Were the Regina and Lloydminster upgraders worth it?

In 2011, when oil was 14 per cent of revenue, health care was around 41 per cent of expenditures. That meant that during those boom years, oil revenue could be considered having paid the bill for every doctor, nurse, hospital, old folks home and home care worker south of Craven, and that includes Regina.

That revenue became so important to this province that when OPEC opened the taps in late 2014 and oil crashed from over US$100 per barrel for West Texas Intermediate down to US$26, the provincial deficit for several years almost precisely matched the decline in oil prices. I was able to confirm this at the time by asking both the premier and finance minister several times. That remained the case for several years.

Regina’s upgrader has processed 16 million barrels of heavy oil per year for 30 years.

Gil Le Dressay has spent 43 years with Federated Co-operatives Ltd’s Regina refinery, starting as a process utility operator and working up to vice president of refinery operations then vice president of manufacturing.

Le Dressay responded to a series of questions by email on Sept. 8. He said of its early days, “You have to remember, at that time, the Heavy Oil Upgrader was the first of its kind in Canada. From the outset, it was an ambitious, innovative and strategic project, one that brought people together to ensure that our Refinery and province were set up well for the future.

“The construction of the upgrader would allow our refinery to secure competitive feedstock, to maintain high processing rates and, most importantly, to provide the Co-operative Retailing System (CRS) with a lower cost for transportation fuels – ultimately providing our owners with the highest rate of return.”

There were some tough times and controversy for the Regina upgrader. Its early days were not smooth. Asked what it took to resolve all that, and how have things been going since, Le Dressay said, “A critical project like the upgrader doesn’t just happen successfully. It requires considerable preparation and planning over its entire life cycle. This included upgrades to its overall design that would ensure it operated safely and efficiently in cold weather, as well as modifications designed to improve the reliability of key processes and functions within the upgrader system.

Brian Zinchuk;

On May 5, Lloydminster Mayor Gerald Aalbers said, “Without the upgrader, Lloydminster would likely be a community of under 15,000.”

The most recent 2021 census put the city’s population at just shy of 32,000, a marginal improvement from 2016.

And it’s been a wild ride getting to that 32,000. In 2003, I was hired as the city hall reporter for the Battlefords News-Optimist. The city manager of North Battleford, Jim Toye, told me at the time that he wished he had the problems of his counterpart in Lloydminster. Lloydminster was building around 600 houses a year at the time, and North Battleford, 150 kilometres down the road, was building 10. […]

After some pioneering work in using steam to produce heavy oil, trying several different extraction methods, Husky started building essentially cookie-cutter projects. Each involved a steam plant, and several well pads composed of well pairs using a technology called “steam assisted gravity drainage,” or SAGD. That might sound like a lot of technobabble until you realize the important points: Each of these thermal projects produces 10,000 barrels of oil per day, and cost $250 to $350 million a pop to build. And Husky built 11 of these projects in northwest Saskatchewan by 2020, prior to the onset of the COVID-19 pandemic and the corresponding crash in oil markets.

When the Lloydminster Bi-Provincial Upgrader was announced in September, 1988, this is what then-Premier Grant Devine said:

“It means diversification. It means the resources. It means community development. It means roads, and it means schools and it means hospitals. It means building. It means homes. It means prosperity!”

And that’s precisely what happened in the 34 years since then.