Visualizing the Economic Benefits from a Partial Upgrading Scheme

In February 2018, the Alberta government announced plans to invest up to $1 billion for partial upgrading projects by issuing $800 million in loan guarantees and $200 million in grants over the next 8 years.

According to the Alberta Energy Regulator's ST3: Alberta Energy Resource Industries Monthly Statistics, oil sands production accounted for 84% of Alberta’s total crude oil production in 2017. Of that, approximately 62% took the form of raw bitumen while the remainder was processed into synthetic crude oil.

Raw bitumen is a dense and highly viscous material that needs to be mixed with a diluting agent to meet specifications for pipeline transportation. Each barrel of that diluted bitumen (dilbit) mixture consists of approximately 0.3 bbls of diluent and 0.7 bbls of raw bitumen.

Apart from occupying a significant portion of pipeline volume, diluent is purchased at a premium at the production site and sold at a discount at the destination, typically the US gulf coast. This inefficient model has long been viewed as simply a cost of business among Canadian oil sands producers.

A key objective for partial upgrading projects is reducing diluent dependency, which increases operating netbacks for producers and also frees-up additional pipeline capacity in existing infrastructure. The transport efficiency attributed to a partial upgrading scheme can be visualized below.

Source: University of Calgary School of Public Policy's Public-Interest Evaluation of Partial Upgrading Technology

Pipeline Transport Scenario: A Practical Solution

Well Resources has developed the Selective Extraction of Asphaltenes (SELEX-Asp) process that drastically reduces diluent requirements when transporting bitumen by pipeline.

SELEX-Asp is a patented, low-cost, low-complexity, and commercial process that cleanly removes asphaltenes from heavy oil fractions. Asphaltenes are the highest carbon intensity molecule class found in oil which contributes to the undesirable flow characteristics of raw bitumen. Asphaltenes currently have little to no economic value and are also the cause of many downstream refining issues.

SELEX-Asp is the only commercial process capable of removing asphaltenes as solid granules, which allows for safe handling while maximizing the yield of deasphalted oil. The deasphalted oil product can be mixed with as little as 8% diluent for pipeline transport, representing a 73% reduction in diluent requirements from the baseline scenario.

Cost savings of approximately $12/bbl can be realized solely from diluent reduction using the SELEX-Asp process. Pipeline volume previously occupied by diluent and asphaltenes can then be used to transport additional volumes of deasphalted oil.

Can Diluent Requirements be Reduced to 0%?

A number of proposals have been examined that combine asphaltene rejection techniques with thermal or catalytic processes to further reduce diluent dependency to nearly 0% in a pipeline transport scenario. Noting high capital and operating costs, environmental emissions, and process complexity associated with such processes, the use of auxiliary thermal or catalytic methods will undoubtedly lead to a diminishing economic return. From a broad perspective, these processes are also redundant refinery steps.

Rail Transport Scenario: Value Chain Optimized

If rail transport is available, the value chain can be reconfigured for the production of value-added blending stock while completely eliminating external diluent dependency.

Under this proposed scenario, all of the diluent used to transport bitumen to the rail terminal is recovered and routed back to the production site. Light fractions recovered from a crude distillation unit can be used as light blending stock or sold as diluting agent for bitumen pipeline transport at other production sites.

Heavier deasphalted oil fractions are subsequently recovered from the SELEX-Asp unit and transported by rail to the refinery. This deasphalted oil can be either a hydrotreating feedstock, or a heavy refinery blending stock.

In addition, rail transport allows the deasphalted oil product to by-pass front-end refinery operations, such as feed distillation. Hence, the configuration may be more energy efficient. Rail transport also allows the deasphalted oil product to be isolated during transport, eliminating feed contamination risks sometimes experienced in a pipeline transport scenario.

Additional Benefits of SELEX-Asp:

- Asphaltenes are the heaviest molecule class found in oil. By selectively removing these components, the carbon intensity of Canadian oil is greatly reduced.

- Asphaltenes cause numerous downstream refining operational issues, and only certain refiners are configured to handle these materials. By removing asphaltenes, Canadian crude can be marketed to any conventional refinery.

- SELEX-Asp-treated feedstocks can be sold at a premium due to reduced concentrations of impurities. Existing commercial SELEX-Asp users in Asia indicate product pricing uplifts from quality improvements ranging from $7 to $12/bbl of residua (diluent cost savings in Canada are incremental to these figures). Some commercial units had less than 1 year capital payout.

Commercialization

PetroChina commissioned the first 500 bpd SELEX-Asp unit at its Panjin refinery in 2009. Since then, four more SELEX-Asp units have been built globally for a combined processing capacity of 36,500 bpd, with the largest commissioned unit having a capacity of 20,000 bpd.

The results are clear—the economic benefits of utilizing an effective partial upgrading scheme are substantial and should be seriously considered.

About Well Resources

Well Resources is an Alberta-based technology company with local offices in Calgary and Edmonton. Its areas of focus are in the energy and life sciences sectors, where Well Resources develops and licenses green technologies that promote effective resource utilization.