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PAPER 2002-205

Pipeline Transportation of Emerging Partially Upgraded Bitumen
R.W. Luhning, A. Anand, T. Blackmore, D.S. Lawson
Enbridge Inc.
This paper is to be presented at the Petroleum Society’s Canadian International Petroleum Conference 2002, Calgary, Alberta, Canada, June 11 – 13, 2002. Discussion of this paper is invited and may be presented at the meeting if filed in writing with the technical program chairman prior to the conclusion of the meeting. This paper and any discussion filed will be considered for publication in Petroleum Society journals. Publication rights are reserved. This is a pre-print and subject to correction.

ABSTRACT The potential for bitumen and heavy oil production in Canada over the coming decade is predicted to be constrained by existing pipeline capacity, diluent availability and refinery conversion capacity. Technology for partial upgrading of bitumen to produce pipeline specification oil, reduce diluent requirements and add sales value is under aggressive development. The partially upgraded bitumen will be attractive for additional upgrading to end user products in a wider range of refineries than raw bitumen. The transportation of partially upgraded crude in existing pipelines to USA and potentially in new pipelines to new overseas customers will present new opportunities and challenges. This paper provides an overview of emerging partial upgrading technologies, the current pipeline specifications and the procedures to transport partially upgraded product, number of existing refineries to potentially accept partially upgraded product and future predictions.

INTRODUCTION Canada, mainly in the province of Alberta, holds one of the largest reserves of oil in the world. With current technology the recoverable reserves are estimated to be 335 billion barrels1a. The vast majority of these reserves are in the oil sands. In 2001 Canada was the largest import supplier of crude oil to the USA1 . Saudi Arabia2 was the second largest supplier as shown in Table 1. As shown in Figure 1, oil sands production is predicted to increase to 50% of Canada's oil by 2011. Over the coming decade conventional oil production is predicted to decline with the increased production being provided by synthetic light oil and bitumen from Alberta oil sands. The announced oil sands projects are listed in Table 2. If all projects were to proceed, the oil sands production alone would reach 3,445,000 bbl/d by 2011 as shown in Figure 2. Besides the physical and financial hurdles, there are three main challenges related to the transportation and marketing of the new production.


taking about half of the Canadian heavy oil plus bitumen4. OBJECTIVES OF PARTIAL UPGRADING The objective and role of a particular partial upgrading technology in bitumen upgrading. The third challenge is the projected refinery market constraint to process the bitumen and synthetic light oil into consumer fuel products. Natural gas is normally burned to produce the steam. the current production and export market for bitumen is relatively small. the capacity is projected to be adequate until the middle of the coming decade then the projected production will exceed the capacity as shown in Figure 2. The objective of a partial upgrader located at a SAGD site is to reduce the bitumen viscosity and density to meet pipeline specifications thus reducing or eliminating the need to use diluent and the associated cost of transporting the diluent to the site. The second challenge is the supply of low viscosity diluent.The first challenge is the physical capacity of the existing pipelines to deliver the oil to market. the bitumen is blended. usually natural gas condensate. With the expansions underway. The elimination of diluent to transport the bitumen effectively removes the "diluent availability" cap for transporting bitumen. The limit of bitumen that can be shipped by pipeline with the anticipated diluent availability is less than the projected bitumen production. Increase Refinery Export Market for Bitumen While it is predicted that bitumen production in Canada will increase dramatically over the coming decade. While the ultimate solution will likely be a combination of methods. Provide Steam for SAGD Bitumen Recovery SAGD and other thermal recovery methods use about 2. a premium fuel. This is a particular concern to producers of bitumen that are not integrated oil companies. for other uses. the technology of partial upgrading appears to have good potential to have a role in the future. such as SAGD (Steam Assisted Gravity Drainage). This also preserves the supply of natural gas. to reduce the bitumen viscosity and density to meet pipeline specifications. as shown in Table 4. This will allow more pipeline flexibility to transport the total volume of products. depending on the bitumen and diluent viscosity. This could reduce dependence on limited and increasingly expensive sources of diluent. Reduce or Eliminate Requirement for Diluent A typical bitumen in situ production operation. Extend the Capacity of Existing Pipelines The elimination of the need to blend bitumen with up to 50% of diluent means that only one barrel of pipeline capacity will be required to transport a barrel of product to a particular location. Depending on process. About 170. transportation and marketing will vary with the technology. The newest emerging approach is partial upgrading (field upgrading) of the bitumen at or near the bitumen production site. The generic objectives of partial upgrading are provided in Table 3 including improved economics and reduced greenhouse gas missions. The market constraint is less than the anticipated projected bitumen and synthetic light oil production as shown in Figure 2. There are a variety of ways to address the increasing bitumen production challenge.000 bbl/d of diluted bitumen3 are exported to the USA with the majority going to refineries in PADD II. 4) developing new markets and 5) adding additional pipeline capacity. produces bitumen that has too high a viscosity and density to be transported by pipeline over long distances. with up to 50% of a light diluent.5+ barrels of steam (cold water equivalent) per barrel of oil produced. 3) production of synthetic diluent for blending with bitumen. These include: 1) refinery modifications and increased Canadian access in PADD (Petroleum Administration Defense District) II and IV. 2) development of a regional upgrader in Alberta. The small market leads to price fragility especially with only 5 US refineries. The refining of 2 . In order to meet pipeline specifications. partial upgrading at site can produce up to 100% of the required steam thereby reducing the dependence on purchased natural gas which represents a large portion of the operating cost for bitumen recovery.

