In December 1999, Shell Canada Ltd, the country's number three integrated oil company, announced the upgrading of its Scotford crude oil refinery facility as well as the construction of a new upgrader next to it. The project, an oil sand upgrader, was part of the Athabasca Oil Sands Project, which was initiated as a joint venture between Shell Canada Energy, Marathon Oil Sands LP and Chevron Canada Limited. Calgary based Shell Canada is 78% owned by Anglo-Dutch oil giant Royal Dutch / Shell.
The Scotford Upgrader has been constructed next to Shell Canada's Scotford Refinery near Fort Saskatchewan. The plant uses hydrogen addition technology to process the low viscosity crude oil (known as bitumen) from the Muskeg River Mine into a wide range of premium quality low sulphur synthetic crude oils. These synthetic crude oils are sold to Shell's Scotford and Sarnia refineries, and Chevron's Salt Lake and Burnaby refineries. The balance is sold to other refiners.
The upgrader became 86% operational in 2004, at a designed rate of 155,000bpd. The company highlighted the plan to expand its upgrading capacity in 2005 in different phases. According to the plan, a capacity expansion by 100,000bpd is expected by March 2010.
The upgrader was closed temporarily in November 2007 due to damage caused by fire. The operations, however, resumed the following month.
The company applied for approval to build Scotford Upgrader 2, to adjoin the existing upgrading facility in 2007. The new 400,000bpd bitumen upgrading facility will be developed in four phases. The new facility proposal has been kept on hold for a capital cost review, owing to its high cost estimates.
The final approval is, however, subject to regulatory process, market conditions, project cost and approval from stakeholders.
Plant production and cost
The new facility was built at a cost of $2.1bn, however, in 2000 an additional $400m was spent modifying the existing Scotford Refinery, which enabled it to use the new synthetic crude oils produced by the Scotford Upgrader.
"The new facility was built at a cost of $2.1bn. An additional $400m was spent modifying the existing Scotford Refinery."
The Corridor Pipeline transports diluted bitumen from the Muskeg River Mine to the Scotford Upgrader, and connects the Upgrader with the refinery and pipeline terminals in the Edmonton area.
Corridor will also provide oil storage facilities for the project. Corridor is being built and will be operated by Trans Mountain Pipeline Company Ltd.
ATCO Power and SaskPower International built gas-fired cogeneration plants at both the Muskeg River Mine and Scotford Upgrader to provide steam and electricity. The project generates additional electricity for Alberta consumers.
Detailed engineering commenced in March 1999 and was completed by the second quarter of 2002. Construction began in April 1999 and the plant was commissioned by 2003.
In the upgrading processing, large hydrocarbons molecules are divided into smaller ones by raising the hydrogen-to-carbon ratio. The upgraded crude oil (smaller ones) is used as feedstock for refineries.
Further, the refineries process it into refined products such as petrol. During the hydrogen-conversion process, hydrogen is added to bitumen and large hydrocarbon molecules are broken down.
The project offers several environmental advantages such as using clean bitumen produced at the Muskeg river mine, maintaining low levels of sulphur dioxide emissions and leaving no residuals as a high carbon by-product.
"The products are clean, high quality, with fewer aromatics, particulates and sulphur."
The products are featured as clean, high quality, with fewer aromatics, particulates and sulphur. The synthetic crude substitutes low crude oil production and has led to a reduction in dependence on imports.
Social and economic advantages
Design and construction of the new facility created thousands of jobs with a peak on-site construction work force of 6,000. Furthermore, approximately 175 operating labour positions were required for the first expansion phase.