Suncor Energy Inc. wants to make “coke” the real thing at its Fort McMurray oilsands plant.
Coke is the coal-like byproduct produced from Suncor’s upgrading operation that turns bitumen into lighter synthetic crude oil.
Overall, Alberta’s oilsands industry produces more than one billion cubic metres of coke every year. Most of the waste is now stockpiled onsite or dumped in landfills.
Rick George, Suncor’s president and CEO, told an investors’ conference last week that his company is conducting research aimed at using more coke as fuel in its oilsands operation.
The goal is to shift away from increasingly expensive natural gas, used to make steam to pull the tar-like bitumen out of the ground.
Gas now accounts for almost 15 per cent of Suncor’s
production costs. And gas is only going to get more costly in the future as existing reserves decline in Western Canada and big gas pools become harder to find.
But Suncor will have to overcome significant technological and environmental hurdles in order to turn what is now mainly a waste byproduct into a free fuel.
Coke is a dirty fossil fuel, high in polluting sulphur and lower in energy value than both natural gas and coal. Suncor is researching ways to make “clean-burning” coke and also to convert the substance into a gas. Coke’s physical and chemical properties make the first option a technical challenge. And the latter route – a process called gasification – currently isn’t economical.
Production from Alberta’s oilsands could increase to five million barrels a day by 2030 from the current 1.2 million barrels by 2030, according to the Oil Sands Technology Roadmap, released last month by the Alberta Chamber of Resources.
But that production jump won’t happen if oilsands plants are still relying on natural gas as fuel two decades from now. The gas will simply be too expensive.
If Suncor can pull it off, using clean-burning coke instead of natural gas could help conserve Western Canada’s dwindling gas reserves, turn a waste by-product into a valuable fuel and reduce greenhouse gas emissions from Alberta’s expanding oilsands industry.
Now that coke would be truly refreshing!
PetroKazakhstan Inc. had better get ex-prime minister Jean Chretien off his favourite ski hill.
The Calgary-based company is going to need its recently hired special advisor to talk its way out of a $91-million US claim against the company by Kazakhstan’s anti-monopoly agency.
The Agency for Regulation of Natural Monopolies and Protection of Competition in the former Soviet republic alleges that PetroKazakhstan over-charged farmers for diesel fuel during last fall’s harvest season, and also set prices too high for gasoline and other refined products.
PetroKaz insists the allegations are unjustified. The company says it has a privatization agreement with the Kazakh government that gives PetroKaz the right to sell its products in Kazakhstan and abroad at free-market prices.
But investors are becoming increasingly spooked since this dispute started last fall. PetroKaz’s shares fell 2.5 per cent last week on the Toronto Stock Exchange, and at one point they had dropped by 8.5 per cent.
A Kazakh court reduced the anti-monopoly agency’s initial $6.3-million US claim against the company to $1 million – which PetroKaz is still appealing.
But another $31-million claim remains unresolved. And the agency’s latest claim for $91 million against PetroKaz oil products distributors has been upheld by a city court decision in Kazakhstan.
The company is also appealing that decision. Based on its track record in tangling with Kazakh bureaucrats, the company will likely get all the claims against it reduced to a fraction of their original amounts.
But until that happens, PetroKaz would be well advised to keep Chretien’s cell phone number handy.
The biggest obstacle the B.C. government has in realizing its vision to develop oil and gas offshore is not federal Environment Minister David Anderson – contrary to what Premier Gordon Campbell may think.
No, it is the disinterest shown so far by companies that hold the key oil and gas leases in the area, including Petro-Canada, ChevronTexaco Corp., Shell Canada Ltd., Exxon Mobil Corp. and Canadian Forest Oil Ltd. And the industry isn’t going to get enthusiastic until the B.C. government settles aboriginal claims that could tie up any move to sink a drill bit into the ocean floor for many, many years.
Anderson is predicting that most B.C. residents won’t accept the risk – albeit very small – of environmental catastrophe to tap into $100 billion of potential energy wealth.
That’s despite a report last week by an independent
scientific panel commissioned by Ottawa. The four-member Royal Society of Canada panel concluded, after a series West Coast, that more than 30 years of prohibitions on offshore oil and gas drilling could be safely lifted under strict conditions.
