CHOA event report: Opportunities and challenges for partial upgrading of bitumen

Image: Joey Podlubny/JWN

This article is part of the Fall 2018 edition of the Journal of the Canadian Heavy Oil Association.

CHOA event speaker: Murray Gray, Senior Technical Advisor, Bitumen Partial Upgrading, Alberta Innovates

Date: June 27, 2018

Venue: Calgary Petroleum Club

Dr. Murray Gray has over 30 years of research experience in upgrading of heavy oil and oilsands bitumen. During his career at the University of Alberta he served in a number of roles, including Dean of Graduate Studies and Research, Director of the Institute for Oil Sands Innovation, Vice-Provost (Academic), and Associate Vice-President (Research). Gray also served as Vice President Research at Hamad Bin Khalifa University in Qatar and Senior Vice President Academic and Provost of the Petroleum University in Abu Dhabi, before joining Alberta Innovates in 2017.

This presentation summarized the key points in the “Bitumen Partial Upgrading 2018 Whitepaper – AM0410A” prepared by Jacobs Consultancy for Alberta Innovates.

While there are no commercial bitumen partial upgraders currently in operation, the development of these technologies is receiving support from the province. The Government of Alberta is currently reviewing applications from companies to receive up to $1 billion in grants and loan guarantees to develop bitumen partial upgraders in the province. This would add value to oilsands production and could ease pipeline bottlenecks.

Gray first explained the need for partial upgrading, which can be best understood in the context of pipeline specifications and representative Alberta bitumen products. A table was presented, which is reproduced from the whitepaper as below:

Most of the bitumen produced from mining is upgraded because it contains a lot of bottom sediment and water, and therefore cannot be transported directly through a pipeline. It is fully upgraded to synthetic crude oil (SCO) or equivalent before transporting to refineries.

However, the development of paraffinic froth treatment technology has enabled mined bitumen to be blended with diluent and transported via pipeline, the whitepaper notes. This technology is in use at the Athabasca Oil Sands Project as well as the Kearl and Fort Hills facilities.

The addition of an upgrader is very capital intensive. For in situ bitumen production, the common solution is to blend with a diluent (typically condensate or SCO) in order to meet pipeline specifications. The volume of condensate used as diluent is typically around 30 percent or more, whereas the volume of SCO used as a diluent may need to be as much as 50 percent of an in situ bitumen and SCO blend.

Both these options impose a huge cost on bitumen producers; the cost of diluent may reach as high as US$14/bbl of bitumen. Additionally, the diluent takes up pipeline capacity which has become very important in the current scenario where WCS differential to WTI is exceeding US $40/bbl.

If a reduced quantity of diluent can be used, for example through partial upgrading before transportation, the financial benefits will be significant as illustrated in the figure below:

Gray informed event attendees about the National Partial Upgrading Program (NPUP) which Alberta Innovates and CANMET Energy Laboratories of Natural Resources Canada initiated in 2015. NPUP’s mission is to accelerate innovation for partial upgrading of bitumen and heavy oil to:

  • Reduce or eliminate the use of diluent for pipeline transport
  • Improve oil product quality and mitigate by-products
  • Increase overall resource value and market access
  • Reduce environmental impacts

A brief description of the current processes in bitumen upgrading was provided at the event. Details of these processes are available in the whitepaper, and a comprehensive table has also been provided therein which compares the various technologies for partial upgrading. This table is reproduced below:

In summary, Gray did a fine job in demonstrating tangibly that partial upgrading can result in significant benefits through opening up new markets to Alberta bitumen, freeing up valuable pipeline space for bitumen, providing greater benefit vs. cost, and reduction of cost in bitumen transportation.

Source for all figures and tables

“Bitumen Partial Upgrading 2018 Whitepaper – AM0410A” prepared by Jacobs Consultancy for Alberta Innovates, May 11 2018

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