Partial upgrading of bitumen generally involves the conversion and/or the removal of coke or asphaltenes. Reid vapour pressure. Thus the oil may potentially be processed in refineries without the requirement for coke removal facilities. This protects other refineries from receiving the cracked product. to Clearbrook/Superior (line 4) and continuing on to 3 . This results in a partially upgraded oil that has less heavy components (i. crude compatibility and refinery concerns. mainly viscosity. The solution for dilution may well include partial upgrading depending on the specific situation. the viscosity specification for crude transport was increased from 250 cSt to 350 cSt. Refinery Potential for Partially Upgraded Oil As outlined in Table 8. 1999. catalyst beds and pipelines unless carefully handled. PIPELINE SPECIFICATIONS AND ISSUES The specifications for pipeline transportation of oil are of critical importance for diluted bitumen transportation to market. The criterion6 have two purposes: 1) to insure the crude meets the quality specifications in the crude petroleum tariff document.e. Table 5. Thus. the current supply of natural gas condensate for bitumen blending is predicted to be outstripped by demand3 by the middle of the decade. Olefin content is measured. When bitumen is cracked organic compounds with double bonds. As shown in Figure 3. 2) information related to safety. Cracked product is pipelined with "buffers" of a compatible crude (that the refinery must accept) ahead and following the cracked product in the pipeline to totally segregate the cracked product. receipt temperature and organic chloride content. Alternate potential sources of natural and synthetic diluent are listed in Table 7 including condensate from Arctic gas. For the production of liquid fuels. The crude stream quality acceptance criteria are provided in Table 5. The olefins are unstable (especially in contact with heat or oxygen) and will form fouling sludge in refinery equipment7. the prices peaked at about 125% of par value in 1997/98 and again in 2000/01. procedures and equipment are in place on the Enbridge system that currently provides for the transport of cracked product to Regina (line 3). by the "bromine number" in the distillation cut from initial boiling to 250 o C. Tanks must be dedicated to cracked product service to ensure containment of the cracked oil. operational. The higher viscosity means that less condensate is required for blending and consequently there was stabilization in the price with the lower demand. The availability of synthetic diluent is expected to increase as the overall average price paid for diluent goes up. A bromine number under 10 is considered acceptable for normal crude handling. called olefins and di-olefins (two pairs of double bonds) are produced. There is seasonal change in condensate usage since the lower temperature winter viscosity specification requires more condensate in the blend than in summer. This is because the amount of diluent to be blended with the bitumen is essentially determined by the viscosity and density specifications. Cracked Product: Pipeline and Refinery Many partial upgrading processes produce oil that meets pipeline specifications for viscosity and density by coking or thermally cracking the bitumen. Solution to Dilution: Synthetic Diluent or Partial Upgrading? Depending on the future production rate of bitumen. On January 1. asphaltenes and coke are low value materials5. Pipeline Specifications and Diluent Price The historic price of natural gas condensate that is blended with bitumen to meet pipeline viscosity and density specifications has increased in value steadily in response to increased demand as diluent for bitumen and heavy oil. it is important that cracked product not be delivered to a refinery that is not prepared to receive such product. Crude that does not meet the specifications is not accepted. density. Partial upgrading of bitumen to pipeline specification oil can eliminate the need for diluent. sediment & water.bitumen to produce fuels generally requires that the asphaltenes and coke be converted or removed from the bitumen. Table 6 provides current tariff specifications for crude transportation on the Enbridge "mainline" system and the Athabasca pipeline. those boiling above 700 oC).

000 per daily barrel3 9 . hydrotreater and sulphur removal facilities will be included to produce 37o API synthetic crude12a that can be transported in existing pipelines. lowest value components and thermally treat the remainder by integration 11 with other commercially available technologies. 4 . Asphaltene gasification. The thermal shock in conjunction with mechanical shear in the process breaks the long chain molecules in the heavy oil resulting in lighter and lower viscosity oil.5 billion. Three refineries receive cracked product on a regular basis. The patented process converts bitumen to lighter. Alberta pipeline terminal in 200213. Inc of Katy. lower viscosity pipeline-able product by rapid addition of heat to the bitumen at low pressure for a short period of time (seconds). Ontario. shortage of diluent and potential to integrate field upgrading with bitumen production has created a "landslide" (Table 10) of innovation for partial upgrading methods. ITS Engineering Systems.000 bbl/d with a capital cost of about $4. developed the RTP technology for partial upgrading of bitumen at its research facility in Greely. Alberta. partially upgraded oils. Hydrogen from the gasification unit will be used for hydrotreating. Neither hydrogen nor catalysts are used in the process. are developing the Long Lake project near Fort McMurray. or $25. Synergy has patented specially designed injectors for the process. The process was initially developed to remediate oily wastes from TM Upgrading Process The OrCrude upgrading process is a proprietary carbon-rejection process10 developed by the Ormat Group of Companies that can process bitumen to remove the heaviest.4. Tests performed16 in a 1/2 bbl/d laboratory pilot converted 13o API gravity heavy oil to 30o API oil with 90% liquid yield and 50% reduction in sulphur content. OPTI Canada Inc. OrCrude TM Rapid Thermal Processing (RTP ) Ensyn Group Inc.000 bbl/d upgrader based on the OrCrude process with startup in 2006 for an "all inclusive" cost of $1. The emerging technologies are at various stages.Chicago (line 6A). EMERGING PARTIAL UPGRADING METHODS The increasing production of bitumen.8 including the Premcor refinery at Hartford Illinois that has announced9 plans to close due to high costs to convert to low sulphur specifications for gasoline and diesel.000 per daily barrel23. SAGD will be integrated with a 60. The produced gas will be used as fuel in the SAGD process. Construction of the RTP demonstration pilot has been initiated by the joint venture. is based on instantaneous transfer of energy from superheated steam to a fine mist of heavy oil15 that is preheated to just below the temperature required for thermal cracking. Refineries that have facilities to process cracked product of the type produced by coking have the highest potential to accept and process. The technology is expected to be economic at about 5. Ensyn is scheduled to install a RTP demonstration pilot for upgrading up to 1000 bbl/d at the Enbridge Pipelines Inc. Hardisty. Excess heat from the RTP process and produced gas can be used to generate steam for an integrated SAGD operation. Alberta bitumen is regularly processed in 7 US refineries for fuels (Table 9). By-product coke is consumed in the process to generate heat for the process. There are 15 refineries in the USA with coking facilities that are accessible or potentially accessible from Canada2. Texas and Ensyn have established a joint venture for construction of RTP plants14 for upgrading bitumen and heavy oil. and Nexen Inc. CPJ Process for Upgrading Heavy Oil The CPJ process by Synergy Technologies Corp. A 500 bbl/d OrCrude pilot has been constructed near Cold Lake. Alberta. The RTP technology has been applied commercially for over 12 years for the production of food flavorings and fuels from wood and biomass. with modifications. The project is to begin with a 3000 bbl/d SAGD pilot project12. Twenty-one US refineries and nine Canadian refineries can access heavy crude from Canada. TaBoRR Process TaBoRR (Tank Bottom Recovery and Remediation) process is a patented process developed by the Western Research Institute17 of Laramie Wyoming. A polyaromatic pitch is coproduced that can be used to fuel the process. Seven refineries are located along these pipelines.

