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Independent chases oil sands upgrading Technology could lower upgrading costs by 50 percent Gary Park Petroleum News Calgary correspondent
A private Calgary company has joined the growing line of oil sands innovators with plans for a heavy oil upgrader tailored to the needs of North American refineries.
BA Energy, a division of closely-held Value Creation Group of Companies, has filed plans with the Alberta Energy and Utilities Board for Canada’s first independent heavy-oil upgrader — a plant to convert raw bitumen into refinery-ready oil.
Engineering firms Bantrel and Larson & Toubro have contracts for the engineering and design work, said BA (which stands for Bridging America).
Plans call for the upgrader to come on stream in 2006 at 50,000 barrels per day at a cost of C$600 million to C$800 million, with ambitions to reach 150,000 bpd at a total cost of C$2 billion.
The Heartland Upgrader would employ a patented technology that would eliminate the need for natural gas to fuel the plant, while producing light to medium crudes that are low in residues and contaminants.
Few North American refineries are able to handle heavy oil from the Alberta oil sands because of high levels of contaminants. Dealing with those concerns would open a wider market for the crude. Significant operating savings expected BA Managing Director Ray Cej, a former oil sands executive with Shell Canada, said that eliminating natural gas will result in “a significant operating cost saving.”
He said the “last hurdle to sustained growth in the oil sands is economic upgrading.
“What we have on the table is a project that’s viable at as little as 20,000 bpd. So not everything in the oil sands has to be mega.”
Oil sands projects worth more than C$30 billion are on the drawing boards, but operators repeatedly face upgrading challenges — the most costly component of oil sands development and, increasingly, a worry because of natural gas consumption and the inability of refiners to handle the upgraded crude.
Cej said the technology developed by Value Creation Chairman Columba Yeung, also a former Shell Canada executive, could lower upgrading costs by 50 percent and reduce greenhouse gas emissions.
The BA refinery site near Edmonton is also close to a heavy oil pipeline terminal planned by Terasen.
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