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Will new process turn oil sands into a production tiger?

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(edited)

I was poking about looking for snippets of information on oil sands extractions processes, and came across some fascinating information about two long-time industry men, who have developed a process for removing the oil, in heavy-oil bitumen form, from the oilsands without using steam injection and tailings ponds.  The process involves using a solvent, of secret formulation, and spinning the mixture in a centrifuge to extract the heavy sands from the oil.  All of the solvent, which is apparently based on citrus liquids, are recovered in the process, and the solvent itself is biologically benign, so even if it spills, it causes no damage. 

Now here is the biggie:  the process has a cost break-even, all in, at $32/bbl.  Plus, added bonus, the CAPEX [capital expenditure needed] comes in at 30% of conventional steam processing, $30,000 per bbl/day instead of $100,000 per bbl/day.  

The story goes that the two fellows interested a Ukrainian fuel distributor to toss in the big bucks, and $62 million later, they had a working plant set up in Idaho.  The landscape there involves a thin overburden of soil about 10 to 30 feet thick, then the saturated oilsands, to be brought to the processing plant by payloader and dump truck. The material is processed, and the cleaned sand is brought back and the earth overburden placed back on top, so the process mines and restores in a continuing loop.  

The plant, which is small in physical size and looks like it could be easily moved as different pockets of oilsands are set up for extraction,  ran into a mechanical problem with the centrifuge machine and needed another $1.5 million to fix, which the guys did not have, and the project, essentially completed, plunged into bankruptcy.  So the Ukrainian fuel guy buys it out of bankruptcy with a credit bid of his secured interest of $9 million, and he was going to do a re-start.  The plant now is sitting in limbo, and nothing happening as of today.  However, it would seem as if these fellows are on to something.  If that works, then Idaho instantly becomes a player in the bitumen business, as there are at least another 4 billion barrels of oil just in the Idaho oil sands alone. 

Here is a description of the process:

          The process takes large chunks of the oil-saturated sands and crushes them into small chunks, then mixes with solvents. The mix is then transferred to a second tank, where a centrifuge spins the lumpy liquid, separating the oil from the sands. Clean sand is moved to a reclamation landfill. Finally, the solvents are distilled out of the oily liquid and recycled over and over again. The company claims virtually no chemicals are left in the sand that is put back as landfill.

Fascinating.  I see huge potential.  If this works...........

Edited by Jan van Eck
typing error
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So, what do our esteemed readers think?  Will it take off?  Is it already being employed more than the article Jan found implies?

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4 minutes ago, Justin Hicks said:

No, at this point the receiver has sold the assets to the credit-bid Ukrainian fellow, and is wound up.  He now owns all the assets and the land leases free of other creditors.  The question is:  what next?  Will he do a re-start?  Will he try to sell?  Is the technology a winner? 

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2 minutes ago, Jan van Eck said:

No, at this point the receiver has sold the assets to the credit-bid Ukrainian fellow, and is wound up.  He now owns all the assets and the land leases free of other creditors.  The question is:  what next?  Will he do a re-start?  Will he try to sell?  Is the technology a winner? 

What's the Ukrainian fellow's name? Do you have an article you can cite?

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(edited)

Even if the economics are as advertised, you end up with bitumen that is worth somewhere between $10 and $20 LESS than the $30 cost. Maybe not such a good idea. The world needs less bitumen, not more!

Edited by William Edwards
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1 minute ago, Justin Hicks said:

Petroteq has appearantly taken the lead in this process

 

https://www.nytimes.com/2018/08/21/business/energy-environment/oil-sands-utah.html

It is unclear if that is the same company, now in its reconstituted form.  My guess is that the technology is intellectual property, and not likely to be expanded to other users at this time.  I don't see the distribution of technical licenses yet. 

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1 minute ago, William Edwards said:

Even if the economics are as advertised, you end up with bitumen that is worth somewhere between $10 and $20 LESS than the $30 cost. Maybe not such a good idea.

Maybe not.  Apparently the finished material is without sand or water contamination.  As such, it is readily usable in the form it comes out of the plant.  Add some naphtha, you c an load into a tank railcar and ship it anywhere. 

And that brings up yet another aspect of Alberta oilsands production: the charges from railroads for transport, said to be at $20/bbl.  A typical railcar is 30,000 gal, or 714 barrels.  At $20., then the charge for moving just one tank car from Alberta to the US Gulf is $14,000.  Taking a typical unit train at 100 cars, the railroad is charging the shipper $1.4 million to move that train.  Nice business. 

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7 minutes ago, Justin Hicks said:

What's the Ukrainian fellow's name? Do you have an article you can cite?

I don't know who he is.  Obviously made some money in Ukraine, distributing fuels.  Probably not an Oligarch. 

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1 minute ago, Jan van Eck said:

Maybe not.  Apparently the finished material is without sand or water contamination.  As such, it is readily usable in the form it comes out of the plant.  Add some naphtha, you c an load into a tank railcar and ship it anywhere. 

