Public Funds for Private Partial Upgrader

The Alberta government has earmarked a $440 million loan guarantee for the private company Value Creation. The company is planning to build a 77,500 barrels per day partial upgrader in the Heartland complex east of Edmonton.

The Alberta government's Partial Upgrading Program has set aside up to $1 billion in financial incentives to private interests for the construction of two to five partial upgraders. The Value Creation plant would be the first, at an estimated price of construction of $2 billion.

One million barrels per day of bitumen is presently upgraded into light synthetic crude oil in Alberta.  The upgraded bitumen represents around 40 per cent of the bitumen produced in Alberta. The remaining amount is diluted with condensate, thus the name dilbit, and sold to U.S. refineries without an intermediary upgrading step.

Upgrading bitumen to synthetic crude oil is considered a thing of the past because the U.S. is saturated with light oil produced from fracking shale oil deposits. Also, technological developments no longer make these kinds of upgraders producing light crude on site or in close proximity to mines or drilling sites necessary.[1]

Heavy oil is desirable as a source of jet fuel and diesel and other products essential for the war industries and active military operations. This makes Alberta heavy oil in demand both on the Gulf Coast, the major refining hub in the U.S., and in California and Washington state. Much of the push for twinning the Trans Mountain Pipeline from Edmonton to Vancouver comes from the demand of the U.S. west coast refineries and U.S. military that want heavy oil to feed the war economy and the California car culture and U.S. air travel.

Partial upgrading of bitumen to make it flow more easily through pipelines without diluents is being tested in pilot projects at various stages. At least ten different technologies are involved in this new process. The global energy oligopolies, which control oil sands projects, consider this technology important because eliminating the necessity to add diluents effectively increases pipeline capacity by more than one-third.

Partial upgrading removes the asphaltenes, and much of the sulphur and heavy metals to produce a medium grade crude plus ultra-low sulphur diesel that can be shipped without the use of diluent. Shippers no longer have to pay pipeline tolls for the diluent, which takes up a third of the volume in the pipeline. Conflicting opinions abound on whether the partially upgraded oil would fetch a higher price, what that price would be and its stability.[2]

The company Value Creation suggests that partial upgrading reduces global greenhouse gas (GHG) emissions, but no evidence has been presented to support the assertion. Partial upgrading in Canada would necessarily increase Canada's overall GHG emissions.

With the main aim of partial upgrading to increase the amount of bitumen to be exported by pipeline, the question arises as to why the Alberta government calls this a form of diversification of the economy. In effect, these pay-the-rich schemes are not aimed at developing a new direction for the economy or dealing with the issue of taking concrete measures to reduce GHG emissions and the use of carbon-based fuels. In effect, this partial upgrading feeds the U.S. war economy and its active military, which are the world's worst polluters and danger to humanity and the environment.


1. The technology used in the latest oil sands mines eliminates almost all water and fine solids, which are prominent in the earlier processes. The presence of water and fine solids made it necessary to have an upgrader on site or very close to a mine because of erosion/corrosion issues.

2. Oil Sands Magazine suggests there may be no price increase, while the University of Calgary School of Public Policy forecasts a price increase of $13-19 a barrel.

This article was published in

Volume 49 Number 8 - March 9, 2019

Article Link:
Public Funds for Private Partial Upgrader


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