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Standalone upgrader gets regulatory nod BA Energy plant in Edmonton refinery area will be first independent of producers; North West Upgrading also has plant in works Gary Park Petroleum News Canadian Correspondent
A private company is one large step closer to launching a possible C$1.8 billion heavy oil upgrader plant — the first of its kind to operate independently of producers.
BA Energy, a unit of Value Creation, did not have to go through a public hearing to obtain approval from the Alberta Energy and Utilities Board to proceed with its 75,500 barrel per day first phase costing C$720 million.
The regulator approved three phases of the project with ultimate capacity of 226,000 bpd.
The company now aims to raise about C$360 million in equity and use debt to cover the balance of construction, targeting a late 2007 start-up.
BA and Value include former Shell Canada and Syncrude Canada oil sands managers in their leadership teams.
BA President Ray Cej was a Shell executive and Value’s Chief Executive Officer Columba Yeung, who designed an upgrader for Shell’s 60 percent owned Athabasca project, is credited with proprietary technology that is aimed at lowering operating costs at BA’s Heartland plant.
The upgrader will be located in the Edmonton refinery area, close to a planned Terasen Pipelines heavy oil terminal.
Cej said in a statement that BA is now talking with “various” heavy oil producers to arrange supplies and, with more than 300,000 bpd flowing into the Edmonton area, it does not expect any problems securing 50,000 bpd. More flexible processing system a priority One of the priorities for Heartland is to lower the impact of downtime for upgraders by introducing a more flexible processing system that will allow it to handle as little as 20,000 bpd without affecting the economics.
Among the innovations, BA intends to generate its own gas to soften one of the most challenging cost factors in bitumen upgrading.
It will produce light-medium, semi-sour crudes that are low in residues and contaminants, giving it access to a greater range of North American refineries.
Another side benefit of the technology is the reduction it will achieve in greenhouse gases.
The next ambitious goal for Value is the possible development of its own oil sands leases, which hold an estimated 26 billion barrels in place, but that is on hold until the upgrader technology is commercialized.
Hot on the heels of BA in the standalone upgrader field is another privately owned company, North West Upgrading, which has just raised C$38 million from a private placement to develop its plans for a C$1.2 billion upgrader to handle 50,000 bpd.
North West hopes to come on stream near Edmonton in early 2010 and plans three additional phases as market demand grows.
It expects to file a regulatory application late this year and start construction towards the end of 2007.
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