"This project has significant potential for Alberta to support the Provincial Energy Strategy goals of increased value-added production and clean energy production," said Alberta Energy Minister Ron Liepert. "It's not a done deal but I am committed to pursuing an agreement that's in the best interests of Albertans."

Processing of the bitumen will go beyond upgrading to synthetic crude oil to include higher value products such as diesel fuel. Once completed, North West Upgrading would process 75,000 barrels per day of royalty in-kind-bitumen on behalf of the province.

The project was selected following a comprehensive review of proposals submitted to the Government of Alberta as a result of a Request for Proposals that was issued in July 2009 and closed in January.

As the steward of the resource for Albertans, the Alberta government is entitled to take its royalty share of bitumen production in-kind, as it currently does for conventional oil production. Negotiations on the processing arrangements are expected to conclude before the end of the year. Bitumen royalty in-kind and other value-added initiatives add value to the bitumen resource, diversify Alberta's economy, increase resource revenues and create jobs in the province.

Bitumen Royalty-in-Kind

• The Alberta government created the Bitumen royalty-in-kind (BRIK) initiative to collect oil sands bitumen in place of cash royalties, which can then be used to encourage upgrading, refining and petrochemical development in Alberta.
• BRIK is aimed at:
  --Fostering value added oil sands development.
  --Enhancing the bitumen market in Alberta.
  --Sharing with industry in the gains while working to mitigate the risks in processing bitumen to further value added products.
• A Request for Proposals (RFP) to purchase or process up to 75,000 barrels per day of in-kind bitumen on behalf of the province was issued in July 2009 with a closing date of January 27, 2010.
• Subsequent RFPs could follow every two to three years depending on market conditions.
• Alberta expects it could have as many as 400,000 barrels per day of bitumen royalty-in-kind to market by 2020.
• The government is also negotiating with Enhance Energy under its Carbon Capture and Storage Program to provide 3,500 tonnes per day of pure CO2 from North West and 1,600 tonnes per day from the Agrium fertilizer plant near Redwater for enhanced oil recovery in east central Alberta.
• Enhance Energy is a Calgary based company in the business of carbon capture and enhanced oil recovery.
• North West Upgrading Inc. is a private, Alberta-based company founded in 2004 with headquarters in Calgary.