Investors back independent upgrader

The Alberta oil sands got another international vote of confidence when investors supported a C$185 million financing for Canada’s first independent bitumen upgrader.

BA Energy, a division of a closely held technology company, completed the private placement for the initial phase of the Heartland upgrader, which plans to start at 75,500 barrels per day in 2007 and expand in three stages over four years to 250,000 bpd.

Columba Yeung, BA Energy’s chairman and chief executive officer, said the funds come from “some of the largest institutional investors in the world, most of them very experienced in the oil sands sector.”

There was a further endorsement from Enbridge, which said Sept. 14 it will invest C$80 million to provide terminal and pipeline services to the upgrader.

Enbridge will establish satellite terminal

Heartland, which is being designed to process bitumen blend, is a break from the tradition of Alberta’s heavy oil producers controlling their own upgraders to convert raw bitumen into synthetic crude for sale to refineries.

BA Energy is confident its products will be ideal feedstock for the majority of North American refineries. The first phase of the upgrader near Edmonton is expected to cost C$720 million, with the full-scale operation costing C$1.8 billion.

A second independent upgrading venture by North West Upgrading to develop a three-phase project — each capable of handling 50,000 bpd of bitumen — is pressing ahead with its plan to come on stream in 2010.

The privately owned, Calgary-based company has hired UOP to design and license a new hydroprocessing unit to upgrade synthetically derived crude oil.

UOP will design a unit to produce a synthetic crude oil blend by hydrotreating 31,750 bpd of naphtha and distillate range feedstock and partial conversion hydrocracking 27,200 bpd of distillate and vacuum gas oil range feedstock.

—Gary Park