July 10, 2008 at 1:51 pm #3540
UPDATE:Shell:Could Upgrade Canada Oil Sands At US Refineries
July 08, 2008: 01:17 PM EST
CALGARY -(Dow Jones)- Royal Dutch Shell PLC (RDSA) is considering shipping oil sands crude from its Alberta project to be processed at its U.S. refineries on the west or Gulf coasts, a senior executive said Tuesday.
Speaking to reporters in Calgary, Shell Canada Country Chair David Collyer said the company could upgrade extra bitumen from a proposed expansion at its Athabasca Oil Sands Project into refinery-ready crude in the U.S., rather than go ahead with a potential C$27 billion expansion at its Alberta-based facility.
A year ago, Shell made a regulatory application to build a 400,000 barrel-a- day upgrader, which processes the sludgy oil sands bitumen into a crude more easily handled by refineries, next to its existing Scotford upgrading and refining complex near Edmonton, central Alberta.
If Shell chooses to scrap the upgrader, it would likely ship the bitumen to its 165,000 barrel-a-day Martinez, Calif., refinery and Deer Park, Texas, refinery, Collyer said. Both facilities would need to be modified to process the bitumen, he added.
The 340,000 barrel-a-day Deer Park refinery is a joint venture with Mexico state-owned Petroleos Mexicanos, or Pemex, which also partly supplies the facility. Mexican financial news service Infocel reported Monday that Pemex has cut Deer Park supplies by 15% as Mexico’s crude output slumps, prioritizing the domestic refining network over foreign clients. Shell is receiving Mexican crude at or above contracted levels, a spokesman said, adding that it also buys crude from other sources.
Existing pipeline infrastructure between Alberta and its biggest customer leads primarily to the U.S. Midwest, but pipeline firms have proposed options to reach new markets, especially the Gulf coast refining hub. Kinder Morgan Energy Partners (KMP) and Enbridge Inc. (ENB) have also proposed new pipelines or expansions to Canada’s west coast.
Shell is “always talking” to pipeline firms about new projects, Collyer said ” but we haven’t locked in a specific option.” The company could also go for a combination of building a smaller upgrading facility and exporting bitumen, Collyer said.
Shell operates and holds the majority 60% working interest in the Athabasca Oil Sands Project, along with partners Chevron Corp. (CVX) and Marathon Oil Corp. (MRO), which each hold 20%. It currently comprises the 155,000-barrels-a- day Muskeg River Mine and the 155,000-barrels-a-day Scotford Upgrader, but an ambitious multi-billion expansion project is already under way.
Both the mine and the existing upgrader are being expanded by 100,000 barrels a day, and eventual bitumen output could hit 770,000 barrels a day.
If it goes ahead, the proposed Scotford Upgrader 2 would be built in four 100, 000 barrel-a-day phases but these will likely happen later than initially planned due to regulatory delays, Collyer said.
“The earliest that we would expect to get through the regulatory process would be late 2009,” he said.
Construction had been slated to start in 2009, with the first phase onstream as early as 2012, according to the regulatory document.
-By Hyun Young Lee, Dow Jones Newswires; 613-237-0669; hyunyoung.lee@ dowjones.com
July 10, 2008 at 1:54 pm #6727
Shell is looking at Scrapping or down-sizing 400 MBD Scotford Upgrader (2) near Edmonton & re-routing Bitumen crude to Deer Park &/or Martinez. Shell Deer Park runs Mexico Mayan crude but supply was recently cut by 15% due Pemex production problems. (see coking.com post – coker section)
Some of this could be negotiation strategy or leverage against Pemex crude cuts but slumping crude production is real issue and will likely continue until Mexico opens exploration up to foreign investors who have the needed technology. And if the New Pemex Grassroots refinery goes into construction – eventually its crude demands could prompt additional round cuts to Refinery JV’s in US.
Recent news also indicates that Shell has canceled its plans for new Canadian refinery in Sarnia.
Perhaps these are both reactions to uncertainty over Canada’s New Royalty tariff, proposed Carbon Taxes, New Environmental attacks cancel Oil Sands use US, and renewed emissions push on Kyoto failures, combined with near term crude supply exposure in its larger coastal refineries. <see coking.com post Dec 17 – upgrader section>
July 11, 2008 at 11:41 pm #6724
Website intro section for News item: Enbridge Triples Cost Estimate for Pipeline Project (Update2)
Bloomberg.com – Jul 09 1:34 PM
July 9 (Bloomberg) — Enbridge Inc. , Canada’s largest pipeline company, more than tripled the estimated cost of a proposal to help transport output from Alberta’s oil sands
Enbridge May Spend C$350 Million on Pipeline Project (Update3)
By Ian McKinnon
July 9 (Bloomberg) — Enbridge Inc., Canada’s largest pipeline company may spend about C$350 million ($346.3 million) to help transport output from Alberta’s oil sands to refineries in central Canada and the U.S.
The Trailbreaker project might start moving about 230,000 barrels of oil a day by mid-2010, Executive Vice President Al Monaco told reporters today at a Calgary conference organized by Toronto-Dominion Bank.
The project includes reversing the flow on an Enbridge pipeline running to Montreal from Sarnia, Ontario, and using a conduit owned by Portland-Montreal Pipe Line to move the oil to a port in Maine for shipment by tanker to U.S. refineries along the Gulf of Mexico, Monaco said.
“It really provides a good near-term solution to get to market quickly,” he said. “The fact that it’s existing infrastructure makes it fairly straightforward to do.”
Enbridge and TransCanada Corp., both based in Calgary, have proposed larger and more expensive projects to move oil-sands output to the U.S. Gulf Coast, home to about half of the nation’s refining capacity.
In March, Enbridge Chief Executive Officer Pat Daniel pegged the cost of reversing Enbridge’s so-called Line 9 about C$100 million.
The higher cost estimate for Trailbreaker includes building two storage tanks, each capable of holding 150,000 barrels, in Stockbridge, Michigan, Enbridge spokeswoman Jennifer Varey said in a telephone interview.
The proposed pipeline project might also supply refineries in Montreal owned by Petro-Canada and Royal Dutch Shell Plc, Monaco said. “Our view is that 150,000 barrels a day would find its way down to the U.S. Gulf Coast and probably 80,000 would stay in the Montreal refinery area.”
The company is still discussing the project with potential shippers, Monaco said without elaborating.
Enbridge fell 52 cents, or 1.2 percent, to C$41.28 on the Toronto Stock Exchange. The stock has gained 14 percent in the past year.
To contact the reporter on this story: Ian McKinnon in Calgary at firstname.lastname@example.org; Last Updated: July 9, 2008 17:30 EDT
July 11, 2008 at 11:45 pm #6723
Here is update on the Enbridge P/L project to move 230 MBD Canada Bitumen Crude by mid 2010. The cost have tripled partly because an option has been added for 2 150MB tanks at Michigan to enable crude to move by ship to US Gulf Coast (Shell Deer Park potential) in addition to deliveries in Montreal Refineries like Shell’s.
This Gulf option seems to jive with Shell option to lower Scotsford Upgrader (2) & move Bitumen crude to Shell Deer Park Refinery and it mentions Shell Canada Refinery is one KM’s customers in Montreal area.
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