Desmond owns just under a 21% stake in the Newfoundland and Labrador Refining (NLR) consortium that hopes to build the refinery which will process lowgrade sour crude oil.

The company has just completed a $7m feasibility study on the plant and is currently drafting an environmental impact study.

Brian Dalton, managing director of Altius, which has a 37.5% stake in NLR, told the Sunday Tribune last week that it was initially intended that the facility, which will be built in Newfoundland, would process higher grade sweet oil. He went on to say that favourable economic models now made it possible to pursue the refinement of lower grade crude.

The cost of the refinery is greater, however. He said that based on conservative estimates the plant should be able to generate a profit margin of around 15% on processed oil.

Dalton hopes that construction will commence late next year and that when completed the plant will be able to refine 300,000 barrels of oil a day.

He added that he expects the project will gain final government approval and said that the local community is largely in favour of the plant.

Roughly 3,000 people would be employed in its construction, he said, while it would eventually have a full-time workforce of between 750 and 850.

Dalton also said that there has been interest from oil majors in the refinery, but he declined to name them. He admitted it's likely that existing partners would dilute their existing holdings to bring additional investors on board.

Shell is among the companies involved in Canadian projects that produce heavy oil of the type that the NLR consortium hopes to refine.

Shell is searching for new sites to develop oil sands in Canada and oil majors are expected to spend about $63bn in the next 20 years to boost sand oil output in Alberta.

The sand oil is almost tarlike and huge capital investment is required to extract it.

However, as oil prices have soared on global markets it has become economically viable to do so. Oil sands output in Alberta is expected to triple to about 3m barrels a day in the next nine years.

There's an estimated 175bn barrels of recoverable oil in Alberta.

Altius is involved in a copper mining project with Scottish mining millionaire Harry Dobson. He is a long time associate of Dermot Desmond and both are shareholders in Glasgow football club Celtic. Other backers include ex-Salomon Brothers executive Stephen Posford.