Bitumen to Finished Products Presented by: Gerald W' Bruce Jacobs Canada Inc' Canadian Heavy Oil Ass

1
Bitumen to Finished Products Presented
byGerald W. BruceJacobs Canada
Inc.Canadian Heavy Oil Association Technical
LuncheonCalgary, Nov 9, 2005
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Overview

• Why all the interest?
• Value chain
• Adding value to bitumen
• Finished products
• Refining challenges
• Typical US refinery configurations
• Complexity range
• Market for Oil Sands production
• Conclusions
• Fit the market

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Life is Good for Now
Comment remember 1999
Source CAPP May 2005
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Light / Heavy Differential
High differentials make upgrading . Very
attractive
Source CAPP
5
Adding Value to Bitumen
Production through refining
Source Petro-Canada
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Upstream vs Downstream
Source Petro-Canada
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Global Decline of Light Sweet Crude

• Historical production vs. reserves

Source Valero Energy Company
Observation Crude is getting heavier,
refineries were designed to run mostly light
sweet crudes
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Upgrading / Refining Incentives

• Capturing the Light/Heavy differential is real
  
• Example refinery capacity 100,000 bpd
• Heavy/light differential 20 per barrel
• Assumption bitumen blend nominal 50 of the
  refinery feed
• Savings 20 x 50 x 100,000 1,000,000 per
  day or 365 million/year
• Availability of low cost reliable feedstocks is
  attractive to US Refiners (with money to spend)
• Availability, pipeline infrastructure, price
• Bitumen is cheap for a reason
• Significant investment required in
  upgrading/refining required to be able to
  capture the margin

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Upgrading?

• Synthetic Crude Oil (SCO) trades at a premium to
  WTI
• Current 1US/bbl
• Bitumen Blends trade at a discount to WTI
• Current 23 US/bbl
• Upgrading bitumen to SCO moves production up the
  value chain
• Example production of 100,000 bpd of bitumen
• Assumption SCO yield of 85 vol on bitumen
• SCO/bitumen differential 23 per barrel
• Additional revenue 23 x 85 x 100,000
• 1,955,000 per day or 715 million/yr
• Upgrading to SCO is not for the faint of capital
• 40k per barrel of SCO product (upgrading only)

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All the Way to Finished Products
Gasoline
Jet fuel
Crude oil
Diesel
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Gasoline

• Gasoline 120 330F boiling range material
• Primarily for light transportation purpose

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Jet fuel

• Jet fuel 300 500F TBP material
• Primarily for commercial aviation jet engines

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Diesel

• Diesel 350 650F TBP material.
• Primarily used for heavy duty transportation and
  industrial purposes

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US Refinery Configurations
Gasoline
Jet fuel
Crude oil
Diesel
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Fitting the Pipes - Typical Yields
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Low Complexity Refinery
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High Complexity Coking Refinery
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High Complexity Cracking Refinery
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Processing Bitumen Blends

• The bitumen portion of the blend is nasty
• Bitumen characteristics
• Heavy, tar like crude oil.
• Gravity and viscosity are high
• Challenging Chemistry
• Contains significant aromatic and asphaltene
  compounds.
• High in sulfur, nitrogen, and metals
• Also contains highly corrosive organic acids.
• Must be diluted or upgraded in order to ship.

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Processing Bitumen Blends

• Not a good fit with refineries designed for light
  sweet crudes
• Need conversion capacity to handle bottoms
• Significant hydroprocessing of converted material
  
• Bitumen is H2 deficient
• Never seems to be enough H2 around
• Byproducts are plentiful and nasty
• Sulphur, Coke
• SCO works well in refineries designed for SCO

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Processing SCO

• Level of upgrading
• Premium SCO vs Sour SCO
• Bottoms?
• Yes or no
• Fit with refinery
• Processing objectives
• Anode grade coking business?
• Opportunities to fit the SCO
• Asphaltene reduced SCO

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SCO Challenges
Quality Fit .
Conventional Light/Heavy Crude Blend
Synthetic Sweet Crude Today
volume
some ideal properties
some questions on hydrocarbon mix
naphtha
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Jet Fuel smoke point gt21
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poor quality distillates limit many refiners to
10 or less of crude diet
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Diesel Cetane gt45
50
Gas Oil to conversion units UOP gt 11.75
11.9
high volume of low quality feedstock for cat
cracking refineries
11.3
residue
Courtesy Alberta Chamber of Resources
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Hydrogen Content

