Turning Canada’s heavy oil sands into a more marketable kind of crude is making a comeback, or rather half a comeback.
Alberta’s government’s C$1 billion dollar pledge ($780 million) will help support the construction of smaller and cheaper varieties of upgraders. The so-called partial upgraders would process the sticky oil just enough so that it can flow freely through pipelines without adding ultra-light condensate. The government expects that as many as five private investors will infuse about C$5 billion in the sector.
Interest in building full upgraders dwindled prior to the 2014 downturn in oil prices amid soaring costs and as the US fracking boom sent a surge of light oil onto the market, depressing prices for similar synthetic crude. The older versions were refinery-sized plants that would cost billions of dollars to build today. The partial upgraders are cheaper, and would produce a grade that’s easier to refine and transport without the need for more-expensive diluent.
“Partial upgrading does part of the job and gets part of the benefit,” Kent Fellows, a research associate at the School of Public Policy and one of the report’s authors. “Its a much-less intensive process and a much less costly process.”