Oilsands Review - Redefining the Heartland May 2013

: : R E D E F I N I N G T H E H E A R T L A N D : : M AY 2 0 1 3 : :

Shifting

focus The Heartland has diversified its post-recession focus, but upgrading isn’t completely off the

PM40069240

books just yet

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The boom is back Alberta’s Heartland is ramping up for another busy season of projects

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Painting the Heartland green As new projects are planned for the Heartland, the need for environmentally friendly technologies is becoming more important

CELEBRATING 15 YEARS

ALBERTA’S INDUSTRIAL HEARTLAND ASSOCIATION

The power of municipal collaboration has been a unique part of Alberta’s Industrial Heartland for fifteen years. The region’s economic prosperity, vibrant innovation, and community commitment demonstrate the municipal partnership’s true achievements.

FIFTEEN years ago Alberta Premier Ralph Klein applauded the partnership, saying “This is a fine example of what Albertans do best – work together. These municipalities are building on the key strengths of our Alberta Advantage. And they have also added another element to our advantages – local cooperation for better long-term, regional growth.” – May, 1998

FIVE municipalities Municipal cooperation enhances business attraction, improves planning, and ensures complementary use of resources. Collaboration has helped the region evolve into Canada’s largest hydrocarbon processing centre with over $30 billion in capital investment.

ONE favorable future The Association is committed to promoting the region’s advantages and opportunities. This includes enhancing value adding, not just in oil and gas sectors, but chemical, petrochemical, and agriculture as well. The process of adding value benefits the entire province and country by creating long term jobs, growth and revenue, and diversifying our markets and customers.

For more information about Alberta’s Industrial Heartland Association, visit www.industrialheartland.com.

www.industrialheartland.com inquiries@industrialheartland.com 780.998.7453

The Association’s Members – Counties of Lamont, Strathcona, and Sturgeon, along with Cities of Edmonton and Fort Saskatchewan – are joined by Associate Members – Towns of Bruderheim, Gibbons, and Redwater – in promoting and coordinating sustainable development of the region.

COntentS EDITORIAL EDITOR

Rianne Stewart | rstewart@junewarren-nickles.com CONTRIBUTING WRITERS

Jim Bentein, Melanie Collison CONTRIBUTING PHOTOGRAPHER

Darryl Zubot EDITORIAL ASSISTANCE MANAGER

Marisa Sawchuk | msawchuk@junewarren-nickles.com EDITORIAL ASSISTANCE

Laura Blackwood, Sarah Eisner CREATIVE PRINT, PREPRESS & PRODUCTION MANAGER

Michael Gaffney | mgaffney@junewarren-nickles.com CREATIVE SERVICES MANAGER

Tamara Polloway-Webb | tpwebb@junewarren-nickles.com CREATIVE LEAD

Contents

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Cathlene Ozubko GRAPHIC DESIGNER

Jeremy Seeman CREATIVE SERVICES

Jenna O’Flaherty

Alberta’s Industrial Heartland If you’re building an industrial project, the Heartland is the place to be

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What is Alberta’s Industrial Heartland?

Heartland by the numbers

By Rianne Stewart

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Shifting focus The Heartland has diversified its postrecession focus, but upgrading isn’t completely off the books just yet

By Jim Bentein

Denise MacKay | atc@junewarren-nickles.com DIRECTORS CEO

Bill Whitelaw | bwhitelaw@junewarren-nickles.com PRESIDENT

Rob Pentney | rpentney@junewarren-nickles.com DIRECTOR OF SALES & MARKETING

Maurya Sokolon | msokolon@junewarren-nickles.com DIRECTOR OF EVENTS & CONFERENCES

Ian MacGillivray | imacgillivray@junewarren-nickles.com DIRECTOR OF THE DAILY OIL BULLETIN

Stephen Marsters | smarsters@junewarren-nickles.com DIRECTOR OF DIGITAL STRATEGIES

Gord Lindenberg | glindenberg@junewarren-nickles.com DIRECTOR OF CONTENT

Chaz Osburn | cosburn@junewarren-nickles.com DIRECTOR OF PRODUCTION

Audrey Sprinkle | asprinkle@junewarren-nickles.com DIRECTOR OF FINANCE

Ken Zacharias, CMA | kzacharias@junewarren-nickles.com

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The boom is back Alberta’s Heartland is ramping up for another busy season of projects

Painting the Heartland green As new projects are planned for the Heartland, the need for environmentally friendly technologies is becoming more important

By Jim Bentein

OFFICES CALGARY

2nd Flr-816 55 Avenue NE | Calgary, Alberta T2E 6Y4 Tel: 403.209.3500 | Fax: 403.245.8666 Toll-free: 1.800.387.2446 EDMONTON

220-9303 34 Avenue NW | Edmonton, Alberta T6E 5W8 Tel: 780.944.9333 | Fax: 780.944.9500 Toll-free: 1.800.563.2946 GST Registration Number 826256554RT. Printed in Canada by PrintWest. ISSN 1204-4741 | © 2013 JuneWarren-Nickle's Energy Group. All rights reserved. Reproduction in whole or in part is strictly prohibited. Publications Mail Agreement Number 40069240. Postage paid in Edmonton, Alberta, Canada.