If successful. Super Critical Partial Oxidation (SUPOX) In the SUPOX process27. heavy oil is partly combusted in a reactor in the presence of supercritical water (water supercritical point is 3206. Synenco Energy Inc. which is a benefit for upgrading. The conversion of 6. The cracked gaseous material exits and is condensed. the Shell Scotford refinery in Edmonton will use catalytic hydrogen conversion technology to upgrade the remaining bitumen. The "contaminants" are subsequently converted to light crude components. The capital cost for a 20. Saskatchewan. A 10 bbl/d pilot plant22 has been located at Conoco's (formerly Gulf) operation at Kerrobert. The process is aimed at converting bitumen to lower viscosity.2 psia at 705. Cold Lake bitumen has been tested18 in a 1bbl/d bench top unit that produced 20o API product. The TaBoRR process is a carbon rejection process that consists of two main elements: 1) Patented "horizontal" stripper (distillation) to separate low boiling material and 2) Pyrolyzer unit to crack and coke the heavy ends from the stripper. Alberta has a joint agreement for development of a novel upgrading process19 invented by Value Creation. is planning a Vapex pilot in heavy oil at Plover Lake.1% sulphur is estimated18 at $98. The anticipated capital cost is reported23 as about $10. Cold Lake bitumen is 11. The solvent dissolves in the oil reducing the oil viscosity so the oil will flow by gravity at natural reservoir temperature to horizontal production wells. Baytex Energy Ltd.refineries. Nexen Inc. The partially upgraded Vapex bitumen requires less diluent for pipeline transport and has less heavy asphaltene content.000 per daily barrel. pentane and hexane) that precipitate fine solids and 4% of the bitumen comprised of resins and asphaltenes2 4 .2 million with operating cost of $2.e. With the removal of a portion of the heaviest hydrocarbons during the extraction of bitumen at the mining site. bitumen extraction process specified for the Athabasca oil sands mining operation at Muskeg River involves the use of paraffinic solvents (i.0 API with 4. Genoil Hydro-Processor Upgrading The Genoil Inc. 5% sulphur content bitumen to 28o API.5o API product with 3. Vapex Process In Situ Upgrading The Vapex (vapor extraction) process is a non-thermal process that uses vaporized solvents that are injected into heavy oil or bitumen reservoirs25.6% sulphur. production operations and used motor oil. 0. Devon Canada Corporation (Northstar) and Alberta Energy Company are beginning Vapex field pilots in the Athabasca oil sands at the Dover and Foster Creek sites respectively26. Saskatchewan. both of Calgary. Albian Muskeg River Oil Sands Mining The Albian Sands Energy Inc. the process could be applied at the PanCanadian SAGD Christina Lake project in the Athabasca oil sands.4 oF). Saskatchewan.66/bbl feed. The technology is based on removing "contaminants" such as asphaltenes23 to produce lower viscosity oil.404 bbl/d of 26.8o API. of Calgary is evaluating the results of the pilot. Value Creation Upgrading Process PanCanadian Petroleum Limited and Value Creation Group. Process development began in 1992 and progressed to a 300 bbl/d transportable demonstration unit. propane) also causes asphaltenes to be precipitated from the bitumen in the reservoir thus reducing the bitumen viscosity and density. higher value oil that would reduce or eliminate the need for diluent for pipeline transportation. The solvent (i. The upgrading process has potential for field upgrading and regional scale graders processing heavy oil or bitumen. The solid coke deposited on the interior of the pipes is moved out of the pipe by the screws in a continuous operation. The heavy oil is cracked and coked in the pipes. The pyrolyzer is made up of pipes with interior rotary screws that are heated in a fluidized bed of hot sand. upgrading process20 combines hydrocracking and hydrotreating in a non-catalytic mode of operation with the objective to convert bitumen to sweet crude that meets pipeline specifications. has initiated a Vapex field pilot in heavy oil at Soda Creek.000 bbl/d commercial operation with Cold Lake bitumen to produce 16. Hydrogen is formed by the reaction of water and carbon monoxide that combines with thermally cracked oil to produce 5 .2% sulphur oil without producing coke has been reported with operations at 745 oF and 1600 psig pressure. The hydrogen for the pilot is provided by an 1140 scf/hour electrolyser from Hydrogen Systems Inc 21 .e.

