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Alberta Government and Industry Considering C$7 Billion Oil Sands Refinery

15 October 2005

Albertarefinery
Location of the proposed refinery near Redwater, Alberta

National Post. The provincial government of Alberta, Canada, and 16 oil and petrochemical companies are evaluating a proposal to build a new C$7 billion (US$5.9 billion) refining and chemicals complex in the central part of the province to handle oils sands output.

The refinery, with an initial capacity of 300,000 barrels per day, extendable to 450,000 bpd, would upgrade the bitumen extracted from oil sands into finished product: about 70% fuel products, 30% petrochemicals.

Diesel, the primary fuel product, would be shipped by pipeline to Prince Rupert on the coast of British Columbia for export to Asia. Gasoline and kerosene would be exported to markets in North America.

The refinery would be the largest in Canada, the first to be built in North America in 25 years and, at 450,000 bpd, on a par with the largest refineries in the Gulf of Mexico.

The project study, led by the Alberta government, is backed by companies such as Agrium, BP, Canadian Natural Resources Ltd., Enbridge Inc., EnCana Corp., Nova Chemicals Ltd., Petro-Canada, TransAlta Corp. and TransCanada Corp., is due for completion early next year.

According to the Alberta Economic Development agency, there are currently some C$70 billion (US$59 billion) worth of oil-sands-related projects underway or planned.

October 15, 2005 in Canada, Fuels, Oil, Oil sands | Permalink | Comments (15) | TrackBack (0)

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Re: Alberta Oil Sands Refinery

With reserve of 180 + billion barrels, oil products from Alberta tar sands will certainly find ready markets in China and India very shorthly.

China has been actively buying local producers and India will probably follow soon. USA will probably react badly and try to put political and economical pressure on canadian politians to obtain a major part of the 178 Mb.

Pipelines will have to be built across the Rockies to a new west coast harbour for large tankers the satisfy the China and India markets.

At 3 Mb/day this reserve could last for about 158 years or 79 years at 6 Mb/day. However, the natural gas required by the extraction process will run out in about 10 years and will have to be replaced with other energy sources such as nuclear, biomass, wind or solar.

The pollution created by the extraction and processing activities could increase the total pollution created in Canada by 5 to 10% per year.

Over exploitation of the Alberta Tar Sands for exports may not be so beneficial for Canada in the longer term. Canada is already a net exporter (mainly with 2 Mb/day to USA) of about 1 Mb/day and present production level should be sufficient for internal needs for many years to come.

Conservation measures to reduce our present Oil consumption from 3 Metric Tons/person/year, the world highest with USA, would be a much better idea.

If the natural gas pipeline is built from AK through Canada (as AK governor Murkowski prefers), there should be plentiful natural gas coming down that way.

I agree, conservation would be preferable. However, with oil prices apparently high for the duration, I expect to see big increases in tar sands and oil shale projects in North America. At $60/bbl, the economics have got to be mouth-watering to the various energy-industry stakeholders. Who are the stakeholders for conservation? Everyone and no one.

Hi Nick:

Re: Conservation vs more oil production:

I guess the chase for more and more OIL is a bit like the hunt for the best health care.

Everybody (specially the people direct involved) is pushing for more expensive corrective health care to better their lot, but very little energy is actually used to promote prevention. However, a recent study determined that $1 spent on prevention has as much benefit for our health as $5 spent on corrective health care.

Most of us have a tendency to believe what we hear and see most often and not always what is best for us. Politicians and product manufacturers have known that for a long while. We are too easily led to believe fake and misleading information. That's another difficult to change vulnerable human atitude.

Lets hope that our children and grand children will see thru all this disinformation and will chose what development is sustainable and compatible with their survival.

Canadians will be sorry we let this happen when the natural gas prices go through the roof and supply prematurely dries up. This project is doubly unsustainable and bad for our domestic energy security, we should be concentrating on renewables, but the short term profits of private corporations is what determines everything in the "free" market, not rational long-term strategies. Average citizens will be forced to cut back on carbon dioxide emissions even more to meet the Kyoto obligations because of this too, that will have a real negative impact on the health of the economy, all so a few corporations can realize massive profits.

It seems like the refinery is being built a good distance from the sands. Wouldn't it be cheaper to build the refinery nearer the sands and then ship the finished product (much smaller by mass and volume) to the location where the plant is being built, and then onward?

It just seems strange to lug all the sand around farther than necessary...

Att: stomy

It seems that ONLY the bitumen 'mechanically' or 'in-situ' extracted from the tar sands will be transported, by pipelines, from various extraction sites, to a centralized refinery for further processing into specific finished products such as fuel oil, diesel, gasoline and other petrochemicals for local consumption and exports. However, the rather light bitumen can be shipped directly, via pipelines and tankers, and refinned at the receiving end as presently done for almost 2 MB/day.

