Public-Interest Benefit Evaluation of Partial- Upgrading Technology
DOI:
https://doi.org/10.11575/sppp.v10i0.42615Abstract
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. Partial upgrading does not upgrade bitumen to a light crude, but to something resembling more of a medium or heavy crude, and at a lower cost per barrel than full upgrading. Unlike in the increasingly crowded light-crude market, the Alberta Royalty Review Advisory Panel recognized that currently there are gaps in several North American refineries that could be filled by this partially upgraded Alberta oil. A partial upgrader serving that less-competitive market not only appears to hold the potential for investors to make attractive returns in the long term, it would also provide important benefits to Alberta from a social perspective. Since partially upgraded crude can be shipped via pipeline without diluent (as bitumen requires), producing it in Alberta would free up pipeline capacity otherwise tied up by current volumes of diluted bitumen or dilbit (diluent typically represents about one-third of each barrel of dilbit). It also reduces the cost to shippers of paying tolls for diluent exported in the dilbit and recovering diluent at the U.S. pipeline terminal, where it is less valuable than if it were recovered in Alberta at the partial upgrader. The value of each barrel produced would also be higher, benefitting oil sands producers. Partial upgrading also seems to promise a lower emissions-intensity profile compared to other bitumen-processing technologies. Based on the model of a single 100,000-barrel-a-day partial upgrader, the value uplift could be $10 to $15 per bitumen barrel. Meanwhile, there could be an average annual increase to Alberta’s GDP of $505 million, and as many as 179,000 person-years of employment created (assuming a 40.5-year operating period). The increase in taxable earnings would increase provincial revenues by an average of $60 million a year, not including additional federal tax revenues. If successful, there would be many such partial upgraders with corresponding multiplication of these benefits. But there remains the critical task of proving partial upgrading technology at a higher scale than current testing. This might also depend on the province helping sustain investors through the “death-valley” between successful research and initial testing and demonstration of full commercial viability. The province has stepped into help technologies cross that “death valley” before. The promise of partial upgrading may well justify, as manager and steward of Alberta’s resources, helping bridge that valley again.
Downloads
Published
Issue
Section
License
The following is the copyright statement of SPPP.
Copyright © <Author name> <year>. This is an open-access paper distributed under the terms of the Creative Commons license CC BY-NC 4.0, which allows non-commercial sharing and redistribution so long as the original author and publisher are credited.
Publication Copyright and Licensing
The following guidelines and information, provided in six sections, are intended for authors (the “Author”) who are invited to write a paper (the “Work”) for The School of Public Policy Publications (the “Publisher”). The rights and responsibilities conveyed in the SPP Author Agreement will only apply once your paper is accepted for publication. At that point in the publication process, you will be asked to download the form and return a signed copy via e-mail to spppublications@ucalgary.ca. Please review the below information to ensure agreement with SPPP policies.
Section 1: Author’s Grant of Rights
In consideration of the Publisher’s agreeing to publish the Work in The School of Public Policy Publications, the Author hereby grants to the Publisher the following:
1.1 The irrevocable, royalty-free right to publish, reproduce, publicly display, publicly perform and distribute the Work in perpetuity throughout the world in all means of expression by any method or media now known or hereafter developed, including electronic format;
1.2 The irrevocable, royalty-free right to use the Author’s name and likeness in association with the Work in published form and in advertising and promotional materials related to the Work; and
1.3 The irrevocable, royalty-free right to license others to do any or all of the above.
Section 2: Prior Publication & Publication by Others
2.1 The Author agrees not to publish the Work, or authorize any third party to publish the Work, either in print or electronically, prior to publication of the Work by the Publisher.
2.2 The Author agrees not to publish the Work in any publication outlet which is substantially similar to The School of Public Policy Publications for a period of six (6) months after publication of the Work in The School of Public Policy Publications. Substantially similar is defined as a non-subscription, open-access publication outlet with a similar mandate/vision and intended audience.
2.3 Should the Author publish or distribute the Work elsewhere at any time or in any alternate format, the Author agrees to contact The School of Public Policy Publications to inform them of the subsequent publication.
2.4 Should the Author publish or distribute the Work elsewhere at any time or in any alternate format, the Author agrees to make reasonable efforts to ensure that any such additional publication cites the publication in The School of Public Policy Publications by author, title, and publisher, through a tagline, author bibliography, or similar means. A sample acknowledgement would be:
“Reprinted with permission from the author. Originally published in the The School of Public Policy Publications, http://www.policyschool.ca/publications/.”
Section 3: Editing and Formatting
The Author authorizes the Publisher to edit the Work and to make such modifications as are technically necessary or desirable to exercise the rights in Section 1 in differing media and formats. The Publisher will make no material modification to the content of the Work without the Author’s consent.
Section 4: Author’s Ownership of Copyright and Reservation of Rights
4.1 Nothing in this agreement constitutes a transfer of the copyright by the Author, and the copyright in the Work is subject to the rights granted by this agreement.
4.2 The Author retains the following rights, including but not limited to, the right:
4.2.1 To reproduce and distribute the Work, and to authorize others to reproduce and distribute the Work, in any format;
4.2.2 To post a version of the Work in an institutional repository or the Author’s personal or departmental web page so long as The School of Public Policy Publications is cited as the source of first publication of the Work (see sample acknowledgement above).
4.2.3 To include the Work, in whole or in part, in another work, subject to Section 2 above and provided that The School of Public Policy Publications is cited as the source of first publication of the Work (see sample acknowledgement above).
4.3 The Editors and Editorial Board of The School of Public Policy Publications requires authors to publish the Work under a Creative Commons Attribution-NonCommercial 4.0 International licence (CC BY-NC 4.0). This license allows others to distribute, remix, tweak, and build upon the Work for noncommercial purposes, and ensures the Author is credited for the original creation. This onward licensing is subject to section 2.4 of this agreement, which further ensures that the original publisher is credited.
Section 5: Author’s Warranties and Undertakings
The Author warrants that:
5.1 The Author is the sole author of the Work, or if a joint author, the Author has identified within the Work the other authors, and holds the copyright, either solely or jointly, and has the power to convey the rights granted in this agreement.
5.2 The Work has not previously been published, in whole or in part, except as follows:
5.3 Any textual, graphic or multimedia material included in the Work that is the property or work of another is either explicitly identified by source and cited in the Work or is otherwise identified as follows:
5.4 To the best of the Author’s knowledge, the Work does not contain matter that is obscene, libelous, or defamatory; it does not violate another’s civil right, right of privacy, right of publicity, or other legal right; and it is otherwise not unlawful.
5.5 To the best of the Author’s knowledge, the Work does not infringe the copyright or other intellectual property or literary rights of another.
5.6 The Author will indemnify and hold Publisher harmless against loss, damages, expenses, awards, and judgments arising from breach of any such warranties.
Section 6: The Reuse of Third-Party Works
The Publisher requires that the Author determine, prior to publication, whether it is necessary to obtain permissions from any third party who holds rights with respect to any photographs, illustrations, drawings, text, or any other material (“third-party work”) to be published with or in connection with your Work. Copyright permission will not be necessary if the use is determined to be fair dealing, if the work is in the public domain, or if the rights-holder has granted a Creative Commons or other licence. If either the Author or Publisher determines for any reason that permission is required to include any thirdparty work, the Author will obtain written permission from the rightsholder.