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Is Alberta Seeing A Refinery Renaissance

Alberta’s Industrial Heartland is a rapidly growing hub of vitality and petrochemical infrastructure value $30 billion. And, with its renewed push for financial diversification, the provincial government could end up including billions more.

That is the petroleum refinery economics quiz primary story in an exclusive three-part collection analyzing the realities and opportunities for enterprise in Alberta’s petroleum manufacturing hub.

Ian MacGregor, president and chief executive of NW Refining, is used to being referred to as a mad scientist. For 12 years, he’s fought for his dream to construct a low-emissions refinery in Alberta—the first new Canadian refinery in 30 years. It has now been over two years since floor was damaged on a barren area outdoors of Redwater in Alberta’s Industrial Heartland. At the moment, the Sturgeon refinery site seems like a totally-fledged refinery complete with storage tanks, hydrocracker reactor towers (shipped from Japan) and a sulfur plant. Every inch of the refinery is buzzing with activity as over 7,000 workers prepare the location and construct modules for the first phase of its completion in 2017.

MacGregor should feel immense satisfaction because the challenge, which many referred to as inconceivable, lastly unfolds in a tangible method. “It’s essentially the most fun an engineer can have,” he says. For years, every misstep, every problem and every funds improve has been recorded by the press. However MacGregor persisted via it all. “With these items, there’s going to be hundreds of thousands of issues,” he says. “First of all, you’ve gotten to like solving problems. And people right here like fixing problems. They imagine it’s the future of the place and they’re on a mission to prove that it can be completed here.” For MacGregor, it’s not just about building the challenge of a lifetime. It’s about constructing a future for generations to return. “I assume if we don’t do it, my youngsters and my grandkids won’t have the ability to stay the way in which that I did,” he says.

Sturgeon Refinery is unique. It’s owned and operated by the North West Redwater Partnership—an enterprise between NW Refining and Canadian Natural Assets. In 2011, the Alberta government agreed to provide seventy five p.c of the feedstock for the refinery with Canadian Natural Assets supplying the other 25 %. It’s the first refinery to be constructed with an integrated carbon capture and storage (CCS) system. The refinery—along with Agrium, a fertilizer facility adjoining to the site—will seize nearly 5,000 tons of CO2 per day. The CO2 will then travel down the Alberta Carbon Trunk Line (ACTL), a 240-kilometer pipeline running from Northern to Southern Alberta, constructed by Enhance Vitality, an organization specializing in CCS technology. Sooner or later, the ACTL will be able to handle CO2 from different plants wanting to cut back emissions, and can take the CO2 to mature oil fields in Alberta for use for enhanced oil recovery (EOR).

EOR helps to extend the life of mature oil fields by pumping CO2 into the bottom which then forces the oil closer to the production nicely. The process can lengthen the life of a effectively by as much as 20 years, which increases earnings, maintains jobs and reduces the environmental influence of constructing new wells. But EOR can also be a method of CO2 storage. As CO2 enters the bottom, it remains inside the pore areas left behind by the oil. Some CO2 will emerge at the manufacturing properly, the place it is going to be immediately injected again into the bottom.

Kevin Jabusch, CEO of Improve Vitality, says he is excited to see the ACTL turn out to be a actuality. He explains that the pipeline can be used by firms across Alberta that want to dump CO2 into the line, or pick it up for EOR. “One of the massive challenges in CO2-EOR is the source will not be all the time near the locations,” says Jabusch. “So that’s the massive alternative right here, to place the trunk line in place, get CO2 closer to the good reservoirs which can be amenable to [EOR]. We’re beginning off with about 5,000 tons a day, but the system could have significantly more capability than that, depending on final location of sources and delivery points.” Jabusch hopes that the ACTL will someday handle about 40,000 tons of CO2 per day, and so does MacGregor.

The CO2-EOR component of the Sturgeon refinery was a key aspect of MacGregor’s early vision for the project. “I don’t assume there may be anybody in the world who believes that CO2 isn’t an issue that we have to deal with,” he says. “Right from the beginning we were considering, ‘How will we make this have the lowest carbon content material of any fuel made ’” Because Sturgeon is the primary new Canadian refinery in three a long time, MacGregor had the freedom to incorporate new technologies and green innovations that may pose a major hurdle for already existing plants. “What is that this going to seem like 50 years from now ” he says. “We don’t need to come back and retrofit it.” Consequently, the refinery exceeds quite a lot of regulatory standards and is constructed with a long-time period environmental strategy—something that hasn’t historically been the standard of the oil and gasoline business. There’s a water therapy facility and a sulfur plant on site, and almost no waste leaves the world.