Either way, the process required huge amount of energy (mainly natural gas for now) and creates huge amount of air pollution. The Alberta government is aware of the problem and is looking for ways to replace natural gas with cleaner energy, such as Wind or Nuclear Power, before the stock of natural gas runs out.

More profit orientated firms will advocate the use of cheap low grade local COAL to generate the power required, thus multiplying the pollution created by the process.

Since the price of alternative cleaner energy is much higher than the price of local natural gas, profit margins dictate the use of natural gas to the last drop.

The users of natural gas must be prepared for major increases in price as more and more gas will be required locally for tar sands activities.

It is easy to see that Tar Sands activities will have a snow ball effect on energy consumption and air pollution. It is a step in the wrong direction that we may regret a few years from now. It is counter productive and may totally negate the efforts and investments made in cleaner hybrid vehicles and cleaner energy production sources such as wind and hydro power. At that rate Canada's pollution creation will increase significantly and NOT decrease by 2012.

A couple of questions:

1.) what's the energy balance of this tar sand -> petro product process(es)? It sounds brutally inefficient but doable because the input energy is cheap (for now).

2.) So far I've seen 2 mb/d production rate. What's the upper end of what could be produced per day. Basically, I'm interested to know how much of world production capacity could be served by the canadian tar sands and the US oil shales. Does anyone have a sense for it?

Cheers,

Tripp

I have not studied in depth the pollution created by this project. I read about the air pollution. I understand there is also liquid pollution - I would like to know more about that aspect - possibly references where I can get specifics of quantity, consistency, etc.

Any pointers greatly appreciated.

ASPO published an evaluation of Canadian oil sands production that includes four production forecasts as well as discussion on evironmental and energy impact.

The four forecasts (National Energy Board of Canada, Alberta Energy and Utilities Board, Alberta Chamber of Commerce and the Canadian Assoc. of Petroleum Producers) all track fairly closely to 2015 with a forecast production for that year of between 2 to 2.5 million barrels per day total.

The National Energy Board forecasts the possibility of total production reaching slightly less than 3 million barrels per day by 2025, while the Alberta Board sees total potential of 5 million barrels per day in 2030.

From a global supply point of view, even the optimistic forecasts do not compensate for the combined declining conventional crude production in Canada and the North Sea.

So it sounds like this is largely an irrelevant source of energy long term with a high environmental overhead. The good news is that it really doesn't sound like it's going to really significantly delay the arrival of new (and hopefully renewable) sources of transporation fuel because it's not providing enough supply. That's good to know.

Does anyone know what sort of production numbers are capable from the American oil shale deposits? Are they similar to the tar sands, >, or

I believe only Shell is experimenting with oil shale and it doesn't look like a positive EROEI is even possible. The Shell experiment involves freezing a circle of ground water and simultaneously heating the shale in the center. I wonder what nut house they keep their engineers in.

There is a great deal more activity with shale now, given the price of crude. Shell kept its work on in situ processing going in the area even after the collapse of the last oil-shale boomlet in the early 1980s. As tom correctly notes, Shell's approach involvd slow-heating of the ground (a couple of years) while a frozen perimeter maintains a barrier against seepage into ground water.

The US likely has the most shale resources globally, with China a possible second. Shell just took a 61% stake in a China oil shale venture. (Post here.)

As to reports, RAND provides a comprehensive recent overview here.

Bottom line...RAND expects eventual production could reach 3 million barrels per day in the US, in about 30 years.

What's interesting is that Shell says that the process is cost competetive at $30/barrel. While it does seem a bit bizarre the in situ approach is a lot more environmentally (with the possible exception of GHG emissions) friendly than the more conventional approach, which is pretty horrific. How conservative is the RAND corporation with their esitimates? Do they have a politcal bent? Just curious. I don't know anything about them.

Here are a few additional stats on the negative effects from OIL Sands production:

The production of one barrel of OIL from the Tar Sands requires:

1) 3 barrels of fresh water.
2) 1.2 mcf of natural gas for extraction.
3) 500 cf of natural gas for upgrading.
4) a multitude of other resources.

Secondly the process produces great quantities of greenhouse gases such as:

1) sulfur dioide
2) nitrogen oxides
3) hydrogen sulphides
4) carbon monpxide
5) VOC
6) Ozone
7) polycyclic aromatic hydrocarbons
8) particulate matters (PM)
9) reduced su;phur componds

The relative CO2 emission to produce 1 GJ of energy, from various sources:

1) from oilsands = 30.0
2) from COAL = 24.7
3) from petroleum = 22.3
4) from natural gas = 13.8
5) from switchgrass = 1.9


Considering all of the above, Oilsands is one of the dirtiest source of energy and should NOT be used except as very last resort or when all other sources have been exhausted. Energy conservation together with clean wind/solar energy production is a much better idea than extracting and burning oil from oilsands.

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