CAPRI In Situ Upgrading The CAPRI (not an acronym) process aims at coupling downhole catalysts with in situ combustion for oil recovery to produce upgraded oil. The process30 has been developed through laboratory physical model experiments at the University of Bath. The ongoing process development has as one of its objectives. Alberta facility. When oil is exposed to particular ionic liquids.000 bbl/d visbreaking unit modified for the purpose. The process36 involves reaction heavy oil/water emulsions at elevated 6 . The deasphalted oil can be refined using a hydrogen addition process. Biocatalyst Upgrading The upgrading of heavy oil by bioprocessing is under investigation in a collaborative research project between NCUT and the University of Alberta. Foster Wheel and Universial Oil Products (UOP). United Kingdom. ROSE TM Process for Partial Upgrading The Kellogg Brown & Root ROSE (Residuum Oil Supercritical Extraction) process is a commercial refinery process to extract asphalt from heavy oil 3 2 . The most common use of ionic salts is in the manufacture of aluminum. some of which are liquid at room temperature. The challenge with visbreaking is that the production is not saturated with hydrogen and requires additional processing. Aquaconversion is an improvement31 on conventional refinery visbreaking technology that exposes heavy oil to heat to convert heavy fractions of the oil to lighter product. In a reservoir application. upgrading process35 is aimed at processing mined oil sands to simultaneously upgrade bitumen and separate it from the sand. Excess amounts of produced asphalt are difficult to market and may be burned to produce energy or gasified to co-produce hydrogen for refinery operations and power generation. in situ combustion would be conducted by air injection into a vertical well located near the toe of a horizontal production well that has been "gravel packed" with catalyst. The development is aimed at small scale field upgrading. Aquaconversion TM Process Intevep of Venezuela invented the Aquaconversion process that is "marketed" via an alliance of Intevep. The objective is to isolate biocatalysts that will selectively "attack" large oil molecules and break them into smaller molecules. Ionic liquids are essentially "molten" salts. The oil is further upgraded and hydrogenated as it passes through the catalyst surrounding the horizontal production well.hydrogenated light oil. Chattanooga Process The Chattanooga Corp. The objective is to directly convert oil sands to sulphur free synthetic crude. The Saskatchewan Research Council also conducted experiments using supercritical water-oil reactions29 to provide viscosity reductions and density improvements. The ROSE process and gasification has been combined on a commercial basis at the ISAB Energy "refinery" in Italy. the oil reacts to produce upgraded oil. The oil viscosity will be reduced thus requiring less diluent for pipeline transportation. The process has been demonstrated in a 36. once-through catalysts (that can be regenerated) to convert entrained water to hydrogen. The free hydrogen reacts with the cracked oil to produce a hydrogenated product. The Aquaconversion process uses oil soluble. Ionic Liquid Catalysts The Saskatchewan Research Council and University of Regina are conducting laboratory scale investigations into the use of ionic liquid catalysts that will upgrade heavy oil at room temperature29 for field upgrading applications. A pilot test has been conducted at NCUT to determine the reaction kinetics of bitumen in dry oil sands in a fluid bed reactor with high-pressure hydrogen. the application of the process directly at the wellhead. PanCanadian and Baker Hughes formed a joint venture28 with University of Calgary combustion group building a prototype scale reactor and National Centre for Upgrading Technology (NCUT) operating the reactor at their Devon. CANMET Emulsion Upgrading Process (CEU) The CEU process was invented in the CANMET Energy Research Laboratories of the Canadian Government with Gulf in the 1980s. The high temperature combustion cracks the oil and the reaction of carbon monoxide and water produces hydrogen.

DEVELOPING NEW MARKETS As bitumen and synthetic oil production increases. The mid-stream polisher would ideally be located in Alberta near to mainline pipeline terminal/injection facilities and to oil reservoirs amenable to CO2 flooding to make use of concentrated CO2 produced when making hydrogen. The emergence of partial upgrading is opening the possibility to conduct portions of the upgrading of bitumen to fuels at different locations. Further expansion of pipeline systems into the US Midwest may be required including expansions to Enbridge's existing mainline system. new markets for the production will need to be developed. A regional upgrader is essentially a stand-alone refinery with comparable capital and operating costs. The regional upgrader concept is to service the needs of producers that are not integrated with a refinery by converting bitumen to synthetic light oil. cracked product may be produced that contain unstable olefins. The ASR-2 process uses an oxidant catalyst to convert sulphur compounds in the fuel (substituted dibenzothiophene) to sulfone which may be mechanically separated from the liquid fuels. to develop several alternatives to move the increasing production of bitumen and synthetic crude to market. Regional Upgrader or Mid-Stream Polisher Regional upgraders to convert Alberta bitumen to synthetic light oil have been studied37 for many years. is undertaking a comprehensive study to evaluate Western Canadian supply and demand issues as well as transportation options with respect to significant new volumes of oil sands production forecast to come on stream over the next six to eight years. Geotreater Process The Geotreater40 uses the natural heat of the earth via a vertical tubular reactor/heat exchanger sunk in the ground for mild thermal treatment of heavy oil to reduce viscosity.2o API with 65% pitch conversion. Economic analysis indicated that pipeline specification product could be produced at 67-73% of the cost of delayed coking. An appropriately stabilized product (i. UniPure Sulphur Removal and Upgrading UniPure Corporation have developed38 a process to remove sulphur from fuel products (gasoline and diesel) without the use of hydrogen. up to 250 oC) to stabilize the oil for transportation and refinery processing.e. Colorado that modified the gravity/viscosity of Cold Lake bitumen to reduce the pipeline diluent requirement by 50%.e. there is not a large amount of published information on the individual process economics. an economic analysis was conducted for a generic carbon removal 7 . A 50 bbl/d pilot was run by Resource Technology Associates at Golden.temperature and pressure in the presence of catalyst and synthetic gas containing carbon monoxide. The mid-stream polisher would provide mild hydrotreating34 of the low boiling fraction (i. The water reacts with the CO to product H2 and CO2. Enbridge is working closely with producers and refiners. Bench scale experiments upgraded Athabasca bitumen to 19. A small amount of oxygen is injected into the oil at the base of the well. ECONOMIC ADVANTAGE Since partial upgrading technologies are emerging in a competitive environment. Unipure are also working an upgrading technology based on coke removal. The produced H2 reacts with the crude oil to produce upgraded oil of lower viscosity and lower gravity. Depending on the upgrading process. The Husky biprovincial upgrader operating at Lloydminster. Pipeline Infrastructure Enbridge Inc. Saskatchewan is an example of a regional approach that was initialed with participation by government and industry. In order to estimate the size of the potential economic "prize" for partial upgrading. bromine number below 10) could be transported in a manner similar to normal crude (Table 12). Partial upgrading at a SAGD field site has the advantage of providing byproduct energy for the SAGD operation. Other options (Table 11) include new transportation corridors to access other US markets or consideration of a new market pipeline33 west to the British Columbia coast. New products specifically designed for the markets may also be required. for tidewater access to the California and Asia markets.

