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Hearing for Total Fort Sask. Coker/Upgrader

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    Mrityunjay Singh
    Participant

    Hearing kick-starts delayed upgrader
    By Dave Cooper, Edmonton Journal
    May 29, 2010

    Photo Caption: State-owned Petrocedeno’s Jose upgrader complex in eastern Venezuela, which has an output of 180,000 barrels per day of synthetic crude, was built by Total and will be replicated in the Heartland upgrader proposed for the Fort Saskatchewan area.

    EDMONTON – Three years after proposing a bitumen upgrader for the Fort Saskatchewan area, French oil giant Total’s Canadian arm will seek a green light on Tuesday from the Energy Resources Conservation Board.

    The Total public hearing, the first in three years for an upgrader in a region that once hoped to have a half-dozen projects underway by now, is expected to attract a range of opponents.

    The promised construction boom was shelved after oil prices plunged along with the global economy, and only the Shell upgrader expansion at Scotford — now almost complete — was built.

    But that could soon change. Total’s 150,000-barrel-per-day upgrader would closely resemble one it constructed in Venezuela several years ago. But construction likely won’t begin for a couple of years.

    By that time, North West Upgrading’s $5-billion project near Redwater is likely to be well underway. NWU is in negotiations with the province to handle its bitumen collected under the Bitumen Royalty In Kind program

    Total doesn’t specify construction costs, but notes the direct contribution to the economy from its project is expected to be in the $7 billion to $9 billion range.

    The project has the support of local municipalities and businesses, but is opposed by some nearby residents, the Citizens for Responsible Development and environmental groups. Opponents have organized a Heartland Reality Tour for today to show the “social, health and environmental costs of industrial development in Edmonton’s backyard.”

    For Total E&P Canada president Jean-Michel Gires, it will be his second time building an upgrader.

    “I was in charge of that (Venezuelan) project, and I suppose it is one of the arguments for why I am here,” he said in an interview. He was named president for Canada last fall.

    “The Venezuelan and Albertan bitumen is quite similar, and the upgrading processes are about the same, so we can rely on the same delayed coker approach, the same type of hydro-cracking and hydro treatments.”

    Gires said the Venezuelan experience has allowed Total to “draw all the lessons from there and improve the design” of the Heartland project.

    The Venezuela experience gives the company more confidence in the Alberta project, he added.

    Unlike the nearby Shell upgrader and proposed North West Upgrading plant, Total’s method will produce petroleum coke that must be stored on-site temporarily. Plants in Fort McMurray are allowed to bury their coke.

    “We have rail (connections) and can move the coke to coal-fired power plants, where it can be mixed with coal. Those plants are equipped to desulphurize the fumes (emissions), so you have a pretty accessible market,” Gires said.

    Total plans to develop the upgrader as part of its Alberta energy portfolio. It recently announced a major expansion of its Surmont steam-assisted gravity drainage (SAGD) joint venture, and will be seeking approval of its Joslyn North mine project next year.

    All three are planned to advance together. And while the firm has said a sustained crude price of $80 US a barrel is needed to justify its mine and upgrader, Gires takes a long-term view.

    “We expect in the future the price will be healthy enough to justify the economics of such projects. We have pretty ambitious plans for the portfolio, and we feel that some level of upgrading is needed.”

    However, while Total would prefer that its upgrader handle most of its Alberta bitumen production, it does have refineries in Chicago and Texas, and Gires said using them instead of an upgrader is always an option.

    “We expect that by 2020 the crude price will be sustained at a much healthier level, and the refining margins as well.

    “The consequence of the very severe crisis today is low demand and a low price differential. We are taking the long-term view, but in the short term, it would be very difficult to justify upgrading,” Gires said.

    Total is a leader in carbon dioxide capture and storage research in France, and has joined the Heartland Area Research Project (HARP) into CO2 injection of the Redwater reef. Gires expects CO2 emissions from the upgrader will be captured, although details haven’t be worked out.

    Total aims to spend up to $20 billion and create 1,000 permanent jobs over the next 10 to 15 years at its Surmont, Joslyn mine and Heartland upgrader projects.

    dcooper@thejournal.canwest.com

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