Production of synthetic crude oil that is processed from Alberta’s oil sands reached record highs at the end of 2020 after touching on two year lows just four months earlier. However, these highs could be undermined and sink to four-year lows for a short period of time this spring with what appears to be a heavier than usual slate of maintenance work on three of Alberta’s four upgraders, the immense processing units that produce synthetic crude oil from bitumen. In today’s blog, we take a closer look at the upgraders, the timing of maintenance, and what this might mean for synthetic crude oil production and exports.
Alberta’s production of synthetic crude oil (SCO) began in the late 1960s when the first experimental attempts were made to upgrade the molasses-like, viscous crude known as bitumen from Alberta’s oil sands into a more usable form of light crude oil. After several decades of development, SCO really started to become a serious player in Alberta’s and Canada’s crude oil production slate in the past decade. As its name suggests, SCO is not a naturally occurring form of crude oil but is the product of a chemical transformation that uses bitumen as the feedstock. By passing the bitumen through large processing units known as upgraders that carry out this chemical transformation, the sludgy hydrocarbon becomes a flowable, light crude known as SCO for use in refineries, with an API gravity similar to WTI, but with an even lower sulfur content.
Alberta currently has four major upgraders that are dedicated to the production of SCO (Figure 1) with a combined output capacity of 1.27 MMb/d. Although expansions have taken place at all four sites over the years, the newest is the Horizon upgrader operated by Canadian Natural Resources Limited (CNRL), which began operations in 2009. Excluded from this list is the Sturgeon Refinery, which while regulated as an upgrader by the Alberta Energy Regulator (AER) processes bitumen to produce intermediate refinery products and ultra-low sulfur diesel. Also not included is the Long Lake Upgrader (capacity 58.5 Mb/d), which was shut down in early 2016 due to numerous technical issues with feedstock from its nearby bitumen reservoir.
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