the net benefit is highly dependent upon bitumen recovery factors and light/heavy price differentials. CONCLUSIONS There is a large number of partial upgrading technologies under development. The gas produced by the partial upgrading process was used in both cases to reduce natural gas required to make steam. As stated earlier. As shown in Table 14. GREENHOUSE REDUCTION WELL TO WHEELS In order to determine if partial upgrading could potentially reduce "well to wheels" emissions. economic and environmental advantages. For the analysis it was also assumed that a facility. 2) steam generation from the upgrader to reduce the amount of natural gas required to produce steam. The comparison cases had partial upgrading with by-product carbon removal either stored or integrated as fuel in the field to make steam for SAGD. If the technology development is successful. The polished product would also widen the market for the product beyond those refineries with the ability to handle cracked product. The main benefits include: 1) increased product sales value. The situation of using partial upgrading and midstream polisher coupled with SAGD bitumen production was examined. 3) Stabilization of cracked product from partial upgrading would be an advantage for pipeline transportation and refinery operations. Storing the carbon removed by partial upgrading rather than using it for fuel reduces the greenhouse gas emissions by 50%. 5) Partially upgraded bitumen may be attractive to more refineries than raw bitumen. Obviously. using the carbon removed by partial upgrading as fuel for SAGD reduces the well to wheels greenhouse gas emissions by 25%. 7) Field demonstration of partial upgrading technologies is required to confirm the potential for technical. partially upgraded bitumen to one location and the diluent elsewhere). These benefits are offset by the capital and operating costs of partial upgrading and mid-stream polisher.e.$5. 2) Provide steam for SAGD bitumen production from heat available via the partial upgrading process. 8 . Current technology is technically and economically attractive for oil sands production as evidenced by the large number announced projects listed in Table 2. The history of oil sands has been continuous technical and economic improvement. generic SAGD operations with and without partial upgrading were compared. The stand-alone SAGD operation was located in the Athabasca oil sands with diluted bitumen transported to a coking refinery located in the US to produce transportation fuels. partial upgrading may provide the following advantages: 1) Reduce or eliminate the requirement for diluent to be blended with bitumen for transportation to market. 4) elimination of diluent transportation to SAGD site and 5) reduction in transportation cost to market (due to smaller volume of higher value product). natural gas prices as well as other factors.partial upgrading process based on a collage of information from the available reference material. would be available to allow the product to be transported as normal crude (without buffering) via pipeline and potentially ocean tanker. partial upgrading may an element in a combination of approaches for oil sands production. However. The analysis in Table 13 indicates a net benefit at the SAGD wellhead of $3. The economic benefit is a combination of increased sales value for the product compared to bitumen and reduced production and transportation costs.00 . the analysis does suggest that significant value can potentially be derived from the processes. The production was stabilized in a mid-stream polisher and transported without diluent to a US refinery that produced an equal amount of transportation fuels for all cases. such as the mid-stream polisher. 4) More pipeline flexibility (effective capacity) may be provided to transport products (i.00 per barrel of bitumen. 6) Partial upgrading may reduce the total "well to wheels" greenhouse gas emissions when making transportation fuels from bitumen. 3) elimination of net cost of diluent.

