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Alberta govt to construct another WCS processing refinery

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7 hours ago, Jan van Eck said:

I would disagree in part with the analysis of William Edwards.  It is my view, and I have nothing to substantiate it except my dour and cynical view of international regulatory agencies, that IMO 2020 will end up with the oil equivalent of "waivers."  The marine industry is simply not ready for a wholesale switchover to low-sulfur, or ultra-low sulfur, fuels.  There are no scrubbers being put on existing boats.  Everyone is taking the attitude that fuel problems need to be sorted  out outside the ship, that the delivery of the fuel has to meet specifications before it is loaded on board.  Meanwhile the refiners are not up to speed to provide the necessary quantities, unless you divert from truck diesel, generator diesel, jetfuel, and agricultural diesel.  And that is not going to happen.

So the real issue is:  will outlier fuelling ports, say  in Africa, simply cheat?  Will China cheat?  Will Singapore cheat?  They just might. 

 The industry is more likely to switch to  burning methanol than they are to attempting to install scrubbers.  How fast can tat changeover be done?  Not that fast; there are too many boats out there.  But it is logical that methanol is going to be the drop-in fuel. 

 If expanded methanol comes to pass, and the marine industry contracts due to trade barriers, then oil grades will drop in price.  If jetfuel continues to climb in demand, then upgraders will have to be built rapidly, in necessary cobbled together from stuff scavenged from closed refineries, and then price will increase, perhaps dramatically.  So the picture remains both fluid and murky. 

I agree that cheatuing will occur. But I also believe that it will be much less than anticipated. There are several big and influential European shipowners investing in scrubbers believing it will give them a competetive edge in the interim. They will leverage all their political clout to ensure that IMO 2020 is enforced. If nothing else in their home countries / regions meaning that it will be the standard for all international trade. 

re LNG - the infrastructure to support it as a large scale replacement is just not there yet and it will take time to implement. 

I really dare not guess about what will happen, but it will be interesting to follow. 

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3 hours ago, ronwagn said:

 Once in a while, I see some old diesel trucks spewing black smoke when accelerating but nothing like the old days. 

https://en.wikipedia.org/wiki/Fuel_oil

Those are two-cycle engines built by Detroit Diesel before 1989, when Mr. Penske, the race-car driver, bought Detroit Diesel from GM and re-named it Detroit Diesel Penske.  He overhauled the production line and developed the Detroit Series 60, a 4-cycle machine that turned out to be the most successful diesel truck/bus engine in US history.  Then Mercedes (Daimler Chrysler) took it over, and promptly promptly scrapped the production.  Now if you want a 13-liter truck engine, you can buy a Mercedes 4000. Oh, well.  There are seriously dumb managers everywhere, it is an endemic problem.

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7 hours ago, ronwagn said:

I am not up to date on modern heat pumps, I know that they work well in moderate climates but are they up to heating in Quebec?

Nope.  It gets too cold for a heat pump to produce any effective heat transfer.  Plus, those heat pumps will electrically trip out, as the heat exchanger units will freeze up,and then you have NO heat.  

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8 hours ago, ronwagn said:

I am not up to date on modern heat pumps, I know that they work well in moderate climates but are they up to heating in Quebec?

If sized appropriately yes. Admittedly heat pumps will not have a good COP in very cold weather but down to about -25 degrees C the COP is above 1. Below that the system just switches to resistive heating.

See this link - page 11

https://web.archive.org/web/20141020150417/http://www.chba.ca/uploads/TRC/May 2013/Cold Climate Air Source Heat Pumps Presentation - May 2013.pdf

It estimates the payback for an ASHP is about 5 years compared to the cost of using fuel oil.

As I said before in those sort of climates I would always have a stand alone back up to any system - wood stove, propane or CNG stove 7 cooker.

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16 hours ago, Andrew Sun said:

I want to thank @Jan van Eck, @William Edwards, @Dan Warnick and others for responding at length to my question. I'm grateful of your insights. The future does look bleak for Canadian petroleum producers.

According to William's view, the higher sulphur content will cause some of production from Canada to get shut-in (or see a big price discount) by 2020. The same effect will be seen by producers from the Middle East. We all know that when price goes low enough, some production shut-in will naturally take place. We also know that the world's demand for petroleum products are likely to be growing for several more years at least.

Does this mean we are going to see a higher or lower oil price? Does this mean that main stream media will need to quote two types of oil prices when reporting - a higher price for oil of low sulphur content and a lower price for oil of high sulphur content? Lastly, how many countries will just ignore this new low sulphur fuel requirement because they simply could not afford the alternatives?

Hi Andrew.  If you found my comments useful, I am pleased to have contributed.  However, the men with the real knowledge on these issues are obviously @William Edwards and @Jan van Eck, as you have already noted.  Their answers to your questions above are beyond my knowledge and I am following and learning as well.  Thanks for the mention.

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I admit that my question(s) are naive and maybe even stupid to some, but........

If the state(s) and Canadian governments are willing to spend money on pipelines to nowhere and corroded refineries would they be willing to subsidize rail and trucks of crude to West Coast ships, and then onto the hungry and more efficient refinery markets in Japan, China, and other Asian countries?  In other words, how important is it to keep the wells/sands active and in-production?

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