Bitcrude may be a game-changer in pipe­line de­bate

PressReader - BRUCE_CAROL_ROWE Channel - Bitcrude may be a game-changer in pipe­line de­bate
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 rail cars 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 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 rail car 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 take-away 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.

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