Alberta govt to construct another WCS processing refinery

[Jan van Eck + 7,558]

I had previously predicted that the Canadian government would end up pushed into building internal domestic refining capacity instead of shutting in WCS oilsands crude.  The reason is that WCS will end up priced out of international markets, and as contributor WIlliam Edwards has predicted, that would result in a shut-in of the highest cost producer, in this case Alberta.  For Canada generally, and Alberta specifically, that is an impossible result; hence, Canada would do their own and effectively create an internal captive market. 

To quote from today's Oilprice article by Irina Slav:

The fact is these production cuts are not the only bullish factor for Canadian crude. Earlier this week, Premier Notley said that Alberta planned to build a refinery in a bid to process more crude locally rather than send it by costly rail south to Gulf Coast refiners, reducing the risk of another price shock like the one that prompted the cuts.

What I had incorrectly predicted was that I calculated that the initiative would come from the Federal Govt; instead, it is coming directly from the Province itself  (whether or not they will insist on Federal participation in the capital costs is yet another thing). 

From the article, the last refinery cost 7.2 billion and is only producing 50,000 bpd of diesel.  That one is called the North Sturgeon Upgrader.  That is a ton of money; but the alternative, no customer for Canadian crude, is anathema.  I predict Canada, or the Province, will spend the money.   Probably a better investment than attempting a twinning of that pipeline to Vancouver, to deliver oil to a terminal at which there are no buyers. 

[Andrew Sun + 17]

Hey Jan, thank you for pointing this out. Please give us some much needed education.

I know Inter Pipeline is building a $3.1 billion refiner in Alberta. How does it compared to the $7.2 billion North Sturgeon Upgrader? How do they compare to the refiners already in operation from the fully integrated producers, such as ones operated by Suncor?

[Jan van Eck + 7,558]

19 hours ago, Andrew Sun said:

Hey Jan, thank you for pointing this out. Please give us some much needed education.

I know Inter Pipeline is building a $3.1 billion refiner in Alberta. How does it compared to the $7.2 billion North Sturgeon Upgrader? How do they compare to the refiners already in operation from the fully integrated producers, such as ones operated by Suncor?

Andrew, I am not tied in to the Alberta scene, I have limited connections personally there.  What I can tell you is that the North Sturgeon Upgrader is mis-named; it is not an Upgrader, it is a full-fledged refinery.  A good chunk of the output is diesel, which is used and sold internally in Alberta.  Another chunk of output is diluent, specifically intended to make it possible to send oilsands crude in diluted form down that pipeline to Vancouver Harbor in BC.  Other components include naphtha and propane, sold locally.   The refinery is so expensive because it is a seriously fancy installation, with a "carbon-capture" add-on to capture CO2, which in turn is sent down some pipeline to the mature Alberta fields down in the South, basically south of Calgary  (the North Sturgeon is maybe 40 miles outside Edmonton).  So there all these extras for several extra billion that got spent.  The feedstock is the oil collected by the Province as an extraction royalty, apparently.  

There are four existing processing refineries up and running, the North Sturgeon is the most expensive by far. I am unsure of the parameters of the Suncor unit, it may well be a simple upgrader, not a complete refinery.  You have these operational difficulties, running a refining tower in bitterly cold weather, and you need heat to do the process, so you end up using a lot more feedstock for heat than you would in say Louisiana. It is not an ideal environment to attempt to operate a refinery.  But, since there are all these problems getting the crude to some market, it looks like refineries are going to be built there nonetheless. 

Small refineries are known in Canada.  You have several quite small units, at about 15,000 bbl/day, sitting out in Newfoundland.  At one time a much larger unit was built at the time of Joey Smallwood  (premier), it was intended as a balancing refinery to be able to quickly deliver additional supplies of either diesel or gasoline to either the US or European markets. Very serious design defects were made and salt water used as coolant was left inside the towers, so it all corroded away.  I think the entire refinery ended up scrapped.  Some of the small ones are apparently still used or usable.  So there is precedent for a small 15,000 bpd installation. 

