The odds of having a new bitumen upgrader facility—a project which would ultimately cost around $10 billion to see come to fruition—are at least 50% says an industry veteran just back from a making a pitch to an Alberta group of government, labour, business and academics earlier this week.
Dr. Walter Petryschuk, who once served as plant manager for the former Polysar, joined Dr. Katherine Albion, who heads the Bowman Centre at the Western Sarnia-Lambton Research Park, in presenting to those attending the session, which was sponsored by the Alberta Federation of Labour and Unifor, a major labour union.
Petryschuk told LambtonShield.com late last month that it will likely take about six years before such a project would begin to be constructed.
“It will take that long to get all the ducks in a row,” said Petryschuk.
Those “ducks” will largely depend on money.
“We have a viable project,” said Petryschuk, referring to analysis already done. “It can money and pay for itself. We know that. It’s a question of how much.”
Petryschuk and others, including Dr. Clem Bowman, another industry veteran, are leading what is being called a “pre-feasibility” study, a necessary step said to cost $300,000 that would lead to a full-scale feasibility. Some $150,000 of the cost of that first step—half the money—has already been committed locally.
The biggest “duck” that needs to be lined up is the one with dollar signs on its back.
“We need the private sector, an investor,” said Petryschuk.
Hence the visit to Alberta and the ongoing discussions those who have the vision for such a facility with those with money and expertise would bring to the table.
“This project would have the latest technologies in it, including the ones that would deal with environmental concerns,” said Petryschuk. “It would be a very modern and very efficient refinery.”
And having the latest technologies is one reason the new facility would ultimate be a success.
“It’s a tremendous advantage,” said Petryschuk. “You only need a small percentage in the increase in efficiencies to see cash flow dramatically impacted.”
Petryschuk is hopeful the project will become a reality for a number of reasons, many of them relating to people.
“We have good engineering capability here and once we get the commitment to proceed—an investor or bitumen producer—the probability of the project goes up dramatically.”
This area, he said, has the advantage of being the first refinery that could be built anywhere in Canada—perhaps North America—to process bitumen into so-called “higher value” products.
Having the latest design incorporated and being thorough in meeting the design challenges will also help ensure the project’s ultimate success.
“We don’t want to be caught in the situation where changes occur after the construction begins,” said Petryschuk, a not-so-subtle reference to out of control costs that have occurred in oil sands projects of the past. “If you’re changing design then you’re in trouble.”
The group that came back from Alberta this week highlighted Lambton County as a region offering a unique opportunity to increase Canada’s bitumen upgrading capacity, using existing pipeline networks to safely deliver the bitumen. The refinery would produce ultra-low sulphur diesel, gasoline, and other high-value products for the global market.
And that would have reverberating positive effects for the entire Sarnia-Lambton region, said Petryschuk.
“If we are to revitalize Sarnia-Lambton, we’re going to need investments of that scale. Otherwise it will diminish significantly over time.”
Petryschuk gave NOVA Chemicals a nod for its recent investments related to being able to use natural gas as a feedstock and Suncor which has invested substantial capital in its infrastructure in the last decade.
He also said that switch to natural gas by NOVA presents its own set of opportunities. “Now that they have switched to natural gas for their main feedstock, there’s additional capacity in the valley as far as the pipelines needed to move the bitumen feedstock from Alberta.”
Sarnia-Lambton, he added, also has the ability to supply the labour needed to build and operate a project of this magnitude.
“We have the advantage of time,” said Petryschuk, again referring to the project’s likelihood, one key being the acceptability of such a project for the community where it is built. “We are a community that’s used to processing oil. We have infrastructure that is fantastically designed to do this because it’s an integrated complex.”