If undeliverable, return to: Circulation Department, 80 Valleybrook Dr,

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Going old school Lime plant contributes to big development news for Alberta’s Heartland

By Melanie Collison

North York, ON M3B 2S9. Made in Canada.

PHOTO: ??????????

The opinions expressed by contributors to this publication may not represent the official views of the magazine. While every effort is made to ensure accuracy, the publisher does not assume any responsibility or liability for errors or omissions.

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PHOTO: DARRYL ZUBOT

a

The Scotford refinery, located right in the heart of the Industrial Heartland area, will be a key player in the move to reduce emissions using carbon capture and storage.

sk people about the best places to do business right now in Alberta and most would immediately think of the oilsands. Yet not far from the province’s bitumenrich region, just a short drive away from the provincial capital, there is a thriving economic powerhouse that is already host to several major industrial corporations—with more on the way in the coming decades.

The Industrial Heartland of today is the product of a 1998 agreement that created the Alberta’s Industrial Heartland Association (AIHA). Initially, the partnership was between four municipalities (Fort Saskatchewan, Lamont County, Strathcona County and Sturgeon County), and support by three levels of government and the Northeast Capital Industrial Association. In the past 15 years, one more municipality (the City of Edmonton) and three associate members (Bruderheim, Gibbons and Redwater) have joined, and the area has become an industrial epicentre with more than $30 billion worth of capital investment.

The association ensures responsible and efficient development for its members, while also promoting economic activity in the area through such initiatives as its Alberta Plus marketing campaign. The campaign focuses on four areas: economics, environment, careers and job security.

“The goal of our board really was to bring the Alberta heartland to its A-game,” Linda Osinchuk, AIHA chair and mayor of Strathcona County, told the Daily Oil Bulletin early this year.

“We’re there, but now it’s time to take it to the A-plus game, and that’s what this campaign is going to do.”

Just seven years ago, the area’s focus was on upgrading and refining crude, but now the AIHA is working to diversify the local economy to create a more stable environment that isn’t so dependent on energy prices.

However, even if the area can’t fully insulate itself from commodity price shocks—the majority of the new projects announced for the region are still oil- and gas-related—the Heartland will be doing more than just upgrading. There is already movement in the areas of carbon capture and storage and off-gas processing, for instance.

The Heartland is also experiencing an influx of green technologies and environmentally friendly industrial processes. Every project currently planned for the area in the coming years has a green component and will help mitigate some of the environmental impacts of the nearby oilsands.

Besides the jobs and booming economy that come with industrial development, the Heartland is home to numerous recreation facilities, provincial parks and museums. Its communities, like Fort Saskatchewan and Lamont, are the towns rural Alberta is known for, complete with quaint main streets and weekly farmers’ markets.

Over 1.1 million people call the greater Edmonton area home, and help supply the Heartland region’s ever-expanding list of industrial projects with a skilled workforce. With more companies setting up shop in the region in the coming years, the number of families living there will also grow—all of which is good news for Alberta’s economy.

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What is Alberta’s Industrial Heartland?

Town of Redwater

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Sturgeon County

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Town of Gibbons

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Town of Bruderheim

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Lamont County The area governed by Alberta’s Industrial Heartland Association is outlined in black.

City of Fort Saskatchewan

Municipal members: 5

City of Edmonton

1

City of Fort Saskatchewan

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Population: 20,000

Strathcona County

Size: 46.4 square kilometres Companies active in the area: Sherritt International Corporation, The Dow Chemical Company, Agrium Inc. Landmarks: Dow Centennial Centre, historical CN station Interesting: throughout the summer, a herd of 40 sheep maintain the town’s grass and weeds AIH representative: Mayor Gale Katchur

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Lamont County

Population: 8,500 Size: 2,474 square kilometres Companies active in the area: Canexus Chemicals Canada LP, Tervita Corporation, Triton Fabrication Inc. Interesting: Lamont County is known as the “Church Capital of North America,” as it has more churches per capita than anywhere else in North America—47 in total AIH representative: Reeve Wayne Woldanski

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Strathcona County

Population: 92,400 Size: 1,265 square kilometres Landmarks: Ardrossan Recreation Complex Interesting: Strathcona County has seen population growth of 12 per cent since 2008, making it Alberta’s third-largest municipality in terms of population AIH representative: Mayor Linda Osinchuk

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Sturgeon County

City of Edmonton

Population: 19,000

Population: 1,300,000

Size: 2,100 square kilometres

Size: 9,426.7 square kilometres

Companies active in the area: Agrium Inc.