The long-planned pipeline to run from Alberta across the Northern Ontario shield and then across Quebec and into Nova Scotia for their two refineries, and to St. John New Brunswick for the Irving installation, has been panned by the current PQ premier, and even without his negativism that pipeline would have to run  on a path well beyond the old Trans Canada along the Lake Superior shore.  It would likely follow along the path of  Highway 11 through Hearst and Kapuskasing, then the PQ Route 117 past Rouyn-Noranda.  That is seriously cold country, either you heat the pipe along the run or you have to bury it, and the frost line is probably eight feet below the surface if not more.  The problem is that there is little soil; it is a thin soil layer over pre-Cambrian rock, so you have to drill and blast the whole length, then bring in sand as a bed for the pipe.  It gets seriously expensive.  It would be a lot cheaper to twin one of the rail lines and use that as a dedicated rail path, using tank cars.  But since everybody has this mindset about building pipe, that is where the conflicts will continue.

Any new refinery being built or planned to be built in Alberta will be some bare-bones affair, you can forget about carbon-capture stuff for CO2, nobody is going to spend another 1.2 billion for that.  The Sturgeon unit will provide all the CO2 needed to push the mature wells down south, so even if somebody put in a second carbon-capture unit, there would be no market for the gas.  With capital scarce, any refinery being built at this point will be done for the specific purpose of developing diesel and jetfuel.  There is a market for it right on their doorstep, and having customers motivates producers. Anyway, that's my guess.  Cheers.

[William Edwards + 708]

The major difference in our views, Jan, is quantity. Your suggestion that Canada can refine all of its crude production and move the products into the local market doesn't match the numbers. Domestic demand is on the order of 1.5 million barrels a day, while production is closing in on three times that quantity. Domestic refineries running Canadian crude now supply 1 million barrels a day of Canadian demand, leaving 3.5 million barrels a day to be handled. If you force the Eastern Canadian refineries to back out imports and run Canadian crude, regardless of cost and quality, you still have more than 2.5 million barrels a day of Canadian crude to dispose of.  Either you export it or you shut it in. If you build more gold-plated refining capacity, like the Northwest Upgrader, which actually cost more than $10 billion for 0.05 million barrels a day of product, you still have to export the product. Canadian demand has been filled in the base case.

The real problem is how Canada can compete to remain the supplier of 4.5 million barrels a day of the world's supply. You can consume only a third of that supply locally. The remainder must compete successfully with desperate sellers from all over the rest of the world to supply the non-Canadian market. Whatever quantity is not competitive, or sold at a loss, will be shut in, as Premier Notley has already implemented.

[Dan Warnick + 6,100]

53 minutes ago, William Edwards said:

The major difference in our views, Jan, is quantity. Your suggestion that Canada can refine all of its crude production and move the products into the local market doesn't match the numbers. Domestic demand is on the order of 1.5 million barrels a day, while production is closing in on three times that quantity. Domestic refineries running Canadian crude now supply 1 million barrels a day of Canadian demand, leaving 3.5 million barrels a day to be handled. If you force the Eastern Canadian refineries to back out imports and run Canadian crude, regardless of cost and quality, you still have more than 2.5 million barrels a day of Canadian crude to dispose of.  Either you export it or you shut it in. If you build more gold-plated refining capacity, like the Northwest Upgrader, which actually cost more than $10 billion for 0.05 million barrels a day of product, you still have to export the product. Canadian demand has been filled in the base case.

The real problem is how Canada can compete to remain the supplier of 4.5 million barrels a day of the world's supply. You can consume only a third of that supply locally. The remainder must compete successfully with desperate sellers from all over the rest of the world to supply the non-Canadian market. Whatever quantity is not competitive, or sold at a loss, will be shut in, as Premier Notley has already implemented.

So, you are saying you can't fit 4.5 million barrels of oil in a 1.5 million barrel bucket?   

[William Edwards + 708]

Just now, Dan Warnick said:

So, you are saying you can't fit 4.5 million barrels of oil in a 1.5 million barrel bucket?   

You said it well, Dan!

[Tom Kirkman + 8,860]

3 hours ago, Dan Warnick said:

So, you are saying you can't fit 4.5 million barrels of oil in a 1.5 million barrel bucket?   

^ this.

3 hours ago, William Edwards said:

You said it well, Dan!

^ yep.

[Jan van Eck + 7,558]

3 hours ago, Dan Warnick said:

So, you are saying you can't fit 4.5 million barrels of oil in a 1.5 million barrel bucket?   

