The Alberta and Canadian governments have sold their interests in a money losing heavy oil upgrader to the Saskatchewan government and Husky Oil Ltd., Calgary.
Husky and Saskatchewan, already partners in the $1.6 billion plant, are buying Ottawa's 31.67% interest and Alberta's 24.17% share. Ottawa will be paid $41.96 million and Alberta $32.02 million.
Now, Husky and Saskatchewan will each hold a 50% interest. Husky previously owned 26.6% and Saskatchewan 17.5%.
Under the sale agreement, Alberta and Ottawa could still earn some return if the upgrader becomes profitable during the next 20 years.
The BiProvincial upgrader at Lloyd-minster, Sask., is losing about $2 million/day because its breakeven spread is more than $6/bbl between the cost of heavy feedstock it buys and the price of upgraded light oil it sells. The spread is only about $3/bbl at present.
Financial problems have plagued the BiProvincial unit and Consumers' Co-operative Refineries Ltd.'s New-Grade Energy Inc. upgrader at Regina, Sask., key components of Canada's sprawling oilsands development program (OGJ, July 11, p. 17).
Ottawa and Alberta said they are selling out to cut their project losses. Ottawa has put more than $558 million into the upgrader. Alberta said its losses are more than $400 million.
Alberta Energy Minister Pat Black said taxpayers want to leave business ventures to the private sector after the provincial government incurred losses on several investments. She said Alberta had a choice of selling its interest, facing further losses, or mothballing the project at a cost of $10 million.
Copyright 1994 Oil & Gas Journal. All Rights Reserved.