Companies active in the area: TBD

Landmarks: Country Soul Stroll agricultural driving tour, Cardiff Park

Landmarks: Art Gallery of Alberta, Royal Alberta Museum, West Edmonton Mall, Fort Edmonton Park

AIH representative: Mayor Don Rigney

AIH representative: Mayor Stephen Mandel

Associate members:

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Town of Gibbons

Town of Bruderheim

Population: 3,030

Population: 1,300

Size: 7.39 square kilometres

Size: 4.23 square kilometres

Landmarks: Jurassic Forest, Goose Hummock Golf Course

Landmarks: Spring Creek Wetland Interpretive Centre, Bruderheim Heritage Trail, Walker School Museum, Canadian Moravian Museum

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Town of Redwater

Population: 2,116 Size: 20.12 square kilometres Landmarks: Pembina Place, Redwater Museum

Proud to be part of the development of Alberta’s Industrial Heartland

Ph: 1-866-454-4717

www.progressland.com O I LS A N D S R E V I E W | rede f inin g t h e h ear t land | M AY 2 013

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HEARTLAND

by the

NUMB3R$

The Heartland area covers

over 40

are in the City of Edmonton

Taxes paid by industry to Heartland municipalities exceeded

$77 MILLION in 2012 Annual local spending by industry in the Heartland area for goods and services is greater than

industrial companies are active in the Heartland region

Industrial activity in the Heartland began in

1952

Industrial activity in the Heartland region employs over

7,000 people 6,100+ people

$900 MILLION over $30 billion

rely on industry in the Heartland region for their livelihood

has been invested in the region to date

SOURCES: ALBERTA’S INDUSTRIAL HEARTLAND ASSOCIATION; NORTHEAST CAPITAL INDUSTRIAL ASSOCIATION

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HABITS of Strathcona County People

Habit 4: Think Win-Win Also think, ‘Yeah baby!’

Celebrate. You’ve worked hard, kept your head down, overachieved in all you’ve pursued. Lofty goals and raw ambition pepper your life’s report card. Now…reap your reward.

It’s called Strathcona County…‘the good life’. But there’s also a humble heartbeat here that grounds you and your children in authenticity. We are salt of the earth, with values and traditions that nourish life and living. Knowing neighbours still matters. Giving back and paying it forward matter even more. Truth, beauty and goodness flourish here, powered by people like you.

Check us out. You owe it to yourself. www.strathcona.ca

ATCO Energy Solutions Providing natural gas liquids extraction, industrial water infrastructure, electric transmission and substations, and energy storage & logistics solutions.

ATCO Power Developing and operating high efficiency industrial scale power generation projects to supply reliable, low cost electricity to Alberta’s primary industries.

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The Heartland region had expanded from a single company in the 1950s to an industry cluster that has attracted world attention since the 1990s. Created in May 1998, Alberta’s Industrial Heartland Association is celebrating its 15th anniversary this year.

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SHIFtInG FOCUS

The Heartland has diversified its post-recession focus, but upgrading isn’t completely off the books just yet

By Jim Bentein

S

ix years ago, those in the Alberta construction industry were fretting about whether or not there would be enough skilled workers to build the seven oilsands upgraders planned for the Industrial Heartland region and the impact a shortage might have on construction costs.

But then, in the words of Neil Shelly, executive director of Alberta’s Industrial Heartland Association (AIHA), “that horse left the barn.”

One after another, the projects worth billions of dollars dropped off. In November of last year, one horse—the Sturgeon Refinery— came back into the barn, followed by speculation early this year of another—the BA Energy Inc. Upgrader—following its lead.

PHOTO: DARRYL ZUBOT

Renewed hope

In early November, the North West Redwater Partnership (NWR) announced that its Sturgeon Refinery, a $5.7-billion project that could lead to billions more in investment, will go ahead.

“I can’t even estimate the total economic impact, but it will be in excess of $50 billion and closer to $100 billion and beyond,” says Ian MacGregor, chairman of North West Upgrading Inc. NWR is a wholly owned subsidiary of Calgary-based North West Upgrading and

Canadian Natural Upgrading Limited, which, in turn, is a subsidiary of oilsands producer Canadian Natural Resources Limited.