Sure you can. 

What you fellows are all overlooking is that refined oils have other uses, displacing other sources.  

Specifically, Canada has always had a thriving plastics industry.  While there is one manufacture of plastics resins inside Canada, a large volume is imported, there to be converted by processors into finished products:  auto parts by injection molding, blow molding of bottles, resins casting, even rotational molding of large objects such as marine paddle-boards.  You can displace these imports of resins by using domestic oils for base feedstocks.

There are others.  Quite a bit of heating, especially in Quebec, is done electrically, because of a devalued price.  There is nothing to stop displacing electric baseboard heating with oil heat, and the electricity sold in the US export market.  It requires re-jiggering of price signals, but it is not as if that cannot be accomplished. 

Further, yet another large market for Canadian crude, converted into diesel, is marine.  There is quite a bit of shipping into the Canadian ports of Vancouver, Montreal and Halifax  (plus a lot of secondary ports that handle bulk cargoes).  As the Canadian currency is devalued relative to the dollar, there is and will be effective 2020 a large market for marine diesel.  Right now Trans-Atlantic ships into Canada will fuel up in the bunker port of Rotterdam, but that trade is about to undergo a tectonic shift as bunker becomes an obsolete fuel. 

Another prime market for Canadian refined is aircraft jetfuel.  The jetfuel business  (and its piston equivalent, 100LL) is arcane, while there are a very few refineries that specialize in jetfuel and 100LL, it remains an outlier, and there is nothing to stop grabbing market share, and all of the Canadian share, of jetfuel, an expanding product.  

A further market is the production of naptha.  This is an interesting feedstock for a variety of other products, and again, remember that as long as the Canadian Dollar is floating at a discount of 1/3 off the US Dollar, the Canadian products have a built-in costing edge, and the savvy seller can snap off nice chunks of market share.  Plus, a cheap feedstock will allow for the development of downstream industries to absorb production of naptha. 

You can fit 4.5 million barrels into a 1.5 million barrel bucket - if you make the bucket larger.  It takes a broader mindset.  Production is not a zero-sum game.  Cheers. 

[Jan van Eck + 7,558]

4 hours ago, William Edwards said:

The major difference in our views, Jan, is quantity. Your suggestion that Canada can refine all of its crude production and move the products into the local market doesn't match the numbers. Domestic demand is on the order of 1.5 million barrels a day, while production is closing in on three times that quantity.

William, I have responded at length on this in a responsive post to Dan.  Check around for it. Cheers.

[William Edwards + 708]

1 minute ago, Jan van Eck said:

William, I have responded at length on this in a responsive post to Dan.  Check around for it. Cheers.

I read it, Jan. I still think that you are still about five years and 2 million barres a day short of full replacement. Thanks for your thoughts though. Production shut-in is much quicker and more effective.

[Jan van Eck + 7,558]

1 minute ago, William Edwards said:

I read it, Jan. I still think that you are still about five years and 2 million barres a day short of full replacement. Thanks for your thoughts though. Production shut-in is much quicker and more effective.

All true. By the same token, a manufacturer is more rapidly served by production shut-in of his factory products than to get out there and hustle for new business.  Historically, I have never shut down a production line.  If I find I have excess capacity of a product, I get off my duff and go find new customers for that product.  It is called "sales."   It seems to be a lost art. 

[William Edwards + 708]

1 minute ago, Jan van Eck said:

All true. By the same token, a manufacturer is more rapidly served by production shut-in of his factory products than to get out there and hustle for new business.  Historically, I have never shut down a production line.  If I find I have excess capacity of a product, I get off my duff and go find new customers for that product.  It is called "sales."   It seems to be a lost art. 

I completely agree, Jan. What Alberta needs to do is recognize the competitive challenge, develop an understanding of the scope of the problem, and get off their duff and start working the problem. Actually, I have been trying to get that message through their skulls for more than five years. Their skulls are too dense, it would seem.

[Tom Kirkman + 8,860]

5 hours ago, William Edwards said:

I completely agree, Jan. What Alberta needs to do is recognize the competitive challenge, develop an understanding of the scope of the problem, and get off their duff and start working the problem. Actually, I have been trying to get that message through their skulls for more than five years. Their skulls are too dense, it would seem.

