North West Upgrading Inc. (NWU) and Canadian Natural Resources Limited have reached an agreement to submit a joint proposal to the Alberta government to construct and operate a bitumen refinery near Redwater, Alberta.
NWU and Canadian Natural will each own 50% of the partnership, with NWU acting as the operator. Closing is anticipated later in 2010 and remains subject to satisfaction of a number of conditions.
"We think it's a good deal for our shareholders and are happy to be taking another step forward," said Ian MacGregor, chairman of NWU.
The refinery, which is targeted to be built in three identical phases of 50,000 barrels per day, will be designed to produce finished products from raw bitumen. It represents the world's first facility with a one step conversion process of bitumen to finished products and an integrated CO2 management solution.
The process incorporates gasification to convert the bottom of the barrel to hydrogen and reduces the need for natural gas. CO2 from the facility will be used for enhanced oil recovery purposes, which will reduce CO2 emissions by approximately 3,500 tonnes per day for each of the three targeted phases.
MacGregor said he was pleased to see the NWU business plan validated by a knowledgeable industry leader like Canadian Natural and believes there will be great synergy in the relationship. "Our plan for integrated CO2 management is a world first and sets a new global 'gold standard' for environmental performance. We are happy to have a partner that recognizes and appreciates it," he said.
The facility will produce the first fuels produced from bitumen that will meet the Low Carbon Fuel Standard being proposed under legislation introduced in the United States. The facility also produces bitumen diluent and petrochemical feedstocks for both the Alberta and international markets.