Bitumen Upgrading Explained
Bitumen extracted from the oil sands is a heavy crude oil which contains a large fraction of complex long-chain hydrocarbon molecules. Depending on the extraction process used, bitumen product can sometimes contains as much as 2% water and solids, which does not meet pipeline specifications for transport over long distances. Pipeline specifications can be met either by upgrading or dilution with a very light oil. Any crude that meets pipeline specs can be sold to downstream refineries, regardless of grade or quality.
TO UPGRADE OR NOT TO UPGRADE: THAT IS THE QUESTION
Refineries typically blend different grades of crude feedstock with varying quality specifications, but not all refineries are built the same. Depending on the type, capacity and configuration of process equipment, each refinery has a limited ability to handle heavy grades of crude, with high concentrations of sulphur and other impurities.
Simple refineries can only process light crude feedstock with a low sulphur content. Bitumen produced from the oil sands would be too heavy and too sour for a simple refinery. In order for bitumen to be sold to this type of refinery, it must first be upgraded in a lighter crude oil.
More complex refineries, commonly referred to as high-conversion refineries, have the ability to process heavier feedstock, with higher concentrations of sulphur and nitrogen. These facilities have a larger capacity to process heavy crude, cracking the heavy components into lighter streams. High-conversion refineries actually prefer heavy/sour feedstock, producing better yields and improved profit margins. In order for bitumen to be sold to a high-conversion refinery, significant volumes of diluent must be added prior to transport, sometimes as high much as 40% by volume. This diluent, typically natural gas condensate, is required in order to meet pipeline specifications.
Both diluted bitumen and upgraded synthetic crude therefore have very different specifications, affecting both the selling price and marketability of the product. The decision to upgrade, or not, therefore depends on the quality of the bitumen, the needs of the final customer and the price differential between heavy/sour versus light/sweet crude.
3 to 4% sulphur
up to 0.5% water + solids
contains trace Na, Ni, V, Fe
high TAN (acidic feedstock)
n/d water & solids
n/d metal ions & salt
UPGRADING ECONOMICS: ADDING VALUE TO A BARREL OF CRUDE
Traditionally, a majority of the bitumen produced in Alberta was upgraded into synthetic crude oil before being sold to downstream refineries. However, some bitumen is good enough to send directly to high-conversion refineries, which have a preference for heavy/sour feedstock.
As more and more refineries around the world convert to heavy oil feedstock, there is less of a demand for stand-alone bitumen upgrading. The economics of upgrading therefore lies in the price differential between heavy diluted bitumen and light crude oil.
According to IHS Markit, Alberta's upgraders have a typical operating cost of US$8-10 a barrel, excluding cost of capital. Factoring in the cost of capital, which can be north of $60,000 per flowing barrel, a new upgrader requires a light/heavy price spread of about US$25 per barrel in order to be economically viable.
no diluent required
improved pipeline utilization
higher realization price
very high capital costs
higher operating costs per bbl of crude
higher GHG emissions per bbl of crude
loss of yield w/carbon rejection process 7
UPGRADING 101: FROM DILUTED BITUMEN TO SYNTHETIC CRUDE
Although flowsheets can vary among the operators, upgrading heavy bitumen to a light synthetic crude involves 5 basic steps:
- Diluent Recovery: Diluent use to transport the bitumen is removed and returned back to the bitumen production facility. This diluent is typically a naphthenic solvent (commonly referred to as naphtha) but can also be a paraffinic solvent or condensate.
- H:C Ratio Upgrading: The hydrogen to carbon (H:C) ratio is improved either through carbon rejection (coking) or hydrogen addition (hydroconversion). A higher H:C ratio is indicative of a better quality crude.
- Heavy to Light Conversion: The lower-value heavy portion of the bitumen is converted into lighter hydrocarbons. This can be done through:
- fractionation (or distillation) where the different crude oils are separated by boiling point, and/or
- cracking, where the complex long-chain hydrocarbon molecules are broken down (cracked) into shorter-chain, simpler hydrocarbon molecules.
- Impurity Removal: Sulphur and nitrogen are removed, producing hydrogen sulphide and ammonia during a process known as catalytic hydrotreating. Removing these impurities enhances the quality and marketability of the final crude oil product.
- Product Blending: The different liquid fractions produced by the upgrader are then blended together to produce the desired crude oil product specification. Upgrader product is typically referred to as Synthetic Crude Oil (or SCO), which is then marketed to downstream refineries for conversion into final consumer products.
SYNTHETIC VS REGULAR CRUDE: COMPARING PRODUCT SPECS
Synthetic crude produced by a bitumen upgrader is slightly better in quality than conventional light/sweet crude, due to its lower sulphur and heavy metals content. Alberta's synthetic crude normally sells at par with West Texas Intermediate, and sometimes even trades at a small premium.
|WEST TEXAS INTERMEDIATE (WTI)||SYNTHETIC CRUDE OIL (SCO)||CANADIAN LIGHT|
5 ppm Ni
15 ppm V
5 ppm Ni
8 ppm V
|US benchmark for conventional light/sweet crude||Upgraded bitumen produced from the oil sands||Conventional light/sweet from Western Canada|
ALBERTA'S UPGRADERS: SIMILAR BUT DIFFERENT
About 60% of Alberta's bitumen is diluted with condensate and sold directly to market, without an intermediary upgrading step. This Dilbit is mostly sourced from in-situ operations and two oil sands mining facilities - Imperial Oil's Kearl Lake Mine and the upcoming Fort Hills Mine.
The remaining 40% of bitumen produced from the oil sands is upgraded into synthetic crude before being sold to market. There are currently 4 operational bitumen upgraders in Alberta:
- 3 located north of Fort McMurray (Suncor, Syncrude and CNRL Horizon Upgraders)
- 1 located NE of Edmonton, AB (Shell Scotford Upgrader).
With exception of Shell's Scotford upgrader, all other upgraders are located adjacent to the mine and integrated with the Bitumen Production facility.
Nexen's Long Lake Upgrader is Alberta's only upgrader integrated into an in-situ facility. However, Long Lake was idled in the summer of 2016 after a fire crippled the upgrader. The adjacent SAGD (steam-assisted gravity drainage) facility remains operational and now produces a heavy diluted bitumen, just like most other SAGD operators in the area.
The Alberta Government has also partnered with Canadian Natural Resources to build a new 50,000 barrels per day bitumen upgrader in Sturgeon County, AB. The Sturgeon Refinery should be operational by the middle of 2018.
|BITUMEN FEEDSTOCK:||Mildred Lake & Aurora North||Base Plant, MacKay River & Firebag||Muskeg River & Jackpine||Horizon Mine||Long Lake SAGD||CNRL Cold Lake & BRIK 4|
|PUG:||carbon rejection + hydroconversion||carbon
|Fluid Coking +
|OrCrude + Solvent Deasphalting||LC-Fining|
|SUG:||hydrotreater||hydrotreater||hydrotreater||hydrotreater||hydrocracker||hydrotreater + hydrocracker|
|DETAILS ➜||DETAILS ➜||DETAILS ➜||DETAILS ➜||DETAILS ➜|