• Bitumen is hydrogen deficient
• SCO has is better
• The hydrogen to carbon ratio is a good indicator
  of how much work needs to be done on the
  molecules
• More hydrogen.
• Paraffins gt Naphthenes gt Aromatics
• For aromatics, the more rings, the lower the H/C
  ratio
• Heavier fractions have less hydrogen, with large
  multi-ring aromatics (like those found in
  bitumen) . Lowest H/C

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Hydrogen Content
Crude Brent Blend
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Hydrogen Content

• The hydrogen content sets the refinery
  friendliness of a crude
• FCC units (the main gasoline producing machine in
  a refinery) are sensitive to the hydrogen content
  of the feed
• Less hydrogen means heavier or more multi-ring
  aromatic feeds),
• gasoline yield decreases and coke yield
  increases.
• Getting hydrogen into the molecules is what
  really happens in upgrading and refining
• Carbon rejection coker units, followed by
  hydrotreating
• Hydrogen addition hydrocracking units

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Other Key Properties

• Sulphur
• tight new environmental regulations
• sulphur at ppm levels on final products
• Nitrogen
• causes NOx emissions and catalyst poisoning
• Metals
• causes catalyst poisoning.
• New environmental concerns around mercury and
  selenium
• Conradson Carbon (CCR)
• coking tendency (yield losses) on conversion
  units
• High TAN
• naphthenic acids may require special metallurgy
  on fractionation columns, furnace tubes, piping,
  etc.

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Other Key Properties
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Diesel Range Properties
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Jet Range Properties
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USA Refinery Limitations

• Conversion capability
• Bitumen blends vs SCO
• You need serious hydroprocessing capability
• Existing refineries unlikely to have required
  hydroprocessing severity
• or hydrogen.
• Metallurgy upgrades required.
• Environmental limitations
• Air, water,
• Byproduct disposal

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Target Markets

• Current
• US Midwest (PADD II)
• US Rocky Mountain Region (PADD IV)
• Extended and New Markets
• US West Coast (PADD V)
• US Gulf Coast (PADD III)
• Offshore (Export from Kitimat BC Terminal)

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Existing Markets - Relative Volumes
Source CAPP
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Existing and New Markets are Key
Shell Canada
Petro-Canada
Imperial
Edmonton
Husky-Lloydminster
Hardisty
Vitol
ChevronTexaco-Burnaby
BP-Cherry Point
Coop-Regina
ConocoPhillips-Ferndale
Tesoro-Anacortes
Ultramar
Shell-Anacortes
Irving
Shell
Imperial
Montana Ref-Great Falls
PetroCanada
Murphy-Superior
Billings
Tesoro-Mandan
ConocoPhillips
ExxonMobil
Cenex
PetroCanada-Oakville
Flint Hills-Pine Bend
MAP-St.Paul
Imperial Shell Suncor
Sarnia
Imperial-Nanticoke
MAP-Detroit
Sinclair-Casper
United-Warren
Sinclair-Rawlins
Salt Lake City
Citgo-Lemont
ConocoPhillips
BP-Toledo
Tesoro
Frontier-Cheyenne
ChevronTexaco
BP-Whiting
Sunoco -Toledo
Sunoco
ExxonMobil-Joliet
MAP-Canton
Valero
Flying J
ChevronTexaco
ConocoPhillips
Valero
Holly
Sunoco
Motiva
Shell
Valero
Premcor-Lima
Tesoro
Sunoco
Suncor
Sunoco
MAP-Robinson
ConocoPhillips-Wood River
NCRA-McPherson
MAP-Catlettsburg
Giant
Frontier-El Dorado
Shell
Farmland-Coffeyville
ChevronTexaco
Valero
ConocoPhillips-Ponca City
ExxonMobil
Shell
Premcor
BP
ConocoPhillips - Borger
Sinclair-Tulsa
Paramount
ConocoPhillips
Gary Williams
Valero
Valero
Navajo
Hunt
Lion
Western
Crown
Alon
Shell
Placid
ChevronTexaco
Valero
ExxonMobil
ExxonMobil
Motiva
Shell
Fina
Source BP
ConocoPhillips
Premcor
MAP
Murphy
LCR
Motiva
ConocoPhillips
CITGO
ExxonMobil
Chalmette
Motiva
Valero
Valero
Crown
ConocoPhillips
MAP
Shell
Valero
BP
Coastal
Valero
CITGO
Flint Hills
Valero
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New Markets - Comparison
Source CAPP
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Conclusions

• The time is right for significant oil sands
  development.
• Upgrading or not.. Depends on the market
• Security of supply will fuel the expansion of
  bitumen derived feedstocks in current and
  extended US markets.
• Refineries need to be reconfigured to make them
  bitumen friendly.
• Start to look much like an upgrader
• New markets provide the opportunity to tailor
  production to meet market needs.