CONVENTIONAL SUPPLY OF OIL WILL SLOW DOWN

Roger R. Alahakkone
Srolank Investment & Trading International
Calgary

In Canada, Alberta and Saskatchewan account for all of heavy oils and tar sands deposits, while the Orinoco belt in Venezuela represents that country's major deposits.

In recent years as conventional oil supplies decline, more and more attention is diverted to heavy oils and tar sands. in western Canada, the major deposits of Cold Lake, Athabasca, Wabasca and Peace River, together are estimated to hold 967 billion bbl of in-place reserves of Crude bitumen. The potential oil in-place heavy oil in both Alberta and Saskatchewan are around 80 billion bbl of in-place reserves of crude bitumen. The potential oil in-place heavy oil in both Alberta and Saskatchewan are around 80 billion bbl, according to conservative estimates.

Two major companies, who are pioneers in oil mining and extraction Suncor and Syncrude have been producing synthetic crude for many years by surface mining. The thick oil in the surface ranges from API 8-12 and only 5 to 10% can be extracted. At the two plants bitumen is strip mined, using open pit mining method. A conveyor system carries these bitumen to the processing plants, where the bitumen is separated from the sand.

Further heating in the processing plants remove naphtha, while the bitumen flows to the upgrader. After removal of Coke and Sulphur hydrogen is added to produce light oil. Further separation takes place in the towers, to process gas, gas-oil and kerosene. Removal of impurities, leaves a mixture of gas-oil, naphtha and synthetic crude. Clarke Hot water process for extraction of bitumen, from mined ore, suffers from two major problems. The bitumen produced from mining or in-situ oil sand operation, is too viscous to be transported, and even if it is transported, it will still be impossible to be fed into conventional refineries. Existing upgrading processes utilize carbon rejection method, which results in large coke production, while the yields of lighter products amount to very little.

The Clarke Hot water process, is used at both Suncor and Syncrude plants. Bitumen deposits have very low hydrogen, in relation to Carbon and API gravity ranges from 6 to 12. At the two plants, bitumen is thermally cracked into coke and distillates, resulting gas. Suncor uses delayed coking method for primary upgrading. This changes bitumen to a low viscous, thermally cracked product containing sulphur and nitrogen. The secondary conversion involves hydrotreating the liquid product to remove sulphur and nitrogen. Carbon rejection and hydrogen addition is used in shallow Athabasca and Lloydminster crudes.

Syncrude plant uses fluid coking as the primary upgrading process. In this method, 3 products are given out namely process gas, Naphtha and gas - oil, where as at Suncor plant the output amounts to four products, the fourth being kerosene. South of Cold Lake deposit, the geological continuity changes, as the bitumen changes into a more fluid in nature and are termed heavy oil. Starting from Lloydminster moving south in both Alberta and Saskatchewan, towards the USA border the heavy oil area opens up.

HEAVY OILS OF ORINOCO BELT AND LLOYDMINSTER

The Canadian heavy oils from Lloydminster, Chauvin, Dollard, Coleville, Kinsella, Bow River, and Weyburn Midale, average around 15 to 29 API gravity.

As in the case of bitumen/tar sands, this oil although is somewhat thinner, still needs upgrading for refining in conventional refineries in Canada. Saskatchewan's first heavy oil upgrader, completed few years ago, uses hydrogen addition process, the heavy crude to refillable products. The plant will consist of desulphurization unit, hydrogen plant, crude separation unit, sulphur plant etc. This New Grade Upgrader, near Regina, Saskatchewan, will have little effect on Alberta's heavy oil production. Although slated for Saskatchewan's production, it is still open for Alberta's heavy crude as well.

After much delay, the Bi-Provincial Husky Upgrader, is in the final stages of design. This heavy oil upgrader costing $1.3 billion is expected to come into operation in 1992. The plant is designed to upgrade 54,000 bbls per day of heavy crude to synthetic crude oil.

ORINOCO BELT - VENEZUELA

The Orinoco belt in eastern Venezuela, is one of the largest heavy crude oil deposits.

