Heavy crudes have recently become much more of a mainstay in the diet of global refining. Their role differs from market to market, depending on availability, price, refinery capabilities and political considerations, but extra heavy crudes and bitumen based products remain very much a western hemisphere phenomenon. When ‘the heavy crudes challenge’ is contemplated, the conclusion is that the challenge is quite different now than it was in the past.
Exploration and production
What are the challenges for heavy crudes? The first order of business would be to find them. This challenge has been met with great success by petroleum geologists, though a great deal has been found while prospecting for other crudes, just as many natural gas fields have been located while prospecting for crude. Global heavy oil resources are unquestionably vast, but significant additions to the proved reserve base have been placed on the books only as technological capability and crude cost have improved. In the past two decades, the additions have been stupendous: chiefly the oilsands resources in Canada and heavy and ultra heavy oils in Venezuela. Although significant oilsands resources also have been identified in Russia and Kazakhstan, for the most part these resources are only in the early stages of development. There are other scattered potential projects, such as a planned pilot project by Italian oil major ENI in the Congo, but most of these are speculative.
Transportation, upgrading and marketing
After the heavy oil is located and produced, there are synergies between the challenges of transporting the material, upgrading the material and marketing the upgraded product. Transporting the raw material may require the addition of diluents to allow pipeline transport. In some cases, this dilbit mixture may be sold directly, skipping the step of upgrading into one of the synthetic crudes. Both Venezuela and Canada sell dilbits, and both operate upgraders to produce various grades of synthetic crude. Canada sells approximately 40% of its bitumen as dilbit and upgrades 60% into synthetic crude. Upgrading heavy crudes and bitumen into synthetic crudes involves cracking some of the longer chain hydrocarbons. Suncor is one of the main Canadian synthetic crude producers, using a delayed coking process to create ‘coker sour’ synthetic crudes and producing ‘coker sweets’ by hydrotreating some of the coker output. The yield is approximately 81% synthetic crude for each bbl of bitumen input. Suncor’s Base and Millennium projects at Fort McMurray in Alberta province have a bitumen capacity of 440 000 bpd and a synthetic crude capacity of 357 000 bpd.
Refining and processing
A further heavy oil challenge is gaining the ability to refine it. Some Venezuelan heavy crudes are sold directly, while some are sold as blends to reduce the API gravities. Some Canadian bitumens are sold as dilbits, others as synthetic crudes of various quality. It is technologically possible to create ‘champagne’ synthetic crudes with very low sulfur levels and no residual fuel oil yield, but in practice, Canadian and Venezuelan producers have largely foregone the expense of upgrading to this level at home and have instead relied upon the refinery capabilities of their customers. These capabilities have grown, though not all refineries are capable of processing a steady diet of heavy crudes and bitumen products. Some refineries are able to process a limited quantity of heavy crudes and bitumens by dilution, but would require investment to be able to process any more.
Refining heavy crudes and bitumens has its own set of challenges, stemming chiefly from the fact that most of these feedstocks are hydrogen deficient and high in sulfur as well as other contaminants. Moreover, refining dilbits may bottleneck certain refineries because of what is known as the ‘dumbbell’ shaped distillation curve. Because a dilbit is a blend of an ultra heavy product and an ultra light product, the first stage of atmospheric distillation at the refinery will produce a large yield of light fractions and a large yield of heavy fractions, but very little in the middle distillate range, giving a true boiling point (TBP) curve that resembles a dumbbell. In some cases, the light ends are separated and sent back as return diluents. Many refineries have little use for these light ends, requiring instead the cracker feedstocks provided by the heavy crudes. In fact, some refineries import cracker feedstock alone, particularly in markets with little demand for light ends such as LPG and naphtha.
Heavy oils pose a number of challenges on several fronts: technological, logistical, environmental, political and economic. The technological challenges are being met with remarkable facility. The proven reserve base is now massive, dominated by the reserves in Canada and Venezuela.
Major progress also has been made on the challenges of extraction, transport and processing, meaning that the challenges are now shifting toward economics and policy considerations.
There are several new directions in the North American market, but they are dual edged swords with respect to heavy crudes and bitumens, and they also tend to be cyclical and self correcting. For example, the increase in global cracking to distillation ratios has broadened the market for heavy crudes and bitumens, which increased demand and price, which in turn reduced the incentive to build additional cracking and coking capacity. The present abundance of American light crudes and condensates has eased the supply of diluents and narrowed the light/heavy differential, yet the build up of light supplies in the heartland of the US has reduced the regional price basis. Producers, processors and customers have grown sensitive to small changes in price signals. As Venezuela and Canada both work to expand output, the new supply may further dampen prices.
It is also possible that the US itself will begin to develop its own oilsands resource. In October 2012, the Alberta based US Oil Sands, Inc. became the first company to receive permission to develop its oilsands resource in the state of Utah. The company expects to produce 2000 bpd in the coming year. In November 2012, another Canadian corporation known as MCW Enterprises announced that it also had received all of the necessary permits to develop its oilsands resource, also in Utah. Consequently, the US may also become a bitumen producer, with the new volumes perhaps offsetting losses of heavy oil output from older fields and displacing foreign barrels. However, oilsands development in the US is strongly opposed by environmental groups, and any developments will be subject to intense public scrutiny.
Heavy crude and bitumen producers have met many challenges, and many advances have been made, but the quest must continue to reduce costs, increase efficiency, and improve environmental protection and remediation.
Nancy Yamaguchi, Hydrocarbon Engineering, Contributing Editor.
The full article can be read in the March 2013 issue of Hydrocarbon Engineering. Subscriber can login here to read the full article.
Read the article online at: https://www.hydrocarbonengineering.com/gas-processing/22022013/heavy_crudes_challenge_328/