The project is to be built in Sturgeon County, near the existing Agrium Inc. fertilizer complex, and it promises to transform the economy of the Heartland, says Shelly.

“It has been a long trip [North West has been working on the project since 2004], but this is really good news for the Heartland and the province as a whole,” he says.

The long-planned oilsands bitumen upgrader will be the first project of its type to capture large volumes of CO2, which will be put to use by the province’s first CO2 pipeline, the Alberta Carbon Trunk Line (ACTL), according to MacGregor.

“We will be capturing enormous quantities of CO2,” says MacGregor. “Initially we will capture 3,500 tonnes of CO2 per day, but with all three phases we could capture up to 11,000 tonnes. That’s equal to the emissions from all the cars in Alberta. This is an important project for Alberta. It’s being done by Albertans. We live here and we wanted to do the right thing.”

Construction on the project, which MacGregor says will employ 8,000 construction workers at its peak, was scheduled to begin this spring. It will take three years to build the huge project, which is being constructed

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SHIFtInG FOCUS

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Opportunities galore

Unlike most CO2 produced by conventional upgraders, which is mixed with nitrogen and other elements, the CO2 produced by the Sturgeon Refinery is considered pure and is therefore suitable for enhanced oil recovery (EOR)—making it a valuable product that will eventually generate huge amounts of revenue.

The CO2 will be sold to Enhance Energy Inc., which is currently developing the 240kilometre, 16-inch-diameter ACTL. The line will eventually transport CO2 from the Agrium fertilizer plant near Redwater and from the Sturgeon Refinery to be used for EOR in depleted oil reservoirs in central Alberta. Enhance has received a commitment of $495 million from the Alberta government’s $2-billion Carbon Capture and Sequestration Fund for the $1.3-billion project.

MacGregor, who is also chairman of the board at Enhance, says the ACTL project will be adjusted to fit the schedule of the Sturgeon Refinery. It will be designed to ultimately move 40,000 tonnes per day of CO2.

Talk of the town

The proposed BA Energy Upgrader, a 260,000-barrel-per-day project planned

by Calgary-based, privately owned Value Creation Inc., may also be back in the barn after being shelved in 2008 following the credit crisis.

“We are still planning to build it and we are working on securing a partnership,” says Value Creation chief executive officer Columba Yeung.

The $1-billion-plus upgrader, on which Value Creation subsidiary BA Energy spent $600 million before the 2008 credit crisis hit (forcing the subsidiary to seek creditor protection in January 2009), is still economically viable, Yeung says. “Capital costs and operating costs are less than half of those with a conventional upgrader,” he says.

Value Creation, which has since recapitalized after BP Canada Energy injected

PHOTO: DARRYL ZUBOT

in three 50,000-barrel-per-day phases for total capacity of 150,000 barrels per day.

MacGregor says it’s important to understand that the company isn’t just developing an upgrader to turn bitumen into a lighter, refinery-ready crude, as all other planned and existing upgraders in the province do.

“Most refineries in North America were designed to produce gasoline, but we are responding to the market in western Canada,” says MacGregor. “We’re producing 40,000 barrels per day of diesel [from the first phase], and diesel is a high-margin product that is in great demand in western Canada.”

Another key technological part of the refinery’s design is that it will deploy gasification, which means the upgrader won’t need to rely on natural gas as a source of hydrogen for the process. Instead of producing dry coke as a by-product, North West will transform hot liquid bottom ends into hydrogen, oxygen and 99.5 per cent pure CO2. It will also produce 10,000 barrels per day of lubricants, which could spawn the development of a lubricants plant.

Shelly predicts the Sturgeon Refinery will bring numerous economic benefits to the Heartland area and the rest of Alberta, including about 800 permanent direct jobs—600 of those in the Heartland and 200 in Calgary.

Enhance president and chief executive officer Susan Cole echoes this, estimating 97,000 person-years of employment during the refinery’s construction phase and 307,000 person-years of employment during the first 30 years of operation.

And because large industrial plants tend to have a “multiplier effect,” creating many spinoff jobs, Shelly says there will be three times that many permanent positions for everyone from environmental consultants to truck drivers and restaurant workers.

A recent AIHA study also showed the project would generate $1.2 billion in provincial and federal tax revenue. North West recently calculated that if the Sturgeon Refinery had been operating in 2011, the government would have collected $500 million, Shelly says.

In addition, the Alberta government, through the Alberta Petroleum Marketing Commission, which collects bitumen from producers in lieu of royalties through the Bitumen Royalty in-Kind program, stands to benefit directly from the project’s profits. The Alberta government will supply 37,500 barrels per day of collected bitumen to be upgraded, while Canadian Natural has agreed to supply 12,500 barrels per day.

