Canadian majors backing new technology to slash costs of pipelining heavy crudes

March 21, 2002
Several major companies are backing a Canadian pilot project that could reduce the cost of transporting heavy oil via pipeline and increase market penetration of Canadian heavy crudes in the US. Ensyn Petroleum Canada Inc. is planning a $4 million, 1,000 b/d pilot plant in Alberta to demonstrate technology that could substantially reduce the need for costly diluent used in pipelining heavy crude. Enbridge Inc. and Conoco Canada, both of Calgary, are providing support for the Ensyn project.

Jim Stott
Special Correspondent

CALGARY, Mar. 21 -- Several major companies are backing a Canadian pilot project that could reduce the cost of transporting heavy oil via pipeline and increase market penetration of Canadian heavy crudes in the US.
Ensyn Petroleum Canada Inc. is planning a $4 million, 1,000 b/d pilot plant in Alberta to demonstrate technology that could substantially reduce the need for costly diluent used in pipelining heavy crude.
Enbridge Inc. and Conoco Canada, both of Calgary, are providing support for the Ensyn project.
Enbridge, which operates the Athabasca pipeline with 570,000 b/d capacity, has given Ensyn an option on land at its Hardisty terminal, 248 miles northeast of Calgary. Enbridge, Canada's second-largest pipeline company, will also provide technical expertise on pipelining for the project.
Conoco Canada will provide some funding and crude oil for the pilot. It has an oil sands operation in the Fort McMurray region of northern Alberta.

Market potential
Enbridge Group Vice-Pres. Stephen Wuori said that Ensyn's patented rapid thermal processing (RTP) technology has the potential to create varying qualities of oil from heavy oil and bitumen and could create a much more tailored approach to meet downstream requirements at refineries.
"It can remove the heaviest end of the barrel, which is often the most difficult for refineries to handle," he said.
"One of the things we see as a challenge to what is a very bright picture for the oil sands is that there's only so much refining capacity, particularly in the US Midwest. The Alberta oil sands are going to be market-limited, not supply-limited. We are hoping to facilitate ways to attack that market limitation, and part of the equation would be providing crudes that more refineries can process."
Wuori said Enbridge would like to see Canadian heavy crude penetrate further into US markets, where it is now largely limited to Petroleum Allocation for Defense District 2 and competes with heavy crude from Venezuela and Mexico.
"From Enbridge's perspective, this project is a low-cost means of facilitating the development of a technology that might be very valuable in this industry," Wuori says.
"Diluent (supply) is limited and very valuable and starts to enter the heavy oil netback equation. To the extent there can be a process that can obviate the need for diluent, it tends to move these barrels away from being held hostage by diluent costs."

Technology demonstrated
Ensyn has already successfully demonstrated the RTP technology in a number of small tests at 33-acre research facility at Greely, Ont.
It also has five plants in operation that use the technology to convert wood processed at high temperatures to make products such as smoky wood flavoring, liquid fuel, and a phenol substitute for oriented strandboard production.
Ensyn Group Pres. Robert Graham said the modular pilot plant is already under construction at Katy, Tx., in the Houston area, and will be completed in well under 1 year.
He said the demonstration facility is not for technical reasons, but for financial reasons, because the technology has already been scaled up. Graham said that permitting and other efforts needed before a site can be approved are now being advanced. The site option with Enbridge is already in place.

How it works
Graham said that a major advantage of the technology is that the plants are not capital-intensive, and heavy oil operators can afford to put them in at the field level.
"You take bitumen—very low value-added heavy oil. You put it through the RTP process, which upgrades it, makes it much less viscous and [makes it] pipelinable ,because you've knocked out the heavy material in the form of carbon," he said.
"You then utilize the carbon to heat your catalyst. You have so much surplus usable energy that you can actually use it to cogenerate steam that's required for production."
Graham contends the process not only increases the value of the project and avoids the use of diluent but simultaneously uses what is normally lost as fuel to replace natural gas used to produce the oil: "The synergy is tremendous—a closed loop."
He said that if all operators produced heavy oil in Alberta at the levels that they have projected, the effort would be hugely expensive and diluent would become scarce. Graham claims Ensyn's technology can break that cycle.

Contact Jim Stott at [email protected]