Upgrading Bitumen with Natural Gas

Keith Kohl

Written By Keith Kohl

Posted February 4, 2016

Most days, we’re more than happy to talk about the unconventional shale producers here in the U.S., and how well innovation as improved the practice.

But it’s long past time for the Canadian oil sands to get some upgrades of its own.

Let me explain a bit: oil sands production doesn’t come from drilling into rock, it comes from separating the bitumen from sand and sediment.

BitumenYet, bitumen isn’t exactly crude oil.

If the resource were just a bit deeper, and had a few more million years to cook underground, then we’d have a recipe for crude.

Bitumen, however, is also notoriously thick. So you can imagine how difficult it can be to transport the bitumen in large quantities through pipelines to where it can be processed.

Usually, a solvent will be used to liquefy the mixture somewhat. But that costs money, and in fact takes up about 30% of the pipeline capacity.

Lucky for producers in Alberta, Canada, there’s a new kind of solvent being discussed: natural gas.

As you know, natural gas production has boomed right alongside oil over the last few years, so it’s now both abundant and ridiculously cheap. If it could be mixed into the bitumen to dilute the thick substance, it would offer an affordable option to oil sands producers.

This serves as a double-benefit to Alberta oil and gas companies. You see, prior to the U.S. shale boom, the U.S. was Canada’s biggest natural gas importer.

When the country no longer needed the gas, Canada lost a large portion of its business there, and oil became the dominant source of income.

This new process would both create a whole new market for natural gas within the country and grow the value of oil sands operations, which would save a lot of money and have more product to take to market.

So far, this change is still under consideration.

CEO of one Calgary natural gas company Darren Gee suggested that maybe the country ought to put more stock into becoming more of a natural gas consumer in other ways, rather than trying to create new demand.

Another consideration is the up-front cost of adding natural gas to bitumen: around $300 million would be needed to develop and build the necessary technology.

To continue reading about Canada’s new bitumen upgrading plans, simply click here to read the CBC News article.

Until next time,

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Keith Kohl

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A true insider in the technology and energy markets, Keith’s research has helped everyday investors capitalize from the rapid adoption of new technology trends and energy transitions. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital, as well as the investment director of Angel Publishing’s Energy Investor and Technology and Opportunity.

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