S hif t i n g focus

The Sturgeon Refinery Owners: North West Upgrading Inc., Canadian Natural Resources Limited Capacity: 150,000 barrels per day in three phases ill receive some of its feedstock volumes from the Government of Alberta’s W Bitumen Royalty in-Kind program First 50,000-barrel-per-day phase sanctioned in fall 2012, start-up expected in 2016

$900 million into the company to buy 75 per cent of its Terre de Grace lease, announced in late 2012 it would spend $3.39 billion to develop its TriStar oilsands project near Fort McMurray.

Diversifying the Heartland The Heartland’s proximity to Alberta’s oilsands means the area sees plenty of industry spinoffs—and will likely see a lot more in the future. As technology and processes are developed to reduce the environmental impact of the Heartland area’s refining and petrochemical industries, the area is seeing focus on CO2 capture and off-gas processing projects, as well as on a new cluster of value-added projects linked to Alberta’s abundant and low-cost

and refineries in the region, and they all produce CO2 emissions,” he says. “Now, because we will have the infrastructure to capture CO2 emissions, many industries that may not have considered locating in the area in the past will now look here.”

In addition, reducing CO2 emissions and other environmental impacts from oilsands development, in which Heartland industries will play a key role, will prove to be vital as more states and provinces shun oilsands crude because of its environmental footprint.

“It’s not just a financial issue, it’s an access issue,” he says.

One of the CO2 capture-related de­ velopments slated for the Heartland region is the Quest Project, which will capture 1.2 million tonnes of CO2 per year from

Construction has begun and will employ 400 skilled workers over 30 months, peaking at about 700 workers.

Shell has also contracted with Aux Sable to move CO2 from the Scotford refineryupgrader to an off-gas processing facility operated by Aux Sable. The firm breaks off-gas down into ethane and other valueadded products, as well as hydrogen, which is returned to Shell for use in its refinery. The Aux Sable plant employed a peak construction workforce of 124 and now employs 11 permanent staff.

In addition, plans by South African­–based Sasol Limited to develop Canada’s first natural gas–to-liquids conversion project in the area, which itself is a multi-billion dollar development, could lead to a “value chain” of new

“ Because we will have the infrastructure to capture CO2 emissions, many industries that may not have considered locating in the area in the past will now look here.”

— Neil Shelly, executive director, Alberta’s Industrial Heartland Association

natural gas production. The off-gases and captured CO2 not only support EOR, as well as the province’s existing petrochem­ ical industry, but would also foster a whole new industry built around space-age plastics and other products.

Shelly points to the CO2-related projects as a key element in the Heartland’s future.

“There are a number of petrochemical plants

Shell Canada Limited’s Scotford refineryupgrader, with that CO2 being stored 2,300 metres below ground. The province will provide $745 million and the federal government $120 million towards the $1.35-billion project being developed by partners Shell, Chevron Canada Limited and Marathon Canada Limited. The CO2 will be transported via an 80-kilometre pipeline.

natural gas liquids–related petrochemical projects, Shelly says.

Shelly says the “greening” and diversifying of the petrochemical and oilsands industries will lead to significant spinoff developments in the Heartland, with one recent study showing 35 different petrochemical companies that could be attracted to the region because of its growing CO2 capture and oilsands off-gas infrastructure.

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12,000 acres (20 square miles)

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Part of Alberta’s Industrial Heartland with easy access to feedstock as well as distribution and supply opportunities Connected to the northern oil sands supply chain and logistics corridors, and to the city of Edmonton for labour, equipment and City services www.edmonton.ca/eetp

H e a r t l a n d P r O J e C t U P d at e

Alberta’s Heartland is ramping up for another busy season of projects

F

rom refineries and upgraders to pipelines and lime processing plants, the list of projects being planned for Alberta’s Industrial Heartland region is impressive.

And for every project that goes ahead, the Heartland will see development of related projects—meaning the list below is only just the beginning of something big for the region.

Here’s a look at some of the proposed or underconstruction projects seeing action in the Heartland area.

STURGEON REFINERY

UPGRADERS AND REFINERIES Developed by: North West Redwater Partnership (subsidiary of North West Upgrading Inc. and Canadian Natural Upgrading Limited, a subsidiary of Canadian Natural Resources Limited) Capacity:

50,000 bbl/d

Bruderheim

X3

Lamont

Location:

Ft. Saskatchewan

Cost:

Sturgeon County

Three phases of 50,000 barrels per day of crude oil (150,000 barrels per day total)

The Sturgeon Refinery will produce 40,000 barrels per day of diesel, and will be the first of its kind to capture large volumes of CO2. The CO2—up to 11,000 tonnes per day—will be transported by the Alberta Carbon Trunk

Operational:

$5.7 2016 BILLION (first phase)

Line (see page 17) and be used for enhanced oil recovery in southern Alberta. Construction was scheduled to begin in spring 2013 and will employ over 8,000 people at its peak.

