The Alberta government (through the Alberta Petroleum Marketing Corporation) has announced that it has signed an agreement with Canadian Natural Resources and North West Upgrading under which the APMC will deliver 37,500 barrels per day of bitumen to an upgrader and refinery to be constructed northeast of Edmonton in the Heartland Industrial Area.

The upgrader and refinery is expected to be complete by 2014. In addition to processing the bitumen on behalf of the APMC, it will also process 12,500 barrels per day of bitumen on behalf of CNRL. The refinery will produce low-sulphur diesel, naphtha and diluent.

The announcement of the upgrading and refining project helps to fulfill a long-term strategy of the Alberta government to keep the value-added benefits of refining and upgrading in Alberta.

The cost of constructing the upgrader and refinery has been estimated at $5 billion dollars.

The bitumen is collected by APMC as part of its "bitumen royalty in kind" program, under which the government is entitled to collect its royalty on bitumen produced in the province in kind rather than in cash.

Further information on the upgrader and on the royalty in kind program, including material agreements, can be found here.

In a related transaction, the province has announced that over 3,000 metric tonnes per day of carbon dioxide will be captured from the upgrader and refinery, and delivered to enhanced oil recovery projects located in. The key component of this transaction is the construction by Enhance Energy Inc. of the 240 kilometer Alberta Carbon Trunk Line, which will connect the Heartland area to existing conventional fields in central Alberta.