Aux Sable Canada and Dow Chemical Canada Announce Oil Sands Offgas Ethane Sale Agreement And Strategic Alliance
21 January 2008
Aux Sable Canada Ltd. (ASC) and Dow Chemical Canada have entered into an agreement related to the long-term sale of an ethane/ethylene stream from Aux Sable’s Heartland Offgas Plant (“HOP”). Aux Sable will be the first company in Canada to extract ethane and ethylene from an oil sands upgrader offgas stream.
The HOP, currently under construction, will use an offgas stream provided by BA Energy’s Heartland Upgrader for feedstock. Implementation of the HOP will match growth phases of the Heartland Upgrader to the latter’s approved capacity of 260,000 barrels per day of bitumen blend and production of 50 million cubic feet per day of offgas.
The HOP will produce a mixture of ethane/ethylene (C2+), a mixture of propane/propylene (C3+) and heavier hydrocarbons, and a residue gas stream composed primarily of methane.
ASC is selling the ethane/ethylene to Dow; the heavier hydrocarbons will go to export markets, and the residue gas stream will be returned to BA Energy for use as fuel in the upgrader. Up to 8,000 bbl/d of ethane/ethylene will be produced at the facility and sold to Dow under this long-term arrangement.
The HOP facility will have no SO2 emissions and limited NOx emissions. In addition, treating and processing the offgas and using lean gas as fuel will lead to a 12 to 16% reduction in upgrader CO2 emissions over using unprocessed offgas as fuel.
Coinciding with the HOP sale agreement, Sable NGL Canada Ltd. (“Sable Canada”), an affiliate of Aux Sable, and Dow entered into a strategic alliance for the development of processing facilities for upgrader offgas in order to recover valuable hydrocarbon feedstocks.
Dow and Sable Canada will work jointly with Alberta upgraders and refiners to develop offgas projects that will produce feedstock for Dow’s petrochemical facilities in Fort Saskatchewan. Under the arrangement, Sable Canada will construct, own and operate the offgas processing facilities, while Dow will be the exclusive buyer of the ethane/ethylene streams produced at the facilities.
Aux Sable Canada and its US affiliate, Aux Sable Liquid Products are owned by Enbridge, Fort Chicago Energy Partners and Williams. Sable Canada is owned by Enbridge and Fort Chicago Energy Partners.
Aux Sable is a natural gas processor. Natural gas contains a variety of hydrocarbons—Methane (CH4), ethane (C2H6), propane (C3H8), butane (C4H10), pentanes plus (C5H12)—plus CO2, nitrogen, water, and sulfur. Natural gas processors such as Aux Sable remove the natural gas liquids (NGLs, C2+ or ethane, propane, butane, pentanes plus) from natural gas prior to delivery to customers.
Ethane is used as a feedstock for the production of plastics, propane is used as a vehicle fuel and for farm and home heating, butane is used to produce gasoline additives and pentanes plus are used to dilute heavy crude oil, bitumen.
The ASC-Dow project is expected to be one of the first to be submitted by Dow for consideration under the new Government of Alberta Incremental Ethane Extraction Policy (IEEP).
The government of Alberta first announced the IEEP in 2006 as a way to encourage greater production of ethane from natural gas and gases produced as a by-product of bitumen upgrading. The Incremental Ethane Extraction Policy provides incentives through royalty credits to encourage petrochemical companies to significantly increase the amount of ethane they consume compared to historic levels.
The government expects between 60,000 and 85,000 additional barrels of ethane per day to be produced as a result of IEEP over the next four years.
"The HOP facility will have no SO2 emissions and limited NOx emissions. In addition, treating and processing the offgas and using lean gas as fuel will lead to a 12 to 16% reduction in upgrader CO2 emissions over using unprocessed offgas as fuel."
Compared to refineries operating pre 'peak oil' in the loose sense of the word say 005 or 007 there seems to be more efficient extraction from waste stream.
The question is how do these new ways compare with the old oil? Sweet crude etc.
Its all well and good getting clean and green but if the new feedstocks are dirtier to start with Coal @ 1.5 * C emissions, and the old feed - oil - is not good, then it would be wrong to se this as a step forward.
Posted by: annold | 21 January 2008 at 04:49 PM
This sounds like another revenue stream to me. Oil sands cost a lot to process and any overhead offset makes the operation more profitable.
Posted by: sjc | 23 January 2008 at 08:37 AM