And that brings up yet another aspect of Alberta oilsands production: the charges from railroads for transport, said to be at $20/bbl.  A typical railcar is 30,000 gal, or 714 barrels.  At $20., then the charge for moving just one tank car from Alberta to the US Gulf is $14,000.  Taking a typical unit train at 100 cars, the railroad is charging the shipper $1.4 million to move that train.  Nice business. 

And if you tack on a cash production cost of $20, you get oil on the water for $40 that the experts say will be burned in place of coal a year from now, netting about $15/B -- a $25/B LOSS!

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7 minutes ago, William Edwards said:

And if you tack on a cash production cost of $20, you get oil on the water for $40 that the experts say will be burned in place of coal a year from now, netting about $15/B -- a $25/B LOSS!

Welcome to the World of Oil Price.Com Alchemy where you too can turn Gold into Lead😄

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Petroteq is currently claiming 1000 bbls per day production with a production cost estimate of $22-$28 per barrel. Their stock is currently .43 cents per share.

They have a fairly detailed site plus access to the engineering report on their solvent process and makeup.

https://petroteq.energy/

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3 minutes ago, William Edwards said:

And if you tack on a cash production cost of $20, you get oil on the water for $40 that the experts say will be burned in place of coal a year from now, netting about $15/B -- a $25/B LOSS!

Yup, all true. 

Let me posit the following:   the extractors pool resources and build a short-line railroad from Northern Alberta across over to Port Churchill.  It would likely be joined to the existing port on the East Bank of the river by a bridge, or a new loading dock on the West side.  Either way, now the producers cut the CN and the BNSF out of the loop, putting a good part of that $1.4 ,million per train back into their pockets.  Some of the oil gets shipped as purified bitumen; some as finished diesel from the new refineries that the Govt of Alberta is going to build.  If - big if - the oil markets shift, then - big then - you have a new low-cost producer.  If - big if - Canada shuts out imports of other peoples' oil and diesel, then -big then - you have a captive marketplace to go play in.  

And you don't know where this new technology ends up.  technological innovation has this tendency to expand on itself and continue to result in lower costs. I am not shutting the door on oilsands oil just yet.  Cheers.

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1 minute ago, Justin Hicks said:

Petroteq is currently claiming 1000 bbls per day production with a production cost estimate of $22-$28 per barrel. Their stock is currently .43 cents per share.

They have a fairly detailed site plus access to the engineering report on their solvent process and makeup.

https://petroteq.energy/

Good sleuthing!   Let's see where this might go. 

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(edited)

I agree, this approach is quite interesting.

The "citrus-based" solvent may be based on the following surfactant:

C10-16 Pareth-1

 (A surfactant is a molecule that allows oil-loving and water-loving molecules to closely associate with each other in an emulsion. Mixing olive oil and vinegar with mustard creates such an emulsion. 

Just because a molecule is "naturally occurring" does not mean that it is benign. Mercury is naturally occurring, but is highly toxic.

What appeals to me about the new process is that it sounds less impactful due to the cyclical nature of returning the sand portion of the oil or tar sands back to the landscape. The devil will be in the details. 

image.png.1e372bffc8c2449ee4006f1263a5c806.png

 

Edited by Janet Alderton
Added the surfactant name.

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Information about D-limonene (p-mentha-1,8-diene):

From the Memorial Sloan Kettering Cancer Center website.

Derived from the peels of citrus fruits, D-limonene is a terpene used to prevent and treat cancer and is also promoted as a treatment for gastroesophageal reflux.

In vitro and animal studies suggest that D-limonene has anti-inflammatory (13) (20), bactericidal (19), wound healing (21) and anticancer effects (14) (16) (17) (18). It was also shown to enhance the activity of docetaxel against prostate cancer cells (15). An epidemiological study reported an inverse relationship between citrus peel consumption and squamous cell carcinoma (4), but an early clinical trial in breast cancer patients failed to support the observations (5) (6). Further research is necessary to determine if D-limonene has a role in the prevention or treatment of cancer.

Cancer prevention

Cancer treatment

Heartburn and GERD (gastroesophageal reflux)

D-Limonene and its metabolites, perillic acid, dihydroperillic acid, uroterpenol, and limonene1,2-diol, may inhibit tumor growth via inhibition of p21-dependent signaling and apoptosis resulting from induction of the transforming growth factor beta-signaling pathway (9) (10). D-Limonene metabolites also cause G1 cell cycle arrest, inhibit post-translational modification of signal transduction proteins, and cause differential expression of cell cycle- and apoptosis-related genes (6).

D-limonene induces apoptosis via the mitochondrial death pathway and suppression of the PI3K/Akt pathway in human colon cancer cells (16). Animal studies show activity of D-limonene against pancreatic, stomach, colon, skin, and liver cancers (5) (17). Data also indicate that D-limonene slows the promotion/progression stage of carcinogen-induced tumors in rats (11) (12). The chemopreventive activity of D-limonene may be via inhibition of inflammation, oxidative stress and Ras-signaling as well as the induction of pro-apoptotic state in a mouse model of skin tumorigenesis (18).

