From upgrader to refinery to partial-upgrader: Value Creation hopes to revive Heartland Complex

From upgrader to refinery to partial-upgrader: Value Creation hopes to revive Heartland Complex

Privately-held Value Creation has asked the Alberta government for help financing a 77,500 bbl/day partial upgrader, dangling the prospects of 2,000 new construction jobs in the Edmonton area.

The plant has an estimated capital cost of $2 billion, and is advertised as being 16% less GHG-emission intensive per barrel than "current processes used to extract bitumen," although exact metrics were not specified.

The province has offered a $440 million loan guarantee, as part of more than $3 billion in taxpayer funds being made available for companies willing to invest in energy diversification projects, such as partial upgrading, refining and petrochemical processing.

A small company with a big history

The project, formerly known as the BA Energy Heartland Upgrader, was approved by the Alberta Energy Regulator (AER) back in 2005. 

The company had regulatory approvals in place for 260,000 bbl/day of upgrading capacity, using its proprietary ADC™ (Accelerated De-Contamination) and COC™ (Clean Oil Cracking) technologies, removing asphaltenes from the bitumen and producing a medium-grade crude. The company embarked on construction of the first phase of 77,500 bbl/day, located just northeast of Shell's Scotford Refinery in Strathcona County, Alberta.

BA Energy was later purchased by Value Creation Inc. (VCI) in 2007, who stalled on construction due to rising costs. The $4 billion Heartland Upgrader was abandoned in the fall of 2008 amidst the global collapse of financial markets. Value Creation then filed for bankruptcy after it was unable to pay back its loans, selling off some of its equipment through a court-ordered auction.

From upgrading to refining

Fast forward to 2014, the company then decided to pivot from upgrading to refining, filing an amendment with the AER to add refining capacity to its facility. The plant would now be designed to produce ultra-low sulphur diesel, hydrotreated naphtha, and premium synthetic crude oil. 

Echoing a similar sentiment from the North West Upgrader, which was later rebranded as the Sturgeon Refinery, VCI said the changes were "in keeping with the Alberta Government’s desire for more value-added processing within the province." 

The AER approved VCI's application in the spring of last year. The Heartland Upgrader then became the Heartland Processing Plant. 

VCI pivots once more

VCI is now proposing to build a 77,500 bbl/day partial upgrader, to be named the Value Chain Solutions Heartland Complex. Unlike conventional upgraders, which produce light synthetic crude, VCI's partial upgrader would produce medium synthetic crude, along with ultra-low sulphur diesel. 

"Medium grade" crude is technically any crude with an API density greater than 22°, although anything lighter than 19° could be shipped by pipeline without the use of diluent. Bitumen produced from the oil sands, either by mining or in-situ, has an API density of less than 10°, making it too dense (or viscous) to be shipped without copious volumes of diluent. This diluent takes up precious pipeline capacity, putting additional strain on existing infrastructure.

The company says design work is nearly complete, leveraging off some of the infrastructure that was constructed pre-2008. Value Creation says it expects to make a final investment decision later this year. If all goes according to plan, the facility could be operational by 2022, and would be the first commercial-scale partial upgrader in the world.

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