The province has announced it has agreed to supply bitumen to a new refinery northeast of Edmonton in an effort to enhance Alberta's position as a supplier of clean energy.
The province is partnering with Canadian Natural Resources Limited (CNRL) and Northwest Upgrading.
The first phase of the bitumen refinery is targeted for completion in mid-2014. The plant will process 50,000 barrels per day, turning most of that into diesel.
"I've always said that shipping raw bitumen out of our province is comparable to selling the top soil on a farm," said Premier Ed Stelmach.
The partnership is the first of its kind to operate under the province's bitumen royalty-in-kind (BRIK) initiative, which means it will use the crown resource to pay its royalties instead of cash.
"Because of BRIK we get to build a refinery, but it will be the legacy of everyone in this room. It will create great value for Albertans," said Ian MacGregor, chairman of Northwest Upgrading.
The project is expected to pump $4.6 billion into the economy by creating 8,000 jobs as well as more than $400 million in tax revenues.
The Alberta Government is hoping to make between $200 and $700 million in profits, depending on where oil prices go.
"There's risk, no doubt about," said Mike Percy, Dean of the University of Alberta School of Business.
And even though the government won't own the project, taxpayers are on the hook for some of the risk because three quarters of the raw bitumen is being supplied by the crown.
"That the returns are lower than anticipated in terms of a lower price received by the province for its bitumen, it's taxpayers ultimately who will bear the cost," said Percy.
A second project announced Wednesday, involving the province and Enhance Energy Inc., is specific to the first major carbon capture and storage (CCS) project in the province.
The government is willing to take the risk and insists it will be good for the local economy.
"Even conservatively, we believe the upside in long-term economics for this project are positive," said Energy Minister Ron Liepert.
And the first Carbon Capture Storage (CCS) project was also announced for the province, which will deliver carbon dioxide (CO2), from the refinery to central Alberta.
The premier had recently vowed not to go ahead with an CCS projects until they were proven safe. That pledge came after concerns were raised about unproven harmful effects from a CCS facility in Saskatchewan. The premier now points to the results of recent research that he says gives him assurance the technology is safe.
With files from Laura Tupper