 

[William Edwards + 708]

1 hour ago, mthebold said:

 

As I read this, I get the impression I'm watching how the old masters did business in a more fluid, competitive market.

I like it.  How do I learn more?

Keep reading, thinking and separating fact (real world data)  from fiction (speculative impulses and comments).

[Chips Reid + 6]

I have lived and worked in the oil industry in Alberta for many years and am retired since 2006. But, Rachel Notley is doing what anyone in her position as the first non conservative Premier after 44 years!

Here is what she is doing IMHO. Promoting the refining despite the huge costs and time to market. It will not fly today but could when the companies have the capital . It's a long shot for any company to spend so much now. 

What I would like you guys to comment on is UPGRADERS . There had been several shelved also due to our high capital costs.

The new technology which should roll out soon is PARTIAL UPGRADING (PU) .The AB government has provided a billion in 5 years for this to be completed and have, in September  already, received bids from current and future experimenters. All will have to be and will be possible at a much lower capital cost. Advantages of PU are numerous. 30 percent more pipeline space is the most obvious.

What have you guys heard about this? Anything?

let's discuss 

[Jan van Eck + 7,558]

9 hours ago, mthebold said:

 

As I read this, I get the impression I'm watching how the old masters did business in a more fluid, competitive market.

I like it.  How do I learn more?

Paul, making money is an art form, it is not learned in some MBA school, that is a charade.  The art, or skill, of making money is a bit like the old guild systems of the Medieval Period.  It is an (unspoken) skill set that remains with the previous generation, and is passed on from father to son.  The art form is learned, and by definition is totally elitist. And that is why it is so in disrepute in a society that has adopted the rationalizations of being a meritocracy, which is where the USA and Canada are today. 

Going with membership in the club that understands the art of making money is an understanding that one is privileged, yet another concept that is held in scorn in the meritocracy.  Yet, in the old school, the privileged understood that those privileges also encompassed deep social obligations.  Those obligations included charity, where the rich, the successful members of the Guild, would support by large gifts of that money various social projects that governments either would not or could not.  Some obvious examples of noblesse oblige are in the huge gifts handed to The Metropolitan Museum of Art,  where very rich have donated entire building wings on their nickel.  You will see large contributions to all manner of charitable programs, and of course to elitist universities.  It is not for nothing that the Endowment of Harvard is running at about $35 billion. 

One of the major structural problems in today's societies, and you get this around the globe, is that the very rigid parameters of the memberships of these money guilds have broken down.  You still see it in some places;  I went to a very exclusive and elite prep school as a youth, and one classmate of mine recently paid for two new buildings on the campus, each at $50 million.  He just writes the check. What this does is allow the next generation of the money makers be ell educated, in areas both of basic science and of old-master literature and philosophy, and that is well before college, this is at the high-school level.  So the sons of the old money-makers always have a massive advantage over everybody else, they not only learn from their own fathers the art of making money, but also grow up in an environment where literally everyone they are with is from the same group.  And the values of that old school are thus passed forward, including the value of the obligation of sharing, of philanthropy, and of obligation. 

Unfortunately the social shift to Meritocracy is wrecking that value system, and now you see the phenomenon of the Oligarchs, especially in places such as Russia, Ukraine, China, Mexico.  These are smart people who have picked up on some of the concepts of making money but, because they never grew up in the Guild Society, have no corollary sense of social obligation.  It is a profound form of selfishness that the Old School leadership would not recognize.  Today much of the problems in American society flow from the loss of the sense of social obligation that the previous generations of money makers had.  The new view, of the meritocrats, is that "government" and its own legions of meritocrats will be the entity responsible for social mattes - not only the art galleries and the libraries, not only the schools, but all charities and all philanthropic operations.  And that will be supported by taxes - which end up falling on the poorer economic groups, simply because the rich have the legions of tax attorneys who have the technical skills to ensure that they pay little to nothing. 