February 4. "Long Lake Project" Opti Canada Inc. 2002.e upgrading by carbon removal vs. Feick. Alexander's Gas & Oil Connections "Synergy Achieved Excellent Results Testing CPJ Process" Oct 18.R. 25. Ensyn. T. P. March 20. R. 2000. REFERENCES 1 . Synergy Technologies "Synergy's Heavy Oil Upgrading Technology" Synergy Web Site. Mawdsley. Calgary. Calgary. for permission to publish this paper. 2002. P. Heavy Oil Assn. "Alberta Reserves 2000" Statistical Series 2001-98. Canadian Heavy Oil Association Conference. 2) The most desired fuels product slate that may be produced in a refinery may be constrained by the initial partial upgrading. 2000. Calgary. News Release "Opti Canada Partner with Nexen on Major Oil Sands Project". National Energy Board "Canada's Oil Sands: Supply & Market Outlook to 2015". International Petroleum Encyclopedia. 2001. (i. 2001. December 2000. J. W. ACKNOWLEDGEMENTS The Authors thank Enbridge Inc. Group. October 2000. 30. J. 2001. Heaton. NCUT Symposium on Stability & Compatibility. California. 17. Fort McMurray.. Nov. 6.000 bbl/d Illinois Refinery. 8 . Web Site.Partial upgrading may have disadvantages as follows: 1) Partial upgrading will impact asphalt production and quality. 2001.. 17. 4 . Enbridge. Alberta Energy & Utilities Board. Oct. 3) Partial upgrading may not "scale up" to the size needed to centrally service oil sands mining operations as compared to de-centralized field upgrading of the scale targeted for in situ bitumen production. November 14. March 19. 2001 12a. Pennwell. 11. "Upgrader Demonstration Project" Can. Opti Canada. "Causes and Control of Hydrotreater Fouling" NCUT Symposium on Stability and Compatibility. "The Use of TaBoRR as a Heavy Oil Upgrader" Pacific Coast Oil Show & Conference. Wright. 21. 2001. 2. 2001. Nov. 16. News Release "Enbridge and Ensyn Establish Alliance to Facilitate Heavy Oil Development". 18. 2002. March 1. 19. Alberta. 13. Brecher L. Jan. 2001. Calgary. Western Research Institute "Tank Bottom Waste Recovery and Remediation".E. 12. January 8. NCUT Symposium on Stability and Compatibility. et al "Heavy Crude Quality from a Refiner's Perspective". Calgary. News Release "ITS and Ensyn Establish Joint Venture to Build and Sell Ensyn RTP Equipment to Oil Industry". 1a. 9 . 15. August 14. 3. 17. by hydrogen addition). 2001. 14. "Oil Sands Update" Regional Issues. 5 . 2002. Nexen Newsletter "Brave New (Bitumen) World" March 2002. Blackmore. Amdal. News Release "PanCanadian & Value Creation Sign Agreement to Pursue Oil Sands Upgrading Technology" PanCanadian..". 7 . Application to AEUB. 10. 2002. Calgary. Platts Oilgram News " Premcor to Shut 70.E. et al "Tar to Car: Matching Bitumen Production Growth with Refinery Capacity". Conference. 9. September 17. Arnold. Bakersfield. Sept. March 1. "Canadian Oil & Gas Heavy Oil Differentials" National Bank Financials. 2002. Sept. "New Crude Acceptance Criteria for Enbridge Pipelines Inc.

et al "UniPure's ASR-2 Desulphurization Process Provides Cost-Effective Solution for UltraLow-Sulfur Refined Products" World Refining. Sept. 16. et al "Canmet Emulsion Upgrading Process" Oil Sands . September 4." Hydrogen Systems. Oil & Gas Journal "New Technology Seeks to End Pipelines Heavy Crude Diluent" May 30. News Release "Genoil Reports Successful Testing of Tar Sands Bitumen at Kerrobert". Doyle. 52 no. 1999. 2001. 22. 27. May 2001. 23. 2007. Heavy Oil Assn. Regina Leader Post "Enhancing the Future for Saskatchewan's Heavy Oil". USA. S. R.Present and Future" Can. C. 10 . 24. Ross. 1998. 1988. R. 39. Calgary Herald "Enbridge Proposes Oil Sands Pipeline". Regina Leader Post "Genoil Tests Cheaper Heavy Oil Technology" September 5. San Francisco. September 17. "Partial Upgrading of Heavy Oil with Rose and Gasification or Combustion". January 1998. 30. "Search for the Holy Grail" New Technology Magazine. 36.. 1998 Newsletter. 5. Issue 1. Heavy Oil Assn. N. 37.Our Petroleum Future Conference. Alberta. AEUB Application 970588 "Approval for Muskeg river Mining Project". Shell Canada. 1993. Conf. J. Calgary. 31. 19. 2001 21. Alberta. September 2001. Edmonton. E. 25. Edmonton. Alberta Chamber of Resources. S. 28. Fort McMurray. TN. " SAGD. 38. 12. Levy. Genoil. 24. Abdel-Halim. 32. et al "Heavy Oil Upgrading with Water via Super Critical Partial Oxidation" Petroleum Technology Alliance of Canada. Reactor System Synthetic Oil Process" Chattanooga Corporation Literature. "Making the Upgrade" New Technology Magazine. Dec. "Chattanooga Process. D. T. April 4-7. Polczer. 35. 2001. Nov. Edmunds. 26.E. Edmonton.J. Sept."New Heavy Oil recovery Process". April 12. 2001.20. Cordova. Calgary. C. "The Aquaconversion Process for Residue Processing". et al "Stability and Compatibility of Refinery Streams" NCUT Symposium on Stability & Compatibility. 2001. P. and Luhning. 18. 2002. 33. Marzin. CMG Advances Newsletter. Calgary. Oct. March 7. 1998. Calgary. 40. Conf. Oil Daily "Nexen to Build Crude Plant" Vol. 1997. "Bitumen Market Expansion Study". Gupta. R. Calgary. Patmore.. 2000.. Rahimi. Vol. Ayasse. 29. 1999. Luhning. 2001. October 18. NPRA Annual Meeting. NCUT Symposium on Upgrading. News Release "Hydrogen Systems Inc Hydrogen Generator Operating in Heavy Oil Field of Central Sask. 70. March 15-17. "The Vapex Process: Non-Thermal Recovery of Bitumen and Heavy Oil" Can. 34.

