Upgrader project could top $1 billion
Regions’ oilsands hit national spotlight

Kevin Laliberte
For South Peace News

The Smoky River region received instantaneous exposure throughout Canada this past week as part of PRO (Peace River Oil) Inc.’s plan to commence work on its $782-million Bluesky Upgrader project just south of McLennan.

“The Smoky River region has received a tremendous amount of interest from all over Canada,” says an excited Greg Radstaak, Smoky River regional economic development officer. “As the ‘Gateway to the Peace Oilsands’ this area is now well positioned to attract new investments and people to the region.”

The attention to the area was highlighted in three prominent daily newspapers, including the Edmonton Journal, Calgary Herald and the Vancouver Sun.

All three publications ran similar articles on PRO Upgrading’s proposal to build the first heavy oil upgrader in the Peace Oilsands region.

Situated 10 kilometres south McLennan and within the M.D. of Smoky River 130, the facility is proposed to be operational by 2010 with the capacity of upgrading 25,000 barrels per day of heavy oil.

Don Allan, who co-founded the Red Deer-based private company with his brother, Doug, and serves as business development director, says work is scheduled to start this summer on the project which will accelerate development of Alberta’s least-tapped oilsands deposit in the Peace River region.

After raising 60 per cent of the construction budget in its first two months on hot financial markets for oilsands action, the firm is now considering the addition of a diesel fuel refinery that would bump up the project’s cost to about $1.1 billion.

“We don’t foresee any problems at all,” says Allan, adding that investor interest in the oilsands is ‘terrific.’

PRO Upgrading will raise the final 40 per cent of its construction budget in 90 days on private Alberta money markets without converting into a public company and starting complex stock exchange share sales, he predicted.

Neighboring communities in the region, meanwhile, are enthusiastic about the project, which has involved several preliminary meetings between the company, regional business and municipal leaders.

“It’s extremely positive news for this region,” says Radstaak. “We haven’t really seen anything in the way of large benefits to date in relation to oilsands activity, which is just starting here.”

M.D. of Smoky River Reeve Don Dumont says the upgrader project will provide a significant and much-needed economic boost to the region which serves a population of around 5,000.

He says that population base, however, takes a hit of around 300 or 400 every five-year census due to farm consolidation and an exodus of local youth to larger communities such as Edmonton and Grande Prairie.

The next step in the process for PRO Upgrading is to submit a formal construction application to the Alberta Energy and Utilities Board by May.

Allan says 14 months of preliminary discussions with the board has left the firm with a real sense of optimism that the project can obtain speedy approval.

Environmental questions, he adds, are inevitable, but the site is ‘brown-field’ or already industrial and in a remote spot where the few residents are accustomed to a large plant, Allan and Dumont both said.

PRO Upgrading’s plans call for development of a 100,000-barrels-daily upgrader in four 25,000-barrel stages. All output from an added diesel fuel refinery could be sold locally and into the Northwest Territories, Allan adds.

Northern farms and transportation use six times as much diesel as the plant could make, he said.

Construction, starting with early work on site conversion and storage installations this summer, will be continuous as oilsands developers accelerate work after the successful acquisition of 830 square kilometres of new bitumen leases in the region during the last six months alone.

Radstaak says municipalities in the area are presently making preparations to meet the increased oilfield activity through planning of new residential and industrial subdivisions.

For more information, contact Greg Radstaak, Economic Development Officer, Smoky River Regional Economic Development at 780-837-2364 or E-mail at gradstaak@mdsmokyriver.com.

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