The reality is that the meritocrats of the government have no ability to fund, or operate, these social endeavors, so society ends up cracking, and that is what you new see in America  (and Canada, although a bit less, as Canada is much tighter in the cohesiveness of the money class).  The reaction is that the "others,", everybody outside the money guild, ends up worse off, and their children are worse off, and society starts to drift apart into camps.  From there, you end up with political disruption, and you see the results in the Trump election and the fractures in France.  There are other elements that have badly disrupted the old order, but that goes beyond what I would describe here and is massively politically incorrect, so I won't go there publicly. Interestingly the guys of the making-money crowd were not particularly greedy; all they wanted from society was a comfortable income stream, the inheritance of the family's estate in the rich enclave they grew up in, and a nice sailboat or motor yacht.  For the rest,they and their wives would indulge in the charities the proliferated in those communities.  Today, the meritocrats that have crashed the money group have become grotesque caricatures, with 230-foot yachts and 100-million-dollar mansions,and behave very badly, especially in their divorces. They think they are part of the old-money crowd,but are not, and they horrify the Old School by their behavior. 

I don't have any solutions to this, other than the fall-back to the private mottos of the old school.  My own is:

The Cultivation of General Literature and Social Culture, the Advancement and Encouragement of Intellectual Excellence, the Promotion of Honorable Friendship and Useful Citizenship, the Development of a Spirit of Tolerance and Respect for the Rights and Views of Others, the Maintenance of Gentlemanly Dignity, Self-Respect, and Morality in All Circumstances, and the Union of Stout Hearts and Kindred Interests to Secure to Merit its Due Reward.

 

[William Edwards + 708]

1 hour ago, Chips Reid said:

I have lived and worked in the oil industry in Alberta for many years and am retired since 2006. But, Rachel Notley is doing what anyone in her position as the first non conservative Premier after 44 years!

Here is what she is doing IMHO. Promoting the refining despite the huge costs and time to market. It will not fly today but could when the companies have the capital . It's a long shot for any company to spend so much now. 

What I would like you guys to comment on is UPGRADERS . There had been several shelved also due to our high capital costs.

The new technology which should roll out soon is PARTIAL UPGRADING (PU) .The AB government has provided a billion in 5 years for this to be completed and have, in September  already, received bids from current and future experimenters. All will have to be and will be possible at a much lower capital cost. Advantages of PU are numerous. 30 percent more pipeline space is the most obvious.

What have you guys heard about this? Anything?

let's discuss 

You are on to something, Chips. Now if Canada's government and industry leaders can absorb the insight that you have displayed, possibly there is a light at the end of the IMO 2020 tunnel.

The simplest, most economical method -- available today -- for transforming bitumen into a desirable, sale-able product is physical separation of the coal-like asphaltenes from the oil sands crude stream. Technology is currently being employed in China that does just that. It separates bitumen into two streams -- a granular solid that contains all the asphaltenes and a low viscosity, pump-able liquid phase that can be hydro-treated to remove the sulfur component. That resulting oil stream then has diesel value since it can then be used directly as the new low sulfur marine fuel required by the IMO 2020 regulation. In a real sense, you get the same refining value upgrade for bitumen that you get in the Northwest upgrader at about one-fifth the cost. The dry, inert solid asphaltenes can be re-injected into the mine for carbon sequestration or stored, much as the current coke piles, for later utilization.

This technology is proven and is being commercially operated right now. It is available for license. The missing step is for the industry to click in to the fact that this solution is obvious and available and, most importantly, can be installed quickly. It simply needs to be recognized and implemented.

In early 2013 I compared CAPP's projection of expected oil sands production with the projection of expected refining capacity, worldwide, to process this unique feedstock. The numbers showed definitively that the available processing capacity would be insufficient even before the expected IMO sulfur reduction occurred. I presented my forward assessment for the Canadian bitumen industry to a major oil sands producer with the recommendation that they shift all of their capital spending from production increases to oil sands treatment. I specifically recommended using the asphaltene removal technology of the Chinese. My recommendation was rejected. The recent production shut-ins by this company, both voluntary and government mandated, plus the ultra-low stock price, are the logical result of doing the wrong thing in the face of easy-to-understand arithmetic -- arithmetic results that were opposed to management wishes. 

If someone can come up with a means for getting this message into the heads of the industry leaders, then Canada, and even OPEC, will be forever appreciative. You see, the in about a year from now Canadian producers become "desperate sellers" to the world market, in the same vein as the recent pipeline-restricted producers were in Canada. Remember the $50/B discounts? Now apply that same mechanism to the global crude market and the price of Saudi Light crude. Not a pretty picture!

