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. Heavy complex hydrocarbons require more energy to break down and separate into higher-value (lighter) final products. About 40% of Alberta's bitumen is therefore upgraded into a lighter, higher-value crude oil before being shipped to downstream refineries for further processing.
Upgrading is a process by which bitumen is transformed into an intermediate crude oil product by fractionation and chemical treatment. This improves the quality of the petroleum, reducing its viscosity and sulfur content. The process of upgrading can be broken down into 4 basic steps:
- The hydrogen to carbon ratio (H:C) is improved either through carbon rejection (coking) or by adding hydrogen (hydroconversion). A higher H:C ratio is indicative of a higher quality crude oil.
- The low-value heavy portion of the bitumen is converted into higher-value lighter hydrocarbons. This can be done through:
- fractionation (or distillation) where the different crude oils are separated by boiling point, and
- cracking, where the complex heavy hydrocarbons are broken down into shorter-chain, simpler hydrocarbon molecules.
- Sulphur and nitrogen are removed (producing hydrogen sulphide and ammonia) during the process of catalytic hydrotreating. Removing these impurities enhances the quality of the final crude oil product.
- The different liquid fractions produced by the upgrader are then blended together to produce the desired crude oil product specification. This higher-value Synthetic Crude Oil (or SCO) is then shipped to the downstream refineries.
There are currently 5 bitumen upgraders in Alberta:
- 3 located north of Fort McMurray (Suncor, Syncrude and CNRL Horizon Upgraders )
- 1 located south of Fort McMurray (Nexen Long Lake Upgrader), and
- 1 located NE of Edmonton, AB (Shell Scotford Upgrader).
With exception of Shell's Scotford upgrader, all other upgraders are located adjacent to the Bitumen Production plant. 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 late 2017.
It is important to note that not all bitumen produced from the oil sands is upgraded into synthetic crude oil (SCO). Higher quality bitumen (containing less than 0.5% water and solids) can be diluted with condensate or diluent and pipelined directly to high-conversion refineries which have the capacity to handle crude oil, provided the asphaltene content is below 10%. Mined bitumen processed in a paraffinic froth treatment plant falls into this category, as does most in-situ production.
Currently, about 60% of Alberta's bitumen is sold directly to refineries without being upgraded to SCO. As more and more refineries in North America convert to heavy/sour feedstock, there is less demand for stand-alone bitumen upgrading. The economics of upgrading therefore lies in the price differential between diluted bitumen and SCO. A new upgrader requires a light/heavy price spread of about $25 per barrel in order to be economically viable. Aside from considerable capital and operation costs, upgraders also produce greenhouse gases, which adds to the carbon intensity of the crude. This is why many oil sands players are opting to produce a better quality bitumen and sell their product directly to refineries without upgrading to SCO.
CANADIAN NATURAL RESOURCES LTD.
|Long Lake 2|
NORTH WEST REDWATER PARTNERSHIP
|Sturgeon Refinery 3|
|Mildred Lake & UE1|
|TOTAL UPGRADING CAPACITY 4|
3 UNDER CONSTRUCTION
4 ALBERTA ONLY; EXCL. SK HEAVY OIL UPGRADERS