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
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 contribute 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.
Why Not Cut Diluent Usage to 0%?
A number of proposals have been re-visited 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 redundant refinery steps. These configurations had been previously explored and published in the literature in the early 1990s.
SELEX-Asp has been developed to optimize the economics of reducing diluent dependency. The 8% diluent used in the currently proposed pipeline transportation scenario is also beneficial to refinery distillation operations.
Rail Transport Scenario: Value Chain Optimized
If rail transport is available, the SELEX-Asp value chain can be reconfigured for the production of value-added blending stock while 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 is more energy efficient. Rail transport also allows the deasphalted oil product to be isolated, 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 sold to any conventional refinery.
- SELEX-Asp-treated feedstocks can be sold at a premium due to reduced concentrations of impurities. Commercial SELEX-Asp operators 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 a year capital payout.
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 integrating an effective partial upgrading scheme are substantial. Tying it back to Alberta's plans to invest heavily in partial upgrading projects, it would be a missed opportunity to overlook a commercially proven solution that was developed in its own backyard.
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