Why Not Bitumen vs Dilbit?

[Janet Alderton + 124]

I am interested in informed comments on the following articles:

If the new regulations for low-sulfur marine fuel (IMO 2020) do reduce the demand for Albertan bitumen, why not avoid the TransMountain pipeline expansion and the requirement for diluent and market bitumen pucks that can be safely transported by rail to ports to be shipped to global markets where road building is expanding?  Sorry for the complicated sentence that contains multiple premises.

Ross Belot IMO 2020.docx

Bitumen Pucks Float.docx

[Ian Austin + 131]

1 hour ago, Janet Alderton said:

I am interested in informed comments on the following articles:

If the new regulations for low-sulfur marine fuel (IMO 2020) do reduce the demand for Albertan bitumen, why not avoid the TransMountain pipeline expansion and the requirement for diluent and market bitumen pucks that can be safely transported by rail to ports to be shipped to global markets where road building is expanding?  Sorry for the complicated sentence that contains multiple premises.

Ross Belot IMO 2020.docx

Bitumen Pucks Float.docx

A semi-intelligent comment from me:

I don’t believe there is enough demand for asphalt to service the 2.5-3 MMbpd of Production currently coming out of the oilsands.

[Janet Alderton + 124]

39 minutes ago, Ian Austin said:

A semi-intelligent comment from me:

I don’t believe there is enough demand for asphalt to service the 2.5-3 MMbpd of Production currently coming out of the oilsands.

Yes, thank-you.

Part of the production could go to asphalt demand. 

[Old-Ruffneck + 1,177]

13 hours ago, Janet Alderton said:

Yes, thank-you.

Part of the production could go to asphalt demand. 

The US demand for asphalt is actually quite high, many roads in last few have been left to ruin because price is too high for quality bitumen asphalt. EPA regulations on it make it hard to use straight bitumen based asphalts, most blend in latex and other materials to stretch it. Roads in Illinois where temperature variations are extreme, the roads don't last like 30 years ago. The EPA said certain chemicals from the old good asphalts were leaching out of the old style. PCB's and few others ones if I remember correctly. So we drive on crap roads that tear our vehicles up and creates another industry 😁

[Janet Alderton + 124]

15 minutes ago, Old-Ruffneck said:

The US demand for asphalt is actually quite high, many roads in last few have been left to ruin because price is too high for quality bitumen asphalt. EPA regulations on it make it hard to use straight bitumen based asphalts, most blend in latex and other materials to stretch it. Roads in Illinois where temperature variations are extreme, the roads don't last like 30 years ago. The EPA said certain chemicals from the old good asphalts were leaching out of the old style. PCB's and few others ones if I remember correctly. So we drive on crap roads that tear our vehicles up and creates another industry 😁

Very interesting. Thank-you Old-Ruffneck.

I have seen asphalt road surface being taken up by a machine that mixes the old surface with additional components and then lays the new road surface immediately behind the machinery. I was impressed by the efficiency, but know nothing about the details.

[Chris Wells + 54]

Could this be a reason for US foundation, like Tides, to support demonstrations against Canadian pipelines to the coast.  Canadian oil is cheaper because the USA is our only customer, another reason to demonize canadian oil.

[Janet Alderton + 124]

On 2/8/2019 at 6:07 PM, Ian Austin said:

A semi-intelligent comment from me:

I don’t believe there is enough demand for asphalt to service the 2.5-3 MMbpd of Production currently coming out of the oilsands.

Maybe this is the solution to transport bitumen to global refineries.

I still am not certain how the high sulfur component of bitumen will be marketed.

Smith: Bitcrude may be a game-changer in pipeline impasse

Danielle Smith
Updated: February 8, 2019

https://calgaryherald.com/opinion/columnists/smith-bitcrude-may-be-a-game-changer-in-pipeline-impasse

 

It didn’t take long to see the perils of trying to control markets through central planning. That’s not to say that oil curtailment was the wrong decision. I supported it too. It’s just that one intervention inevitably leads to another and another, and pretty soon you have a hot mess.

To be fair to Premier Rachel Notley, we don’t know what would have happened if she hadn’t announced a supply restriction of 325,000 barrels per day of oil production. Perhaps the $50 discount would have stretched on for months and Alberta would have faced even more severe layoffs. Perhaps with the regime change and sanctions in Venezuela — our chief competitor in providing heavy crude to the U.S. — the price would have corrected on its own.

What we do know is the industry is struggling with the restrictions. A last-minute change to the formula caused CNRL to curtail an amount disproportionately higher than its share of production. Imperial Oil — and every other company that transports oil by rail — says the differential is now too narrow to be competitive. Here’s why: If a refinery can buy West Texas Intermediate crude for $50 a barrel, and it costs $15 a barrel to transport by rail, Western Canadian Select crude would have to be less than $35 a barrel to make it worth it.