While Sturgeon nears the primary section of its completion, other proposed refineries are hoping to come back along for the journey. Refinery projects have been proposed in B.C. as a solution to Alberta’s oil export problems. But whether these tasks can actually get off the ground is unsure on account of the large expense involved, and the anti-oil sentiment prevalent in components of B.C.

Refineries are sometimes constructed at the top of a pipeline. And proposed pipeline projects, whether it’s Power East or Northern Gateway, have stalled attributable to highly-publicized environmental and safety considerations. Whereas supporters of these tasks maintain that pipelines would, in truth, scale back harmful rail accidents, be outfitted with the latest anti-corrosion and leak-detection applied sciences, and supply thousands of jobs to Canadians during an economic disaster, the environmental image of the industry in B.C. coupled with the political friction between the 2 provinces, leaves the future of these pipelines in limbo. Regardless of this, proponents of at the least petroleum refinery economics quiz two proposed refinery projects in B.C. are soldiering on despite the political local weather.

Pacific Future Vitality proposes to construct a $10 billion refinery in Northern B.C. that it says will produce close to-internet zero emissions. The refinery would take bitumen from Alberta and refine it into diesel, gasoline, aviation gas and different merchandise. Near-solid bitumen, or “neatbit,” would be shipped by rail instead to transport diluted bitumen. Within the event of a rail accident, the neatbit, which has a very thick consistency, wouldn’t spread and may very well be simply cleaned up, in keeping with the corporate. Moreover, Pacific Future Energy says it might additionally incorporate CCS technology.

The proposed Kitimat Clear refinery, the vision of Black Press newspaper magnate David Black, is one other proposed venture for Northern B.C. Like Pacific Future Vitality, Black hopes to garner favor with environmental groups by incorporating green know-how and practices into the refinery. At $21 billion, Kitimat Clean has a a lot bigger worth tag than Pacific Future Power, with an additional proposed pipeline to cost $11 billion. However skeptics wonder if it’s even attainable to wrangle the mandatory funds to get the project started, especially in the current economic local weather.

The proposed budgets of each Pacific Future Energy and Kitimat Clean are much bigger than Sturgeon’s. True, the Sturgeon refinery’s true value rose larger and higher over the years, until settling at $8.5 billion—something MacGregor has faced broad criticism for. At the ground breaking in September 2013, the Sturgeon refinery was anticipated to cost $5.7 billion. The project has additionally taken flak for its development time. It was first projected that phase one would be completed in 2015, then it was 2016 and now it’s 2017. But it seems as if the 2017 date is going to stay as the refinery lastly rises from the empty field.

MacGregor doesn’t apologize for the cost and time that have gone into completing Sturgeon. “When they accomplished the Panama Canal in 1914, it value $375 million. If you happen to inflate that value to 2014, it’s about $8 billion,” he says. “So what we’re constructing out right here is roughly the financial equivalent of the Panama Canal.” However will the affect and legacy of the Sturgeon refinery really be comparable to that of the Panama Canal—a challenge which opened trade routes between the Atlantic and Pacific oceans, and is considered a marvel of the modern world Maybe not, but MacGregor’s comparability isn’t all hubris. Once completed, he hopes that Sturgeon will spark a renaissance of development, engineering and power tasks in Alberta.

“We all have one thing to prove—I have something to prove,” says MacGregor. “I’ve received to get this stuff to work proper so I can get permission to build the remainder of it. The people who work here should show that we are able to do this rapidly and effectively and productively, and if we do, we’ll build extra.” Western Canadian gasoline markets are disconnected from the remainder of the country—“Newfoundland may as effectively be a different continent,” says Neil Shelly, the Alberta Industrial Heartland Affiliation CEO. Alberta supplies Western Canada with 75 percent of its motor gas from refineries that usually run at ninety two percent of their capability. If one goes down, or there’s a glitch, retail prices shudder even when crude prices are going in the other course. In petroleum refinery economics quiz 2009, a storm knocked out power in the Edmonton area, shutting down Petro-Canada’s and Imperial Oil’s refineries, triggering gasoline shortages across the province. Critics assault the Sturgeon refinery’s high cost for only bringing on stream 50,000 b/d. However, when added to the province’s current 600,000-650,000 b/d capacity, it’s going to deliver higher price stability—making it a more a palatable price to pay.