Natural Resources Minister John Efford, whose department commissioned the panel’s report, says Ottawa would be prepared to consider lifting the ban once it receives reports from two other panels by June. One of those panels is holding public meetings in West Coast communities, while the other panel is consulting aboriginal communities.
The group that holds the key to unlocking B.C.’s offshore oil and gas is the Haida Nation, on Haida Gwaii or the Queen Charlotte Islands.
The Haida vow there’ll be no drilling off their ancestral lands without their say-so. And they are backed by a 1997 Supreme Court of Canada ruling and recent B.C. Court of Appeal decisions that say governments must address aboriginal rights and interests prior to any resource development.
In 2002, the Haida launched a landmark lawsuit in the B.C. Supreme Court, claiming aboriginal title over the Queen Charlotte Islands, surrounding waters and offshore resources.
It’s fine for the B.C. Liberals to hand out grants totalling $262,000 to two pro-exploration groups, to promote offshore oil and gas drilling. But until his government sits down hand-in-hand with the Haida to negotiate their claim, offshore oil and gas will remain a dream.
The National Energy Board (NEB) says it’s “satisfied” with the safety performance of the federally regulated pipeline industry in Canada.
Pipeline companies regulated by the Calgary-based NEB improved their safety record from 2000 to 2002 in terms of the number of unauthorized activities on pipeline rights-of-way, the regulator says in its second annual report on pipeline safety performance.
However, the number of ruptures reported by NEB-regulated pipelines carrying hydrocarbon liquids and natural gas increased to three in 2002 from two in 2001, according to the report. The NEB oversees approximately 46,000 kilometres of pipelines.
Eight of the 27 ruptures that occurred on pipeline systems regulated by the NEB between 1991 and 2001 were due to metal corrosion, and 10 were attributed to cracking (including mechanical damage and corrosion), the report says.Corrosion is the leading cause of pipeline incidents and failures identified by the Alberta Energy and Utilities Board as well as the U.S. Office of Pipeline Safety.
Corrosion is also blamed for two ruptures and a huge explosion and fire on TransCanada Pipeline Ltd.’s Alberta natural gas pipeline system near Grande Prairie last December.
Yet Alberta and Canada – unlike the U.S. – don’t have any standards that qualify the competency of pipeline
operators, to ensure they’re properly trained. Instead, the Canadian Association of Petroleum Producers and the Canadian Energy Pipeline Association both prefer Canada’s “goals-oriented” regulatory approach, which the industry says puts responsibility for pipeline safety on the company.
The NEB says the safety performance of pipeline companies it regulates continues to compare well with that of other firms whose performance is monitored by other provincial, national and international organizations.
But to assure the public that the operators pushing the
buttons on potentially dangerous pipelines are qualified to do the job, Alberta and Canada need a formal and transparent set of standards.
EnCana Corp. continues to shift out of the conventional heavy oil business.
EnCana last week paid $374 million for ConocoPhillips Canada’s 46.7-per-cent interest in their heavy oil
venture, PetroveraResources. EnCana then sold all of Petrovera for more than $700 million to Canadian Natural Resources Ltd.
Randy Eresman, EnCana’s chief operating officer, says the move is part of the company’s strategy to focus on large, unconventional natural gas and oil reserves that can be produced at a relatively low per-barrel cost for a long time.
EnCana is concentrating on enhanced heavy-oil- recovery projects at Suffield and Pelican Lake, plus being a low-cost oilsands producer using steam-assisted gravity drainage technology at its wholly owned Foster Creek and Christina Lake oilsands projects.
Canadian Natural says that for it, the deal adds properties located in the company’s core heavy oil-production area, increases its market share without increasing overall supply of heavy oil from Alberta, and will enable the firm to increase demand for heavy oil.
In a separate deal, Canadian Natural spun off about one-third of the Petrovera assets for $234 million to independent Calgary-based producer Penn West Petroleum Ltd., which said the acquisition fits with its existing operations in southwest Saskatchewan.
(Mark Lowey can be reached at mark@businessedge.ca)