Compounding the problem is Notley had already announced a plan to buy 7,000 railcars for a government-sponsored oil-by-rail program. The economics of that plan are blown to smithereens under the current scenario.

It’s darn tricky to get central planning right. We need to end curtailment as soon as possible.

To this point, everyone — including me — has been saying that new pipelines are the only real solution to get out of this mess. Now it appears there may be another way.

A private company has been quietly working to solve the problem of the bitumen bottleneck and make Athabasca oilsands the safest oil in the world to transport.

This week I spoke to Cal Broder and Andy Popko from Bitcrude. If what I’m about to tell you seems too good to be true, you can check their presentation out yourself at bitcrude.ca.

Their plan is to transport bitumen in semi-solid form by rail to any market in the world. It turns out Athabasca bitumen is naturally a semi-solid; it’s the reason why companies have to mix it with diluent to get it moving through pipelines. Their plan is to transport it as a semi-solid and only convert it to a liquid once it reaches the refinery for processing.

How would it work? They are building a processing centre in central Alberta to extract the diluent from the bitumen. They will then pour pure liquid bitumen into a liner where it will solidify. A railcar will transport it to the port of Prince Rupert for loading on a container ship bound for Asian markets.

This could change everything.

Because it is in solid form, if there is a derailment there is no spill. If there is an accident loading on to the container ship or the container falls overboard, there’s no spill. Even if it ever did get into the water it would float. Plus it has been lab tested and shown that it doesn’t kill fish.

Without diluent, the product is 100 per cent fuel and less costly to transport. Plus, it will sell at a premium because heavy crudes are more valuable on the international market.

It will require less energy to produce, transport and refine so it will mean fewer greenhouse gases.

There are no First Nations access issues because it uses an established railway right of way. It doesn’t need NEB approval because it’s not going in a pipeline. It is not subject to Trudeau’s tanker ban because it is a solid. And because liquid bitumen and diluent will be taken out of the existing pipeline system, it leaves more room for conventional crude which will immediately increase takeaway capacity.

The first processing plant is under construction. Once the first unit is complete, they say they can scale up almost without limit.

This may be the solution we’ve all been waiting for. If it works, let’s remember it didn’t take central planners to come up with it.

Danielle Smith can be reached at danielle@770chqr.com.

[Jan van Eck + 7,558]

On 2/8/2019 at 7:56 PM, Janet Alderton said:

I am interested in informed comments on the following articles:

If the new regulations for low-sulfur marine fuel (IMO 2020) do reduce the demand for Albertan bitumen, why not avoid the TransMountain pipeline expansion and the requirement for diluent and market bitumen pucks that can be safely transported by rail to ports to be shipped to global markets where road building is expanding?  Sorry for the complicated sentence that contains multiple premises.

Ross Belot IMO 2020.docx

Bitumen Pucks Float.docx

Janet, it is not a question of "if" the new low-sulfur regulations will reduce demand for Alberta oil-sands bitumen, it is more that IMO 2020 "will" collapse the demand for oil-sands oil and end up with the industry facing shut-in status. But there is yet another solution (see at the end of this reply post). 

The  CN proposal to convert bitumen into so-called "pucks" is not some enlightened social idea; it flows from rather self-interested motives, which is fine, just remember the reasoning.  The end product is not going to be some "puck" in the shape of say a  hockey puck; instead, these are headed for pelletizing, then coated with a very thin film of some plastic.  Once coated, the end product becomes inert.  At that point the CN can ship the product in something other than a dedicated tank car; it can use any of the vast numbers of plastics resin railcars used to supply plastic processing plants, or it could use wheat grain cars, or it could use gondola cars, and if bagged and palletized, it could use ordinary boxcars.   

Now, if the train derails in the mountains and smashes itself up into splinters, as did the 115-car wheat train running Kicking Horse Pass on the CP mainline between Calgary and the Coast last week  (99 of 115 cars plus two locomotives dropped off a 200-foot cliff into the river below, a total loss), all you have for environmental impact are some plastic pellets strewn about.  They can be salvaged at leisure using vacuuming equipment.  If that is oil, the mess would bankrupt the CN to go clean up - especially true in the high mountains in the Winter. 

There are surplus grain cars, which are only used twice a year for moving grain harvests.  Admittedly, the rail lines CN and CP are so inefficient at moving the harvests that the shipments end up in interminable delays  (in part due to the rail companies deferring the departure of grain trains in favor of oil trains) and thus extended shipping seasons  (another motive for Fairfax Holdings of Toronto, plus the natives, to purchase the busted-up Hudson Bay Railroad, fix it, and open up the Port of Churchill to summer grain shipments).  It may surprise you to learn that the CN and CP are both rail capacity-constrained; those lines are single-track and trains have to run to passing-track locations in order to allow two-way transport.  The situation is so chronically congested in mountain areas that the fierce rivals are now getting together to combine physical plant, with one set of tracks being used for Westbound traffic and the other for Eastbound, thus allowing following trains on a continuous loop instead of having entire blocks of rail set aside for each movement.   Although the ultimate solution is to purchase gigantic tunnel-boring machines and build a flat railroad underneath the Rockies,  I don't see the shareholders making that investment any time soon.  So capacity constraints are the order of the day. 

