Sturgeon Refinery Optimization
Sturgeon Refinery Optimization Agreement
In June 2021, on behalf of the Government of Alberta, the Alberta Petroleum Marketing Commission renegotiated the processing agreement in the Sturgeon Refinery to secure a 50 percent ownership stake in the Northwest Redwater Partnership, the owner of the Sturgeon Refinery, enabling the Government of Alberta to capture the value of processing bitumen as both a toll payer and as an owner of the Refinery. The optimization agreement provided APMC ownership on behalf of Albertans and governance capabilities to reduce the refinery’s long-term costs and operational risks.
The agreement improved the government’s net present value of the refinery by $2 billion over the project life span and freed up $1 billion in government cash flow over through to 2026 while reducing previous operational risks by aligning the Refinery's toll payer/ownership structure.
Working with our partner, Canadian Natural Resources Limited, the APMC will continue to improve the refinery performance to maximize profitability and value to the government and Albertans.
Keystone XL Pipeline
The Keystone XL project was first proposed in 2008 as an extension of the existing Keystone Pipeline network and offered a safe, reliable and environmentally responsible way to deliver crude oil from western Canada to refineries in the U.S. Gulf Coast.
In early 2020, the Alberta government through APMC worked with TC Energy to mitigate pipeline constraint issues in the province with the Keystone XL Pipeline Expansion Project, agreeing to provide financial support to TC Energy to help advance pipeline construction. This investment included C$1.5 billion in equity investment in 2020 and a C$6 billion loan guarantee in 2021.
The agreement was the culmination of six months of negotiations, as well as rigorous vetting by government officials and outside industry experts to ensure the success of the project, while minimizing risk to taxpayers and enabled TC Energy to begin immediate construction on the Alberta portion of the pipeline, to ensure the earliest possible date of completion.
The project was projected to create over 1,400 direct and 5,400 indirect jobs in Alberta during construction and generate an estimated $30 billion in tax and royalty revenues for future generations of Albertans and Canadians.
Once operational, Keystone XL would have provided North America with a stable supply of crude oil, reducing reliance on supply from OPEC, carrying at least 830,000 barrels per day of Alberta crude, and significantly increasing the province’s takeaway capacity to help to protect the value of its energy resources. Alberta’s oil export capacity was limited by the lack of pipelines and without the ability to export more oil, there was no incentive for producers to invest in more production in Alberta.
Following the change of government in the United States in November 2020, TC Energy and the Government of Alberta continued to work to demonstrate the importance of Keystone XL to North American energy security and interdependence while providing job creation opportunities furthering the economic recovery on both sides of the border. Despite these efforts, in January 2021, U.S. President Joe Biden revoked the Presidential Permit, effectively cancelling the expansion project and resulted in TC Energy formally suspending pipeline construction.
APMC and TC Energy negotiated an agreement for an orderly exit from the KXL project and partnership. APMC is seeking to recoup its investment in the KXL project, and has filed a notice of intention to claim compensation from the United States government.