Plans to boost fossil profits by partially upgrading sticky bitumen are still more pipe dream than reality, two years after a blue-ribbon panel led by ATB Financial CEO Dave Mowat recommended that Alberta “encourage partial upgrading of bitumen from the oilsands to enhance value and free up more pipeline room for exports.”
While the technology itself is considered promising, The Canadian Press reports, concerns range from the capacity to duplicate the process at large scale, to regulatory hurdles, to the technology’s competitiveness under Alberta’s carbon tax [and against ever-lower renewable energy costs, exemplified by wind power in Alberta—Ed.].
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If the bitumen were upgraded, Mowat’s panel concluded, “there would be less need to add light petroleum” to aid its passage through a pipeline, which would mean “as much as 30% more bitumen could be stuffed into existing pipelines,” CP notes. Which is why there’s interest in the Enhanced JetShear partial upgrading and acid reduction technology developed by Calgary-based Fractal Systems Inc. The company “has processed more than 225,000 barrels of diluted bitumen trucked to a 1,000-barrel-per-day pilot plant from steam-driven oilsands operations in northern Alberta,” CP reports, and has “succeeded in reducing the need for diluent by up to 53%.”
While “a 50,000-barrel-per-day Enhanced JetShear facility at an oilsands project is estimated to cost about C$275 million to build,” the news agency adds, citing Fractal President Ed Veith, that plant would deliver “savings from lower transportation and diluent costs of about $7.50 per barrel, based on 2017 average prices.”
“We’re now ready for commercial deployment, and we’re hoping we’re hitting the market at just the right time,” Fractal Chair Joe Gasca told CP.
But Fractal’s partner in the venture, Cenovus Energy, isn’t so sure.
“We’re seeing some positive indications, but I think we’re still in what I would call the R&D stage,” CEO Alex Pourbaix told CP. “It isn’t something we’re going to be rolling out on a commercial basis in the short term.”
Also skeptical is Kent Fellows, research associate at the School of Public Policy at the University of Calgary. “We’re probably looking at measuring in years, definitely not weeks or months,” he said.
In addition to being convinced that “positive results from small pilot plants will be duplicated on a large scale,” producers interesting in investing in the technology will “also need to make sure their customers will be willing to pay to use the resulting crude in their refineries,” Fellows observed. “And the projects have to pass regulatory hurdles.”
And then there is Alberta’s carbon tax.
“Raw bitumen shipped to the U.S. Gulf Coast is processed in Texas, which has no carbon tax,” Fellows noted. “If it’s partly upgraded in Alberta, the producer will have to pay Alberta’s carbon tax on any emissions from the process—even if, as technology developers promise, the overall greenhouse gas emissions wind up being slightly lower.”
While Gasca “has been in touch with the Alberta government about the carbon tax issue,” CP states, “it’s unclear whether anything can be done to address it.”