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H e a r t l a n d P r O J e C t U P dat e

BA ENERGY UPGRADER

UPGRADERS AND REFINERIES Developed by: Value Creation Inc. Capacity:

Cost:

Bruderheim Lamont

Location:

Ft. Saskatchewan

STRATHCONA County

260,000

Construction was suspended in 2008 due to financial constraints, but the company recently announced that it was actively seeking investment and

bbl/d

Operational:

$1+ TBD BILLION

would resume construction once secured. The BA Energy upgrader will produce synthetic crude oil and synthetic diluent.

GAS-TO-LIQUIDS PROCESSING PLANT

OFF-GAS PROCESSING Developed by: Sasol Limited Capacity:

Bruderheim Lamont

Location:

Ft. Saskatchewan

STRATHCONA County

500 MILLION cubic feet per day

If this project goes ahead, Sasol will build the first gas-to-liquids facility in Canada. Initial plans predict producing 48,000 barrels per day of diesel, naphtha and liquefied petroleum gas from the first phase. The company estimates that

Cost:

Operational:

$4+ TBD BILLION

the facility will produce 500 new permanent jobs and employ over 5,000 at its peak construction. The company has determined a project site but has delayed project plans for at least one year to focus on its operations in Louisiana.

KEYERA DE-ETHANIZER

OFF-GAS PROCESSING Developed by: Keyera Corp.

Capacity:

Lamont

Location: Ft. Saskatchewan

Fort saskatchewan, alta.

30,000

bbl/d of ethane-rich natural gas liquids

Plans to add a de-ethanizer component to Keyera’s existing natural gas liquids facility would mean a new source of ethane for petrochemical facilities in the area, as well as supply of propane-rich natural gas liquids for the company’s

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Operational:

$110 2014 MILLION mid

Bruderheim

Cost:

fractionation plant. The company estimates a peak construction workforce of 200 employees, with a permanent workforce of 60. Engineering for the project is currently underway.

H e a r t l a n d P r O J e C t U P d at e

WILLIAMS DEHYDROGENATION FACILITY

OFF-GAS PROCESSING Developed by: Williams Energy (Canada) Inc.

Location:

Redwater

strathcona county

Capacity:

Cost:

Operational:

$900 2016 MILLION 2nd quarter of

1.3 BILLION

Bruderheim Lamont

barrels of propylene

The company will use propane recovered from its existing off-gas facility to produce polymer-grade propylene. Williams is currently the only company in Canada that currently produces polymer-grade propylene. The plant’s

by-products will include hydrogen, butane/butylenes and condensate. The project was sanctioned in March 2013 and is currently undergoing the consultation process.

ALBERTA CARBON TRUNK LINE Redwater

CO2 CAPTURE AND STORAGE PROJECTS Developed by: Enhance Energy Inc.

Bruderheim

Edmonton

Capacity: Leduc

Cost:

Tofield

Location:

Camrose

redwater to clive, alta.

14.6 MILLION

Clive

tonnes of CO2 per year

Lacombe

This 240-kilometre pipeline will transport CO2 captured at Agrium Inc.’s Redwater fertilizer plant and the under-construction Sturgeon Refinery to aging reservoirs

Operational:

$1 TBD BILLION

in southern Alberta for use in enhanced oil recovery and for permanent storage.

Project plans are dependent on the timing of the Sturgeon Refinery.

QUEST

CO2 CAPTURE AND STORAGE PROJECTS Developed by: Shell Canada Limited, Chevron Corporation, Marathon Petroleum Corporation Capacity:

Cost:

Bruderheim Lamont

Location:

Ft. Saskatchewan

Strathcona County

1 MILLION cubic feet per year of CO2

As a fully integrated carbon capture and storage project, Quest will capture CO2 from Shell’s Scotford upgrader-refinery before transporting it 80 kilometres north of the facility and injecting it underground (2,300 metres below the surface) to be stored permanently in impermeable geological formations.

Operational:

$1.35 2015 BILLION

Quest received support from the Alberta government’s Climate Change and Emissions Management Fund ($74.5 million), as well as $120 million from the federal government. The project began construction in September 2012 and is expected to have a peak construction workforce of 700.

