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Alberta offers refinery help from north Refined product challenges include permitting, investment in the United States; heavy oil processing capacity in Alberta Gary Park Petroleum News Canadian Contributing Writer
In the aftermath of Katrina and Rita, refining has gained more attention than at any time in the last three decades, since the first OPEC-induced oil crisis.
U.S. legislators wasted no time giving urgency to the construction of new facilities removed from the destructive path of hurricanes.
The prospects have even prompted an offer from Alberta.
Speaking at the World Petroleum Congress in South Africa, the province’s Energy Minister Greg Melchin said his government is eager to work with the U.S. administration on “a North American concept” for refineries.
He said Washington should consider “diversifying” away from Gulf refineries, a strategy that is part of legislation adopted Sept. 29 by the U.S. House Energy Committee.
President George W. Bush has pressed Congress to remove regulatory obstacles to building the first new refineries in the United States in 29 years, despite concerns by state and local officials about the environmental and health impacts. U.S. should look to Alberta Melchin urged the United States to “look at the economic case for Alberta, rather than just investing near some of the traditional areas.”
“It’s more about policy and trying to work with the U.S. administration,” he said.
Currently Alberta ships only a small volume of refined diesel fuel to the United States.
Federal Industry Minister David Emerson joined the campaign Sept. 29 when he submitted measures to the federal cabinet that sources said proposed incentives to boost refining capacity.
The Canadian Independent Petroleum Marketers Association also entered the debate, claiming that Canada lacks adequate competition at the refinery level. Report: refining the challenge A special report issued in September by the Toronto-Dominion Bank on the future of oil prices said the bigger challenge facing oil markets is not so much supply as the growing shortage of capacity available to refine crude into gasoline, jet fuel and diesel fuel.
It said the latest figures show “refiners have been running flat out in an attempt to meet growing demand,” operating at 90 percent of capacity in the United States last year and 97 percent in Canada.
Even those numbers “don’t capture the true extent of the problem,” the report said.
The “real crunch” is the need for conversion technologies to refine relatively dense heavy oil, while removing sulfur has become increasingly important in achieving environmental objectives.
The bank quoted Hart’s World Refining and Fuels Service, which forecast that 60 percent of the global market for gasoline and diesel will require ultra-low sulfur by 2010 and 80 percent by 2015.
The report said “a lack of investment in refining capacity has been a bigger culprit (than the robust demand for gasoline and other refined products) holding back supply, and most notably in the United States.” Alberta challenge: heavy oil For Alberta to enter this picture in any significant way is seen by observers as more complex than simply building new refineries.
Currently Canadian plants can refine 2.5 million barrels per day, compared with 19.5 million bpd in the United States, but those plants are equipped to handle only 360,000 bpd of heavy oil.
That already lags far behind Canada’s current conventional and unconventional heavy oil output of 1.2 million bpd that could grow to over 3 million bpd by 2015.
Just shrinking that gap, partly by converting existing refineries which are designed to handle light crude, represents a greater priority for Alberta than talking about building new refineries.
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