5% _______________ * Source US Energy Information Administration Table 2 Announced Oil Sands Projects Company Project Volume (mbpd) Suncor Firebag/Voyageur 215-550 Syncrude Aurora Mine/Upgrader 235-465 Shell/Chevron/Western Lease 13/Upgrader/Jackpine 25-525 Conoco Surmont 100 Imperial Cold Lake 160-225 True North Fort Hills 85-190 Husky/Imperial Kearl Lake 250 Mobil Kearl Lake 100 Petro-Canada MacKay River 30 Petro-Canada Meadow Creek 80 Petro-Canada Lewis Creek 60 PanCanadian Christina Lake 70 JACOS Hangingstone 50 Blackrock Orion 30 Deer Creek Deer Creek 30 AEC Foster Creek 20-100 CNRL Horizon 25-300 SynEnCo Northern Lights 75-150 Nexen/Opti Long Lake 140 Project Year Ultimate Production 2011 2007 2010 2010 2010 2009 2010 2005 2002 2007 2006 2008 2006 2007 2004 2007 2010 2006 2010 Total Ultimate 3.Table 1 United States 2001 Crude Sources* Country Crude Sources (% of USA Oil) Canada 9% Saudi Arabia 8.445 Table 3 Objectives of Partial Upgrading • • • • • • Improve Economics of Bitumen Production Reduce Greenhouse Gas Emissions Increase Refinery Export Market for Bitumen Provide Steam for SAGD Bitumen Recovery Reduce or Eliminate Requirement for Diluent Extend Capacity of Existing Pipelines 11 .5% Venezuela 8% Mexico 7% Iraq 4% Nigeria 4% USA (domestic) 41% Others 18.

ALTA PDV: Lemont.Table 4 Heavy Refining Capacity Accessible to Canadian Crude Refinery Koch: Pine Bend. OH ExxonMobil: Joliet. IN BP: Toledo. 20°C. 30°C) Reid vapor pressure (kPa absolute at 37. IL Husky: Lloydminster. IL Other 24 Refineries Percent of Total Heavy Production 15% 11% 8% 7% 7% 5% 47% Table 5 Quality Information Required for New Crude Stream Approval Quality Test Name Density (kg/m3 at 15 °C) Kinematic viscosity (cSt at 10°C. MN BP: Whiting.8C) Pour point (°C) Sulphur content: 1) total sulphur (weight %) 2) hydrogen sulfide (weight ppm) 3) volatile mercaptan sulfur (weight ppm) Organic chlorides (weight ppm) Bromine number in distillation cut from IBP to 250°C Salt content (kg/1000 m3) Metals/elements in whole crude (weight ppm): 1) vanadium 2) nickel 3) manganese Neutralization number (mg KOH/gm) True boiling point distribution Benzene content (weight ppm) Procedure ASTM D 1298 or D 5002 ASTM D 445 ASTM D 323 ASTM D 97 ASTM D 2622 or D 4294 ASTM D 5623 ASTM D 5623 ASTM D 4929 ASTM D 1159 ASTM D 3230 Plasma Analysis Plasma Analysis Plasma Analysis ASTM D 664 ASTM D 86 GC-FID 12 .

Line 6A to Chicago Table 9 Refinery Potential for Cracked Crude Product • • • • • • • Canadian Heavy Oil Delivered to 30 Refineries 21 USA and 9 Canadian Refineries Refineries with Cokers Produce and Process Cracked Material 15 USA Coking Refineries are Accessible from Canada 14 Canada and US Refineries Process Bitumen for Asphalt and Fuels Bitumen Regularly Coked for Fuels in 7 USA Refineries Cracked Bitumen Regularly Pipelined to be Processed in 3 Refineries 13 .5 oC in January/March to 19. In 2001 the reference temperature varied from 7. Measurement Table 7 Diluent Sources For Heavy Oil Transportation • • • • • Remaining and Undiscovered Gas Condensate Condensate from Arctic Gas Light Crude Synthetic Crude Synthetic Diluent Table 8 Transporting Cracked Crude Product • • • • • • Olefins in Cracked Crude Form Sludge in Refineries Bromine Number is Indicator of Olefin Content Normal Crude has Bromine Number Below 10 Need to Securely Segregate Cracked Product Crude "Buffers" in Pipeline and Dedicated Tanks Enbridge Delivers Cracked Product (10+ Bromine #) Line 3 to Regina Line 4 to Clearbrook/Superior.5 oC in August.5 0. kg/m3 @ 15 oC 103 103 Reid Vapour Pressure.5 Organic Halides none none _________________________ * Main line reference temperature is set biweekly related to pipeline temperature in the earth. C 38 42 940 970 Density. cSt @ Reference Temperature* 350 350 Sediment & Water.Table 6 Enbridge Crude Transportation Tariff Specifications Restriction Maximum Main Line Athabasca Line o Maximum Receipt Temperature. kPa @ 37. % by volume 0.8 oC Viscosity.