Rocket science is not required to grasp what I have described. An intelligent, open mind is all that is needed. Canadian producer CEO's --  are you listening?

Edited December 16, 2018 by William Edwards

[Jan van Eck + 7,558]

34 minutes ago, William Edwards said:

 

Rocket science is not required to grasp what I have described. An intelligent, open mind is all that is needed. Canadian producer CEO's --  are you listening?

Probably not.  And the reason why is captured in the phrase:  "Not invented here."  

You are not part of the management team inside that client.  When you say things that they have not figured out, they your results are "not invented here."  Remember: consultants are not hired to take a fresh look at whatever problem is before them.  They are hired to validate the pre-conceived ideas of internal management  (and, I would say cynically, to make management look like super-stars to the Board of Directors).  

I do have one question.  Why are the solids, the asphaltenes, not immediately marketable as a road-building material  (asphalt)?  Is there a technical or market barrier?  Just curious. 

[William Edwards + 708]

13 minutes ago, Jan van Eck said:

Probably not.  And the reason why is captured in the phrase:  "Not invented here."  

You are not part of the management team inside that client.  When you say things that they have not figured out, they your results are "not invented here."  Remember: consultants are not hired to take a fresh look at whatever problem is before them.  They are hired to validate the pre-conceived ideas of internal management  (and, I would say cynically, to make management look like super-stars to the Board of Directors).  

I do have one question.  Why are the solids, the asphaltenes, not immediately marketable as a road-building material  (asphalt)?  Is there a technical or market barrier?  Just curious. 

Thanks, Jan. I well understand the NIH concept and recognize its ubiquity. But I suspect there is more at work here. It goes back to the basic deficiency of the petroleum industry -- the lack of understanding of the "business" of oil. The industry is run, mostly, by people with an engineering mindset. And they do a great job of addressing engineering-type challenges (amenable to calculation). You tell them to figure out how to get oil sands out of the ground, and they do it! But oftentimes the missing ingredient, business judgement, is missing because it is not subject to simplistic quantification. Thus the necessary economic judgement is missing.

There is one other large component at play here. The structure of large corporations "protect" top management from new, good ideas. Most have in place a screener to decide what new information reaches the top executive. Thus it is the screener's knowledge and ability that makes the decisions on new thoughts, not the CEO. And a low level screener is not necessarily the one in the corporation with the best business judgement. But is is almost impossible to circumvent the screener in trying to communicate with top management -- unless you know someone.

To answer your question -- yes, the asphaltenes can be used for road building by back-blending it with appropriate oils. It is a matter of economics. After all, Fort McMurray is still a long transportation distance from the consumer.

Edited December 16, 2018 by William Edwards

[Jan van Eck + 7,558]

4 minutes ago, William Edwards said:

But oftentimes the missing ingredient, business judgement, is missing because it is not subject to simplistic quantification. Thus the necessary economic judgement is missing.

 

You do have to wonder how much of that, the "business judgment" factor, is at work in other industries.  I watch the disintegration of the greatest manufacturing juggernaut of America, the General Electric Corporation, and you ask:  How is it possible that such a vaunted enterprise can so totally screw it up?  

And you look at Sears, Roebuck, the outfit that developed the sale-by-mail-order model, and once again, Amazon beats them to a pulp.  How can a business that is built on that sales model so totally screw it up?  

Astonishing stuff.  then again, the Canadian Govt just paid out $4.5 billion for an old pipeline that seems to be pumping oil to nowhere.  Bad business judgments is getting endemic. 

[William Edwards + 708]

1 minute ago, Jan van Eck said:

You do have to wonder how much of that, the "business judgment" factor, is at work in other industries.  I watch the disintegration of the greatest manufacturing juggernaut of America, the General Electric Corporation, and you ask:  How is it possible that such a vaunted enterprise can so totally screw it up?  

And you look at Sears, Roebuck, the outfit that developed the sale-by-mail-order model, and once again, Amazon beats them to a pulp.  How can a business that is built on that sales model so totally screw it up?  

Astonishing stuff.  then again, the Canadian Govt just paid out $4.5 billion for an old pipeline that seems to be pumping oil to nowhere.  Bad business judgments is getting endemic. 

