The Alberta government is providing a $440-million loan guarantee to help a Calgary-based company build a bitumen upgrader east of Edmonton.
Value Creation Inc. says it's ready to break ground on the $2-billion upgrader that would convert more than 77,000 barrels of diluted bitumen each day into medium synthetic crude and an ultra-low-sulphur diesel.
Synthetic crude can flow easier through pipelines and the company says that would reduce the need for diluent or thinning agent while increasing pipeline capacity by up to 30 per cent.
"With our proprietary technology we are able to first clean up this very nasty bitumen ... such that we can achieve much lower capital costs, operating costs, energy costs and greenhouse emissions," Columba Yeung, chairman and CEO of Value Creation, said Tuesday.
Premier Rachel Notley said the loan guarantee for the Heartland Upgrader is part of her government's strategy and is all the support the company will receive.
"We're just looking at the loan guarantee and ... as you can imagine we've gone through an excessive amount of due diligence already. There would be much more due diligence that would go on between the letter of intent and the binding agreement being signed," she said at a news conference.
"Of course, we'd ultimately be looking at a number of conditions ... before the guarantee would come in place."
Notley said the project is expected to create more than 2,000 jobs during construction and another 200 full-time positions once the upgrader is running in 2022. It was its advanced technology that made it an ideal candidate for support, she said.
"It upgrades the bitumen so that there are more refineries in the world that can use it, which helps drive up the price for it. It reduces (the bitumen's) volume to help with takeaway capacity, which we all know is a problem."
Alberta's official Opposition said there was nothing new in the announcement.
"We agree that Alberta needs to pursue more upgrading, refining and petrochemical developments. The question is how best to achieve that, and we look forward to seeing a complete economic assessment from the NDP," said Prasad Panda, energy critic for the United Conservative Party.
He suggested the problems facing Alberta oil and gas producers will remain unchanged.
"The premier told Albertans that a carbon tax on their daily living would secure so-called social licence for a pipeline. Albertans still have the carbon tax, but not an inch of pipe is in the ground."
Notley said she's unsure about the support the project would receive if another party were elected in the upcoming spring vote.
"When we introduced this program ... at the time the energy critic for the official Opposition referred to the businesses with whom we would be partnering or supporting as folks that were lining up at the trough," she said.
"That's not necessarily a good signal, but it's not black and white and I'll leave it to them to speak to it."