Public-Interest Benefit Evaluation of Partial- Upgrading Technology

Abstract

Approximately 60 per cent of Alberta’s oil sands production is non-upgraded bitumen which, after being mixed with a diluting agent (diluent) to allow transport, is exported. A popular view within Alberta — and particularly among Albertan politicians — is that a much larger share of oil sands bitumen should be upgraded in the province. However, without public subsidies or government underwriting, it is uneconomic to build and operate new facilities in Alberta to fully upgrade the bitumen into synthetic crude oil. But there are new partial upgrading technologies being developed that, subject to successful testing at a larger (commercial) pilot scale, can prove to be not only economic in Alberta, but also generate large social and economic benefits for the province. The advantages include a much smaller capital investment, a significant increase in the value of the product and market for the product and, even more importantly, a dramatic reduction in the need for large amounts of expensive diluent to transport the product to market. Indeed, the only diluent required will be that to move the bitumen from the production site to the partial upgrader and this can be continually recycled. The market for the synthetic crude oil produced by full upgrading is only getting tougher. Any Alberta bitumen fully upgraded here would compete closely with the rapidly expanding supply of light U.S. unconventional oil.