percent better than the best refinery in the U.S.”
If you haven’t noticed by now, the NWR Sturgeon Refinery is set to change the oil refinery game in Canada, North America, and perhaps even the world. MacGregor and his team are committed to building a refinery that will last at least 50 years—and hopefully a full century.
“We’re not interested in constructing something that’s going to need retrofitting down the line. We’re building for the future,” he said.Many of the strategies and initiatives implemented at NWR Sturgeon Refinery go above and beyond what is required and regulated in the industry. Even things that aren’t mandated—like EOR solutions for CO2 emissions—MacGregor and his team have engineered a solution for, because it’s the right thing to do.
“We’re trying to build the best business we can,” he said. “We live in the community where the refinery operates—these strategies and initiatives affect us all. Every step of this process, every decision we’ve made, we’ve cared, we live here.”
One person, or one company, can’t solve all of the CO2 emissions problems the world has, but NWR Sturgeon Refinery is committed to making a positive difference. The CO2 from this refinery is an anchor tenant for the world’s largest system for managing manmade CO2.
“I think what we are doing for Canada is important,” MacGregor said. “Little guys like us, we can do some big things even on the world scale, something we’re proud of.”
It’s going to create a whole new industry in central Alberta and the thousands of jobs that go along with it. As far as MacGregor is concerned, “that’s the Alberta way.”
North West Refining is a private, Alberta-based company. In 2004 it was founded under the name North West Upgrading by a group of Albertans who shared a vision to create value-added products from bitumen in an environmentally sustainable manner.
After a decade of having to explain that North West Upgrading was building a refinery that produces high-value finished products, and not an upgrader that makes bitumen into synthetic crude, the name of the company was changed to North West Refining in 2016.
North West Refining’s mission is to build a profitable bitumen refinery that makes refined products that set the world standard for low CO2 content and achieves the highest goals for sustainability wherever possible.
North West Refining is a 50 percent owner in the North West Redwater Partnership (NWR). Canadian Natural Upgrading Limited, a wholly owned subsidiary of Canadian Natural Resources Limited, also owns 50 percent of the Partnership.
The Partnership is building the Sturgeon Refinery, the first greenfield refinery to be built in Canada since 1984. It is also the world’s first refinery designed to capture CO2 process emissions from the outset.
The project is located on land approximately 45 km northeast of Edmonton, immediately west of Agrium’s Redwater Fertilizer Operation in Sturgeon County.
The location offers numerous advantages, including close proximity to major crude oil and diluent pipelines, established infrastructure, and a stable and skilled regional workforce. Further, there are several opportunities for product synergies with other industrial plants in Alberta’s Industrial Heartland.
This location is also ideal to form a foundation for future eco-industrial development based on essential feedstocks produced from upgrading and refining bitumen.