The size of the deposit is estimated at 700 to 1,000 billion bbl of oil in place. Estimates of undiscovered heavy oil in Venezuela, accounts for four main areas. The Maracaibo Barinas, Maturin and Apure, totalling 1.13 trillion bbl of oil. Venezuela produces 1.4 bbl/d of heavy crude, and 9300 bbl/d of tar sand oil.

Venezuela is the most important oil producing country in South America, and offshore fields of Lake Maracaibo is a vast oil province. There have been continuous exploration in the Orinoco Belt River delta. The crudes are heavy and range from 10 to 25. The Orinoco belt, the Costa Boliva district and Urdonete district constitute the major oil producing areas of Venezuela.

UPGRADING PROCESSES

Various upgrading processes and modifications to existing ones are available to industry, depending on their particular requirement.

The LC Fining process developed by C-E Lummus, Eureka Process developed by Kureha and Chiyoda chemical companies of Japan, Canmet Hydrocracking by Petro-Canada/EM&R, Hydrocracking using H-OIL, to mention a few, These are mainly primary upgrading which falls into broad categories of Delayed coking, Fluid coking, hydrocracking, and solvent deasphalting. The process selected by Husky Oil Co., for the bi-provincial upgrader, is H-OIL of Hydrocarbon Research Inc. Low conversion hydrocracking, combined with delayed coking, was chosen as the primary upgrading process. Secondary processing, includes a naphtha-jet fuel hydrotreater, as well as a gas/oil hydrotreater. In addition, a hydrogen plant, sulphur recovery plant, and a tail gas treating unit, will comprise the associated processes.

This process has been tested using heavy crudes of Western Canada and Venezuela. In addition to the above upgrader, a third plant is planned near Fort McMurray, costing $4.1 billion. This plant is sponsored by six lease holders, with Imperial oil as the project leaker. The process used here will be somewhat different to delayed and fluid coking technologies. The selected process, Veba Oel's high conversion hydrogen addition upgrading technology, known as Combi-cracking process is far efficient and economical.

FURTHER DEVELOPMENT

In addition to OSLO project, Edmonton based Canadian Energy Developments Inc., is planning a heavy oil/Coal Upgrader costing $700 million, and expected to come into operation in 1996. The technology used here is different to Husky/HRI. In the Husky Upgrader, the catalyst used is more expensive and high performance type, whereas Canadian Energy Developments Inc., uses a low cost disposable type.

In addition to above plant & upgrader developments, there have been various, insitu/EOR Projects underway, to recover oil sands, using a flurry of combinations. The Underground Test Facility (UTF) Shaft and Tunnell Access (SATAC), Steam Assisted Drainage (SAGD), Heated Annulus Steam Drive (HAS-Drive), Mine Assisted In Situ Processing (MAISP) are some of the projects, under development. The Alberta Rearch Council and Alberta Oil Sands Technology and Research Authority (AOS-TRA) have done research jointly, with private sector to develop some other projects related heavy oil/tar sands.

In New Brunswick, pilot plant is planned to use Venezuelan bitumen, to generated power, for the utility. The process uses a bitumen-in-water solution known as Orimulson. If successful, there will be strong demand for Canadian heavy oil. In any development further progress depend on a substantially higher oil price, for a stable sustained period. If not a further delay or cancellation of some of the projects are possible. Delaying projects in the hope that rise in oil price, in the near future will make these projects vulnerable. For the obvious reasons, as increasing labor costs, material and equipment, coupled with rising inflation, marginally economical projects will suffer. These projects need 5 to 6 years interval from start of construction to come on stream. Immediate positive decisions are needed, which will benefit all parties.

DEMAND FOR HEAVY OILS AND TAR SAND OIL

It is predicted that conventional oil supply will decline by 45% by the year 1995. To fill the future demands, the obvious choice will be untapped resources of Oil Sands and heavy oils. The traditional markets for Canadian Heavy Oil are the Northern tier areas of USA. Some areas of US Midwest have expressed interest in processing Canadian heavy crude oil and bitumen. To meet the above demands, a combined field/upgrader investments are essential.