There is discussion in your references to using a "liner" to contain the plastic-coated pellets.   That points to the use of hopper cars or gondola cars.  The further problem is that the density of the product will prevent filling a typical ship container and using a containership  (also called "boxship") for overseas transport.  Fill it all the way up and you are way over the structural limits of the container, also the lifting capacity of the cranes.  So you are not going to get the volumetric efficiency as you would get in a bulker, or "dryship."  ON the other hand, containerships tend to run with lots of empty containers back to Asia, so using containers for a backhaul is a cheap way to ship the product.

The bottom line is that Alberta faces shut-in for their oil sands projects.  But, big but, there is a solution out there on the horizon.  It involves a technical innovation, the use of multiple solvents to remove the various grunge components including the sulfur and leave a pure oil behind.  That pure material can then be refined on-site into high-level products such as pure diesel and jet-fuel kerosene.  The process then removes and recycles the solvents.  At this point a pilot plant is up and running in Idaho, with additional reserves of 1.2 billion barrels just now purchased on leased lands.  The company is "Petroteq" and the shares are trading on the Toronto Stock Exchange, I think.  The pilot plant is only 5,000 bbl/d, headed for 10,000 bbl/d, and again the big problem is lack of investment capital, so the company is diluting its shares by issuing more, but that is the way of these small outfits.  97 million shares outstanding at 41 cents, for a market cap of roughly $60 million.  Anybody got some spare change?  Go buy the company and run with it, I predict this technology will be a winner. 

As Mr. Edwards will point out, the numbers no longer will work for Alberta crude.  However, keep in mind that that presumes that Canada does not become a closed market.  As it is politically impossible for any Federal govt to survive in Ottawa with Alberta crude shut in, I predict that Ottawa will close imports of refined fuels to force the use of Alberta crudes.  The big refineries in East-end Montreal have mostly closed, I think there is one left; for the rest, refined product comes in from the USA by  both rail and pipe.  If you shut that down and oblige consumers in Ontario and Quebec to use Alberta oil, then coupled with the new innovation in oil-sands purification you have enough of a market to keep Alberta oil-sands running.   I do not see any other politically palatable solution. 

Jan van Eck, DJ Engineering,  janvaneck.conn@gmail.com

Edited February 10, 2019 by Jan van Eck

[Jan van Eck + 7,558]

20 hours ago, Old-Ruffneck said:

The US demand for asphalt is actually quite high, many roads in last few have been left to ruin because price is too high for quality bitumen asphalt. EPA regulations on it make it hard to use straight bitumen based asphalts, most blend in latex and other materials to stretch it. Roads in Illinois where temperature variations are extreme, the roads don't last like 30 years ago. The EPA said certain chemicals from the old good asphalts were leaching out of the old style. PCB's and few others ones if I remember correctly. So we drive on crap roads that tear our vehicles up and creates another industry 😁

The problem with Illinois is that it is now, financially speaking, 50th out of 50 States,dead-last in the financial world due to the grotesque rampant spending coming out of Springfield and Chicago. As an effectively bankrupt State, it no longer has the ability to repair the "crap roads."

For States not quite so bankrupt, I am developing a new road product that will put asphalt out of business.  The new road will have well over a 100-year effective life, will be built in sections in a factory, and shipped to the jobsite in panels to be dropped in place.  If a section ends up damaged, it can be lifted out and a replacement dropped in.  No potholes, ever. Also, cheaper in initial cost and a lot faster than laying asphalt.  If this takes off, then asphalt roads are a minor product. 

[Jan van Eck + 7,558]

Picture this 99-car,two locomotive train wreck in the mountains, with busted oil tankcars instead of grain cars.  Then figure out the clean-up costs in such a remote, high-altitude, winter location:

A sobering prospect, to be sure.  

[Janet Alderton + 124]

Thank-you, Jan van Eck, for taking the time to reply in detail and with hopeful as well as sobering information. I am very concerned about oil spills from every type of transport. I have learned that "clean up" of oil-contaminated soils consists of excavating the soil and transporting it to a "sealed" landfill. I have a neighbor-to-be who is remediating oil-contaminated soil by instead spreading the contaminated soil about 18 inches thick and then adding special bacteria that breakdown the oil over several years. 5 years with intermittent plowing seems to be working quite well for oil-contaminated soil from an abandoned military site in the Aleutian Islands. After the oil is fully biodegraded, the soil will be returned to the site from which it came. Expensive to be sure, but more satisfactory than containment in a theoretically "sealed" landfill.

I applaud your modular roadbed project!