The Government of Alberta is taking a direct equity stake in the $5.4 billion Sturgeon Refinery, a move the province says will reduce its costs and save an estimated $2 billion over the long term.
The province becomes a 50 per cent equity partner in the refinery, under the new agreement and the other 50 per cent continues to be held by Canadian Natural Resources Limited (Canadian Natural).
Although the province says there is no additional cost to taxpayers resulting from this process, the $2 billion in estimated long-term savings are projected from a smaller financial commitment for the government over time.
Additionally, the government says the restructured deal also “reduces the previous operational risks under the original contracts by significantly streamlining the ownership” of the Sturgeon Refinery.
“We are taking action to get a better deal for taxpayers and reducing long-term costs,” said Minister of Energy Sonya Savage in a media release Monday. “This agreement provides more economic certainty which will benefit Albertans today and into the future. We look forward to our renewed arrangement with the refinery’s operator, the North West Redwater Partnership, in the years to come.”
The Sturgeon Refinery was, before Monday’s restructuring, owned and operated by North West Redwater Partnership, which was owned in an equal 50-50 split by North West Refining Inc. and CNR (Redwater) Ltd., a subsidiary of Canadian Natural Resources Limited.
Alberta’s NDP Opposition Critic for Energy, Kathleen Ganley said Albertans should be deeply concerned that Jason Kenney has made them part owners of one of the “most notorious Conservative boondoggles” in Alberta history.
“It’s unacceptable that neither the premier nor Minister Savage made themselves available to take questions from the public on the details of this deal,” Ganley said in a media release Monday afternoon.
“Albertans have a right to see the complete agreement and understand all the details of the potential new risks and liabilities. Jason Kenney’s record on energy investment is abysmal. He lost $1.3 billion of taxpayers’ money on his purchase of the doomed Keystone XL project. Now he has taken on part ownership of a refinery that, according to Alberta Energy’s most recent Annual Report, has a negative net present value of $2.5 billion.”
The province, however, says Monday’s plan improves the government’s net present value, the difference between the present value of cash inflows and the present value of cash outflows over a period of time, by $2 billion. Additionally, the government sees the agreement as one that frees up $1 billion in cash flow to the government over the next five years.