D-limonene and its metabolite perillyl alcohol were shown to affect wound healing by decreasing systemic cytokine production, and by inhibiting endothelial P-selectin expression and neo-vascularization (21).

 

Possible side effects:

Nausea, vomiting, diarrhea (3)

Case Reports: Contact Dermatitis (7) (22) and asthma (8) have been reported.

 

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On 12/19/2018 at 2:01 PM, Jan van Eck said:

All of the solvent, which is apparently based on citrus liquids, are recovered in the process, and the solvent itself is biologically benign, so even if it spills, it causes no damage. 

The whole thing sounds cool,  and a game changer if it survives to expand.

However,  it is the CITRUS LIQUIDS part that interests me.

I live in Florida,  and many of you may,  or may not know,  but the CITRUS INDUSTRY is in trouble worldwide,  with two different types of attackers that are damaging and destroying tens of millions of citrus trees every year.

(1)  the Mediterranean Fruit Fly is still a problem.   The fly inserts its eggs into the fruit,  ruining it.

(2)  FAR WORSE,  is the tree-killing disease called "CITRUS GREENING",  that the industry has been unable to defeat.   A bacteria attacks and grows inside the tree,  and causes the leaves to change color and drop off,  and destroys the flavor of the fruit,  as it slowly kills the trees over a 2 year period.

If this "solvent"  will be needed in vast amounts in the future,    that could be a godsend for distressed Citrus Grove Owners who have groves that are diseased,  but still putting out fruit.   the fruit may not "taste" good enough to market as food,  BUT CAN DISEASED FRUIT STILL BE USED IN THE SOLVENT ?

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(edited)

7 hours ago, Janet Alderton said:

I agree, this approach is quite interesting.

The "citrus-based" solvent may be based on the following surfactant:

C10-16 Pareth-1

 (A surfactant is a molecule that allows oil-loving and water-loving molecules to closely associate with each other in an emulsion. Mixing olive oil and vinegar with mustard creates such an emulsion. 

What appeals to me about the new process is that it sounds less impactful due to the cyclical nature of returning the sand portion of the oil or tar sands back to the landscape. The devil will be in the details. 

 

 

I have been studying the actual underlying patents, three have been issued so far, and the descriptive is interesting.  I think these guys have latched onto a process that may well completely obsolete the existing manner of oilsands production, and dramatically drop the CAPEX.  To quote from the patent:

---------------------------

image.png.f76df45ebb1ce5c85fa8392cf711497a.png

----------------------------------

Getting past the jargon, what leaps out is that these fellow contemplate using an extractor chemical that in turn is composed of two groups of chemicals, which they can fine-tune further ot make a perfect fit with the composition of the bitumen and the water found at the site.  So one group of chemicals absorbs the water  (note, that appears to be the alcohols), and another group absorbs the oils  (and that appears to be the iso-pentanes)  Then they boil off the extract solutions to vaporize the water and its extracts out of the system, and condense the material back for re-use.  However, alcohol is cheap enough and it remains harmless if allowed to escape.  They can buy corn alcohol in bulk by the railcar. 

The other materials include the straight solvents and the branched hydrocarbons.  Those then extract at a different boiling point and again are fully recoverable.  It also seems that this process removes the sulfur contaminants, so then the remaining cleaned and separated bitumen becomes - hold onto your hat - clean, sulfur-free bunker C oil for ships, now meeting IO 2020 for 0.5% sulfur or less.  It appears to definitely be way less.  So what remains is to see if the low SPI gravity, of about 8, is sufficient for the bitumen to be a direct drop-in replacement for ship engines, and if not, well tossing in a little naphtha or diesel should do the trick. 

It is axiomatic that all industrial processes drop in costs as the production expands and as it moves in time down the experience curve.  They are already at $22-26/bbl.  Now, there also is a market for the nice clean sand, there is no particular reason to return it as overburden fill, it can be loaded directly into gondola cars and shipped to a customer.  While typically sand is the type of product where its sales radius is limited, say to 60 miles from the extraction point, that presumes that the extraction has costs.  Here the sand is nice and clean and free, there is no extraction cost as that is already absorbed into the bitumen costing.  SO the output of the reactor is direct into the gondola car, and off it goes.  It may end up that the ability to sell the clean sand makes the whole deal quite profitable. 

As always,never underestimate the ability of new technology to change how things are done.  If this ends up with much lower costs, and with no requirement to build process steam for injection into the earth, and provide for sludge lagoons, then the Athabasca sands rapidly have different economics and Canada may end up the next Kuwait.  Now, that would be interesting!

 

 

Edited by Jan van Eck

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first time I've heard about recycling solvents in heavy oil production was in 2004; practiced in Venezuela at a time.

D-Limonene is what gives citrus smell. It is widely used oilfield solvent.

I don't see this as a technological breakthrough.

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The value of the sand depends on its characteristics.

The world is running short of "sharp" sand.

May 29, 2017 - David Owen writes about the scarcity of many kinds of usable sand, which is one of the world's most widely used natural resources.

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If oil is extracted from oil sands in Idaho,would it be possible to pump the wet sand waste to Wyoming for use in fracking?

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