Executive Summary

BACKGROUND

In situ bitumen production will significantly exceed regional upgrading capacity. In situ production in Athabasca is expected to increase by approximately 2.5 million barrels per day (bpd) over the next 10 to 20 years, from 500,000 bpd presently to 3 million bpd, based on capacity under construction, approved and under regulatory application. At the same time, upgrading capacity earmarked for in situ bitumen is slated to increase by only 50,000 bpd (North West Upgrading), from 72,000 bpd currently (Nexen) to a total of approximately 120,000 bpd. Other upgrading expansions by Canadian Natural and Shell are targeting surface bitumen and not in situ.

Shipping raw bitumen will be costly. Shipments of raw bitumen are therefore projected to more than quadruple to an excess of 2 million bpd, resulting in diluent requirements in the order of 500,000 bpd. Diluent is costly and its availability is dependent on the construction of inbound pipelines. 
Bitumen upgrading is a unique challenge. Conventional crude oil contains only 10% vacuum residue and can be transported and refined with existing technologies. By contrast, bitumen is composed of over 50% vacuum residue, a large portion of which is composed of asphaltenes. Therefore, upgrading bitumen, even partially is a daunting technology challenge.

VALUE PROPOSITION

Full upgrading of bitumen to synthetic crude oil is practiced commercially by a number of oil sands companies, particularly companies with surface mining operations. However, full upgrading costs are very high in Alberta and the only upgrader under construction is by North West Upgrading with financial support from the Alberta government. As a result, most in situ bitumen will be shipped as diluted raw bitumen using approximately 30% diluent.

Diluent is expensive (but less so than full upgrading) but crucially it occupies space in export pipelines. Given that pipeline capacity will likely be less than needed, the deployment of upgrading technologies that would avoid the need for diluent would result in 30% more pipeline capacity without laying new pipe.

Thus the high cost environment and pipeline capacity limits have created a market need for partial or field upgrading, which is loosely defined as sufficient upgrading to allow bitumen to flow in a pipeline without the addition of diluent. The limited scope of upgrading would also result in lower costs.

PROJECT SCOPE

The purpose of the Project is to outline the need and opportunity for field and/or partial upgrading technologies that could be developed and supported by industry/government consortium projects. The outcome will be a list of market, performance and cost criteria that will need to be met by any new technology to be successful in the application.

The Project will include the following tasks:

1. Review of industry literature. 
Public domain industry and technical literature will be reviewed to obtain information about future bitumen production levels and diluent demand, and desired performance and cost criteria for partial upgrading. The review will also identify technologies that have been proposed to fill this market need.

2. Consultations with industry. 
Through PTAC’s Upgrading committee, interviews and consultations will be conducted with major oil sands producers to allow them to express their needs and expectations and also to review and comment on the findings of the literature review.

3. Development of Summary Market, Performance and Cost Criteria. 
The information generated in tasks 1 and 2 will be summarized in a list of criteria that should be met by any new partial or field upgrading technology. A short final report will be prepared that will describe the process and participants engaged to derive the criteria.

BENEFITS

The criteria and the information generated by this Project will inform technology companies that are attempting to develop partial or field upgrading technologies and help guide their technology program and business plan. The information will also benefit funding providers in assisting them with funding decisions.

Partial Upgrading Report