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H e a r t l a n d P r O J e C t U P dat e

GRAYMONT LIME HYDRATING FACILITY

OTHER PROJECTS Developed by: Graymont Western Canada Inc. Capacity:

Lamont

Location: Location:

Ft. Saskatchewan

lamont lamontcounty county

Operational:

TBD TBD 2014 late

Bruderheim

Cost:

The Graymont facility will process and distribute lime, which is used for separating calcium, magnesium, silica and other contaminants out of produced

water to prevent scaling buildup in SAGD boilers. Regulatory approvals have been filed. Once received, construction is expected to begin in mid-2013.

HI-Q FIELD DEMONSTRATION PROJECT

OTHER PROJECTS Developed by: MEG Energy Corp.

Capacity:

Lamont

Location:

Ft. Saskatchewan

lamont county

3,000

bbl/d of diluted bitumen

Co-funded by Alberta Innovates – Energy and Environment Solutions, Sustainable Development Technology Canada and MEG, the pilot project will be used to research and apply MEG’s new technology for converting diluted

$103.6 2014 MILLION

bitumen into heavy crude oil. The process emits 44 per cent fewer emissions than conventional upgrading processes. Regulatory approval applications have been filed and are expected to come through in mid-2013.

GRAND RAPIDS PIPELINE

OTHER PROJECTS Developed by: TransCanada Corporation and Phoenix Energy Holdings Limited

Ft. McMurray

Location:

Athabasca

Pump stations

Capacity:

30 km WEST of Fort McMurray to Edmonton

Edmonton

Operated by TransCanada, the completed 500-kilometre pipeline will transport crude oil from the Fort McMurray area to Edmonton and diluent in the opposite direction, from Edmonton to operations near Fort McMurray. The

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O I LS A N D S R E V I E W. c O m

Operational:

mid

Bruderheim

Cost:

900,000 330,000 bbl/d of crude oil

bbl/d of diluent

Cost:

Operational:

$3 2017 BILLION

project also includes eight pump stations, four tank farms and two loading/ unloading terminals. Construction is slated to begin in mid- to late 2014.

Regulatory approval applications were filed in early 2013.

Redwater is on the brink of the bitumen refining revolution. Located only 5 km north of Alberta’s Industrial Heartland and with direct access to Fort McMurray, Redwater offers a diverse commercial and industrial base with strong development and employment prospects.

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As new projects are planned for the Heartland, the need for environmentally friendly technologies is becoming more important

Shell's Scotford Upgrader (pictured here) will supply Quest with up to one million tonnes of CO2 per year, which will be stored permanently underground.

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PHOTO: DARRYL ZUBOT

By Jim Bentein

Green

$745

Williams Energy fractionation plant

Quest Project

million

for the Quest Project

$496

-5to00,000 nnes of CO2/year

-1,000,000 tonnes of CO2/year

million

for the Enhance Project

70%

The CCSF is aimed at reducing GHG emissions by 70% (200 megatonnes) through carbon capture and storage projects by:

2050 a

which is the same as removing 260,000 vehicles from the road

huge list of industrial projects could conjure an image similar to something out of a Charles Dickens novel. However, a closer look at the specific projects planned for Alberta’s Industrial Heartland region paints a different—much greener—picture.

Without exception, the projects planned include environmentally friendly components, with a common theme of capturing and reusing huge volumes of CO2 and other greenhouse gases (GHGs).

One of those projects is Provident Energy Ltd. and Williams Energy (Canada) Inc.’s fractionation plant, which processes off-gases. Williams Energy entered an agreement in 2012 to purchase off-gases from Canadian Natural Resources Limited’s Horizon oilsands plant. With Horizon operational, the plant will be reducing CO2 emissions in Alberta by 500,000 tonnes per year, according to David Chappell, president of Williams Energy. That’s equivalent to removing 85,000 vehicles a year from Alberta’s roadways.

But Chappell points out that the Quest project, being developed in conjunction with Shell Canada Limited’s Scotford Upgrader, will remove even more—up to one million tonnes of CO2 per year, which is the equivalent of taking 175,000 vehicles off of the province’s roads.

And even those numbers are eclipsed by the environmental benefits of the upcoming Sturgeon Refinery and the related Alberta Carbon Trunk Line.

The Sturgeon Refinery will be the first refinery of its kind to use gasification technology—producing pure CO2 that will be captured and then sold to Enhance, who will transport the CO2 using its 240-kilometre-long, 16-inchdiameter Alberta Carbon Trunk Line to southern Alberta, where it will be used for enhanced oil recovery (EOR). The line will also carry CO2 from Agrium Inc.’s nearby Redwater fertilizer plant.

