As bitumen production in Alberta’s oil sands has grown over the past decade, so has demand for diluent, which is blended with molasses-like bitumen to help it flow through pipelines or be transported by rail. With bitumen output expected to continue rising through the first half of the 2020s, we have estimated that Alberta demand for field condensate, natural gasoline and other diluent will increase by more than 40% — to almost 1 MMb/d — by 2025. The catch is, diluent production in Western Canada isn’t growing fast enough to keep pace, and there are limits to how much diluent can be imported on the two existing pipelines from the U.S. What if there were a way to slash how much diluent is needed to put bitumen in rail tank cars — and make rail transport safer in the process? Today, we discuss Gibson Energy and US Development Group’s new diluent recovery unit in Hardisty, AB.
With reserves in the hundreds of billions of barrels and production costs that continue to be whittled down each year, Alberta’s oil sands are in the oil supply game for the very long run. The heavy and viscous oil supply that is produced from the oil sands, known as bitumen, does require some extra help to stay in the game and reach refineries across North America, however. It must be mixed with a lighter hydrocarbon, referred to as diluent, to reduce its viscosity — that is, to allow it to flow in pipelines or be transported in unheated rail cars. The blended material is known as dilbit when shipped in pipelines or railbit when shipped in rail cars. Generally speaking, dilbit is a 70/30 blend of bitumen and diluent by volume, while railbit is about 83% bitumen and 17% diluent. (The percentages can vary somewhat depending on the viscosities of both the bitumen and diluent in question.)
With Alberta’s oil and bitumen production riding the COVID roller coaster this year, it only makes sense that the demand for diluent (black line in Figure 1) to be mixed with bitumen to yield dilbit or railbit has taken the same ride. RBN estimates that diluent use for bitumen blending reached a high of 796 Mb/d in October 2019 (dashed blue oval), bottomed out at 545 Mb/d in May of this year (dashed red oval), and has since recovered to 730 Mb/d in October (dashed green oval) based on non-upgraded bitumen production data from the Alberta Energy Regulator (AER).
To access the remainder of Closer to Home - A Novel Effort to Recover Diluent for Reuse in Alberta's Oil Sands you must be logged as a RBN Backstage Pass™ subscriber.
Full access to the RBN Energy blog archive which includes any posting more than 5 days old is available only to RBN Backstage Pass™ subscribers. In addition to blog archive access, RBN Backstage Pass™ resources include Drill-Down Reports, Spotlight Reports, Spotcheck Indicators, Market Fundamentals Webcasts, Get-Togethers and more. If you have already purchased a subscription, be sure you are logged in For additional help or information, contact us at email@example.com or 888-613-8874.