sulphur removal Coke removal by rapid heating Cracking by steam thermal shock Stripper/pyrolyzer makes solid coke Asphaltene removal & conversion Hydrocracking & hydrotreating Asphaltene removal & disposal In Situ asphalt deposition Operating 500 bbl/d pilot with commercial application plan Building 1000 bbl/d pilot Operating laboratory pilot Movable 300 bbl/d pilot "High Head" laboratory pilot 10 bbl/d field pilot Commercial oil sands mine Four field pilots in startup "High Head" laboratory pilot Laboratory investigations Laboratory investigations __________________________________________________________________________________________________________ ____________________________________________________________________________________________________________ ____________________________________________________________________________________________________________ ____________________________________________________________________________________________________________ ____________________________________________________________________________________________________________ ____________________________________________________________________________________________________________ ____________________________________________________________________________________________________________ ____________________________________________________________________________________________________________ ____________________________________________________________________________________________________________ PanCanadian. OrCrudeTM Ensyn. Albian. SUPOX Combustion/supercritical water SRC. Muskeg Vapex Process Table 10 Emerging Processes to Partially Upgrade Bitumen Method Development Status Asphaltene gasification hydrotreater. TaBoRR Value Creation Genoil Inc. Work & reservoir design Commercial demonstration Commercial operation ____________________________________________________________________________________________________________ Intevep. ROSETM Chattanooga Asphalt removal & gasification ____________________________________________________________________________________________________________ ____________________________________________________________________________________________________________ Fluid bed hydrogenation of mined oil sands Laboratory pilot ____________________________________________________________________________________________________________ CANMET. AquaconversionTM Visbreaker/hydrogenation catalysts Kellogg. CEU Oil/water emulsion reaction with catalyst Bench scale pilot ______________________________________________________________________________ UniPure Coke removal process Laboratory/feasibility ______________________________________________________________________________ Geotreater Thermal visbreaking with oxygen addition 50/bbl/d pilot ______________________________________________________________________________ Table 11 Developing New Markets • • Pipeline to Canada's West Coast Bitumen/Synthetic Oil to Washington & California Ship Bitumen/Synthetic Oil by Tanker to Asia Extend Canadian Accessibility in USA 14 . RTP Synergy. CPJ WRI. Ionic Catalysts NCUT/U of Alberta Capri Process Liquid ionic salts catalysts Biocatalysts ____________________________________________________________________________________________________________ ____________________________________________________________________________________________________________ ____________________________________________________________________________________________________________ In situ combustion/producer well catalysts Lab.Process Opti.

0 SOR) • Eliminate Diluent Transport to/from SAGD Site (Pipeline.000/daily bbl bitumen) • Mid-Stream Processor (Capex + Opex) (Capex: $3.Table 12 Regional Upgrader or Mid-stream Polisher • • • Non Integrated Companies Need Access to Refining New Regional Upgrader(s) Example: Husky Bi-Provincial Upgrader Produce Synthetic Light Oil Mid-Stream Polisher for Partially Upgraded Bitumen Mild Hydrotreating to Stabilize Olefins in Cracked Product Normal Crude Pipeline Procedure More Attractive Product for Refinery Markets Central Location near Conventional Oil Reservoirs for CO2 Flood Use CO2 from Hydrogen Plant for EOR • Table 13 Generic Partial Upgrading / Mid-Stream Polisher Economic Benefits Alberta Bitumen to USA Refinery Assumed Basis : SAGD VS.000/daily bbl partially upgraded feed) Total Additional Cost Range of Benefit at Wellhead $3.$5.85 bbl partially upgraded 65% SAGD steam via upgrader X X X X X $10.00 .85 bbl vs.50 (X) (X) ($6. SAGD + Partial Upgrader & Mid-Stream Polisher partially upgraded at SAGD site 19 API (pipeline specification) 0.00 15 . 1 bbl) Total Additional Benefit Capital & Operations Costs • Partial Upgrader (Capex + Opex) Capex: $5.50) bitumen 8 API 1 bbl bitumen Gas for steam Value Increase & Cost Reduction • Incremental Sales Value (Higher Value Product to Refiner) • SAGD Natural Gas Cost Reduction (Gas @ $3. 40% blend) • Reduction in Transport Volume Cost (0. Tankage & Operations) • Reduction in Diluent Premium Net Cost (WTI @ US$28/bbl @ 5% premium.50/mscf @ 3.

0) Natural Gas for Steam Boilers 500 170 420 Partial Upgrading Produced Steam ----.Energy from coke & produced gas 730 .Table 14 Generic Partial Upgrading "Well to Wheels" Greenhouse Reduction SAGD SAGD+Partial Upgrading (CO2e kg/m3 bitumen at wellhead) Carbon &Gas Gas (store carbon) Bitumen Production (Steam/Oil Ratio = 3.Energy from produced gas (store coke) 160 Pipeline Diluted Bitumen or Non Diluted Partially Upgraded to USA -------(30 to CO2 Flood)------Mid-Stream Polisher (CO2 from H2 production) ----Transportation 40 30 30 Refinery Upgrading (Identical Products) Refinery Coke & Gas Disposed for Fuel 650 ----Transportation Fuel Products ---------equal transportation fuels--------____ ____ ____ 1190 900 580 CO2e kg/m3 Bitumen at Wellhead Reduction in Greenhouse Gas ----- 25% 50% 16 .

The "hot bitumen" pipeline will transport heated raw bitumen without the need for diluent to reduce viscosity. The temperature of the bitumen naturally reduces the viscosity. 17 .Figure 1 Western Canada Crude Oil Supply (000 M3/D) 700 600 Potential Preliminary Forecast 2002 (000 B/D) 4500 4000 3500 3000 2500 500 400 300 200 100 0 1997 Bitumen Conventional Heavy Pentanes Plus Mined Synthetic Conventional Light 2000 1500 1000 500 2009 0 2011 1999 2001 2003 2005 2007 Figure 2 Oil Sands Pipeline Capacity (000 B/D) 3000 Market Constraint Preliminary Forecast 2002 2500 2000 Existing + Hot Bitumen Pipeline Capacity 1500 1000 500 0 1999 2001 2003 Forecast >>> Potential Oil Sands Production 2005 2007 2009 2011 • • Pipeline capacity is for transport of products from the oil sands to Edmonton with the planned new "hot bitumen" pipeline in place.

• 18 .• • Diluent premium compared to WTI par crude Diluent price stabilized in 1999 when the pipeline viscosity specification was increased from 250 cSt to 350 cSt thus reducing the amount of diluent needed to be blended with heavy oil and bitumen Recently the Bowden refinery (10.000+ bbl/d) in Alberta that processed diluent in the refinery suspended operations and the price of diluent fell.