= 5,000 vehicles

The Heartland’s environmentally friendly projects are seeing support from the Alberta government—the Enhance project received about $496 million from the $2-billion Carbon Capture and Storage Fund (CCSF). The CCSF is a result of the government’s Climate Change Strategy, aimed at reducing GHG emissions by 200 megatonnes—or 70 per cent—by 2050 through carbon capture and storage projects.

The Quest project received $745 million from the CCSF, and also saw $120 million in additional support from the federal government. Once construction is complete, Quest will capture an estimated 1.2 million tonnes of CO2 per year and store it in underground basins.

Leah Lawrence, president of Calgary-based Clean Energy Capitalists Inc., a consulting firm working with Enhance and other companies looking at CO2 capture, believes there’s the potential to produce at least 1.4 billion barrels of oil in Alberta using CO2 for EOR. In addition, she thinks all of the GHG emissions in the province could potentially be stored permanently in the depleted reservoirs.

“The potential is enormous,” echoes Enhance president and chief executive officer Susan Cole.

Lawrence cites two studies proving the potential of CO2 in EOR: one by the Alberta Economic Development Authority (AEDA) and another by the provincially appointed Alberta Task Force on CCS. The task force’s study predicts 450 megatonnes of CO2 could be captured and sequestered annually in Alberta, beyond the 240 megatonnes emitted now in the province.

Meanwhile, the AEDA report predicts the captured CO2 could produce at least 1.4 billion barrels of crude, worth more than $105 billion at today’s oil prices, while taxes and royalties paid to governments would be as high as $25 billion.

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21

lIMe PrOCeSSInG

Going old school Lime plant contributes to big development news for Alberta’s Heartland

By Melanie Collison

t

Bruderheim’s 1,300 residents need recreational facilities and generally want a better quality of life, he says. “Lamont relies on taxes of farmland which are very low, so services and amenities are also low. Our non-residential tax base is five per cent of our budget. We have to get to 30 per cent to be sustainable.”

After the heady days of planning “Upgrader Row” in Alberta’s Industrial Heartland sagged into one disappointing cancellation after another, it’s exciting for Lamont to be wooed again.

And the Graymont plant is not the only big news for Lamont County. Canexus Corporation is applying to expand its hydrocarbon transloading terminal located just east of Bruderheim. Triton Fabrication Inc., in the town of Lamont, is expanding its modular fabrication shop and almost doubling its workforce, Newman says.

MEG Energy Corp. has also announced plans to build its HI-Q pilot plant on the Canexus property in 2014, if all goes well with its regulatory hearings. MEG’s Stonefell tank terminal is already under construction west of Bruderheim.

“Then there are pipelines and a transmission corridor coming through this area,” Newman says. “We’re trying to get our heads around growth in the next 18 months and the tax base we’re going to have and the impact of residential growth that could happen. It’s exciting times.”

PHOTO COMPOSITION: JEREMY SEEMAN

he newest addition to Alberta’s Industrial Heartland will be performing one of the oldest known chemical reactions: hydrating quicklime.

Graymont Western Canada Inc. expects to break ground this spring on a lime processing and distribution centre seven kilometres east of Bruderheim, an industrial bedroom community located in central Alberta.

Lime is the crucial ingredient in one of the two established processes for freeing raw and produced water of the calcium, magnesium, silica and other contaminants that cause scaling on the steam generating boilers that enable steam assisted gravity drainage (SAGD).

Bruderheim and surrounding Lamont County are warmly welcoming Graymont’s lime hydration plant and distribution centre. “It’s a good fit for the location and for Lamont County,” says county manager of economic development Jim Newman. “It doesn’t have a big environmental impact or footprint.”

But the plant does have jobs, a tax contribution and a commitment to community involvement, adds Bruderheim Mayor Karl Hauch. “Here we are in the middle of the Industrial Heartland, we’re the closest residents, but seemingly we’re the least able to capitalize on opportunities. We’re all for a project that’s responsible to the environment.”

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Advertisers’ Index Access Pipeline Inc.

................................................................................................

Alberta’s Industrial Heartland Association

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inside front cover

ATCO Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 City of Edmonton

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City of Fort Saskatchewan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . inside back cover Inca Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 NC Services Group Ltd.

.......................................................................................

PCL Industrial Management Inc. Progress Land Services Ltd.

..........................

14

outside back cover

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Skyway Canada Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Stewart Weir & Co Ltd.

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8

Strathcona County . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Thunder Bay Port Authority

................................................................................

9

Town of Redwater . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Visit the oilsands with the click of a button. canadianoilsandsnavigator.com

• Lease ownership • Operating and upcoming project locations • Operating project details • Project development timelines • Key performance indicators • Company-specific capital expenditures

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seizing

industrial opportunity

For business expansion or relocation information contact Economic Development at:

780.992.6231 or visit www.fortsask.ca

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