I point much of the blame to the substitution of the trading mentality for real world thinking. Unfortunately, real world fundamentals have been displaced by the trading mentality since derivative trading now is the price setter. Reality has a tough time making itself felt. But eventually reality prevails, and everyone is shocked and says "I didn't see it coming"

Keep you eye on the real ball, not the trading illusion.

[Jan van Eck + 7,558]

Just now, William Edwards said:

Keep you eye on the real ball, not the trading illusion.

All true.

Getting back to the asphaltene matter,  if it can be back-blended into a nice asphalt, then I see a market.  OK, so the stuff is used as a very hot liquid, it does not have to be shipped that way.  Lets say the stuff can be solidified into the shape equivalent of the 50-lb bag, palletized, and shrink-wrapped as cold asphalt.  then it can be handled as pallet freight and shipped in ordinary boxcars by rail, you don't need special hopper cars or tank cars and external heaters to do a flow unload.  A forklift truck can load and unload, a ton at a time, on pallets. 

When packaged that way, it can be shipped cheaply for long distances.  As the raw material is waste, the effective cost is quite low - the cost of the back-blending, and the packaging. The solids themselves cost zero. Actually, less than zero, as otherwise you have this disposal of waste costs.  You would pour the material into aluminum molds at the blending plant, cool, and you have logs of asphalt, that can be easily stacked and shrink-wrapped.  You sell a trainload to say the City of Philadelphia to go fix their potholes.  Right now the city of Kansas City, Kansas is busy tearing up their old outlier streets and letting them go back to dirt because they don't have the money to rebuild them properly.  Cheap asphalt in bulk would resolve those types of issues. Am I missing something?  

[William Edwards + 708]

2 minutes ago, Jan van Eck said:

All true.

Getting back to the asphaltene matter,  if it can be back-blended into a nice asphalt, then I see a market.  OK, so the stuff is used as a very hot liquid, it does not have to be shipped that way.  Lets say the stuff can be solidified into the shape equivalent of the 50-lb bag, palletized, and shrink-wrapped as cold asphalt.  then it can be handled as pallet freight and shipped in ordinary boxcars by rail, you don't need special hopper cars or tank cars and external heaters to do a flow unload.  A forklift truck can load and unload, a ton at a time, on pallets. 

When packaged that way, it can be shipped cheaply for long distances.  As the raw material is waste, the effective cost is quite low - the cost of the back-blending, and the packaging. The solids themselves cost zero. Actually, less than zero, as otherwise you have this disposal of waste costs.  You would pour the material into aluminum molds at the blending plant, cool, and you have logs of asphalt, that can be easily stacked and shrink-wrapped.  You sell a trainload to say the City of Philadelphia to go fix their potholes.  Right now the city of Kansas City, Kansas is busy tearing up their old outlier streets and letting them go back to dirt because they don't have the money to rebuild them properly.  Cheap asphalt in bulk would resolve those types of issues. Am I missing something?  

I think that the elements of your scheme are sound. But you might improve the economics by shipping the already-in-pallet-bags of the solid asphaltene to a re-blending plant much closer to the end user. Much like what is done with cement and concrete mixing. 

Now, can you arrange financing for development of your idea? If so, I can help.

[Jan van Eck + 7,558]

1 minute ago, William Edwards said:

I think that the elements of your scheme are sound. But you might improve the economics by shipping the already-in-pallet-bags of the solid asphaltene to a re-blending plant much closer to the end user. Much like what is done with cement and concrete mixing. 

Now, can you arrange financing for development of your idea? If so, I can help.

William, that is a big-bucks undertaking.  And at this point, the Canadians have not (yet) cottoned on to the idea of doing the Chinese steam separation thingy, as there is not even the separated stream of waste material in the first place!

[William Edwards + 708]

18 minutes ago, Jan van Eck said:

William, that is a big-bucks undertaking.  And at this point, the Canadians have not (yet) cottoned on to the idea of doing the Chinese steam separation thingy, as there is not even the separated stream of waste material in the first place!

I understand, Jan. The first step is commitment to asphaltene removal. But the strict and unalterable timing requirements of the IMO 2020 regulation change dictate a prompt undertaking by Canada or "forget oil sands producers". The asphalt scheme must follow, as you suggest, but development of that idea will take longer than implementation of asphaltene removal, which has a deadline. So it is not too early to begin thinking asphalt implementation, if you are serious.