Taking a big chance on a small project

A small Alberta community of Metis, the descendants of mixed ethnic marriages, is ready to team up with small Western Canadian energy firms to build a small heavy oil upgrader.

The 1,005-member Elizabeth Metis Settlement is offering land in exchange for a 50 percent share of profits from a joint venture by Vancouver-based Sonic Technologies Solutions and Lloydminster-based Mirex Energy.

The plans call for aC$3 million upgrader to process 1,000 barrels per day and possibly grow to 5,000 bpd.

Sonic’s Chief Executive Officer Adam Sumel estimates profits from the plant could reach C$5 per barrel for processing the crude.

If the project goes ahead it will be the first in Canada to use a technology for upgrading oil to meet minimum pipeline requirements.

The process involves deasphalting and oxidation stages at a low temperature and pressure designed to allow smaller-scale, low-energy upgrading for heavy oil for regional and independent producers.

Sumel cautioned that because the proposal is a brand new thing and nobody knows if it’s really going to work, “we’re just taking a big chance and giving it a shot.”

Columba Yeung, chief executive officer of Value Creation, which plans a 260,000 bpd merchant upgrader, said most companies believe it’s a “very, very difficult” challenge to build any plant with capacity of less than 100,000 bpd.

“I’m not aware of any technology where you include the infrastructure and other costs and be economic at 1,000 bpd,” he said.

Elizabeth Metis Chairman Archie Collins, while admitting he has not inspected the upgrading technology, said there is little risk to his community, since it is putting no money on the table.

—Gary Park