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A project eight years in the making, Canada’s newest refining facility will be marked with an official ceremony Friday celebrating the ground-breaking just north of Edmonton in Alberta’s industrial heartland.

North America has not seen the construction of a major new refinery for almost three decades, and the $5.7-billion Sturgeon project brought forward by North West Upgrading Inc. is a rare example of new refining capacity on the continent.

The diesel-producing refinery will be particularly significant for Canadian Natural Resources Ltd. (CNRL) and the Alberta government. Under a special arrangement, they hold a stake in the operation, will supply oil sands crude to it, and participate in its profits. As a result, the Redwater, Alta. refinery will allow them to both avoid the difficulty of transporting bitumen from Alberta’s oil sands to market, and the price discount – referred to as the differential – on Western Canada’s heavy oil. Instead, both CNRL and the government hope to make their profits from the finished diesel product.

“It’s more viable now than it ever has been,” said North West Upgrading chairman Ian MacGregor. His dedication to the project extends to having a special caboose attached to the train that will carry the heavy building components from Duluth, Minn. to the refinery site this winter so he can ride along.

Mr. MacGregor said another benefit of refining in Alberta is that it doesn’t require another crude-oil pipeline, which could run into the same opposition currently affecting Keystone XL and other planned projects. “We’re kind of realizing it’s not going to be so easy to build pipelines to other places.”

At the refinery site, underground utilities are already being installed, and Mr. MacGregor said 3,000 people will be employed on site once construction fully ramps up. The first 50,000 barrels per day phase of the project is scheduled to be up and running by late 2016. Eventually, the facility will process 150,000 barrels of bitumen per day into low sulphur diesel. He is still working to finalize billions of dollars of financing.

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