and coke. The coke is in a much finer, powder- Catalysts help chemical reactions take place
like form, which is drained from the bottom. but are not chemically altered by the
reaction. Different types of catalysts can be
used, and they are either shaped like beads
or pellets. The surface area of the catalyst is
quite important because the cracking occurs
when heated bitumen contacts active sites
on the catalyst.
Coke’s best use is in coke furnaces, which
produce the heat needed for the
hydrocracking process. More coke is
produced than is needed, so it is stockpiled
for future use.
Catalytic conversion is another way to crack
oil molecules. It also requires high
temperatures, meaning catalytic conversion
is really an enhanced form of thermal
conversion.
Catalysts encourage the cracking of
hydrocarbons in two ways. When large
hydrocarbons contact active sites on a
catalyst, they react by breaking down into
smaller molecules. Catalysts also act as
86|Unlocking176BillionBarrels:TheEnergyofAlbertaInnovation
Heartland boasts $11 billion in existing
investment. The co-presence of other
industrial neighbours offers the
potential of synergistic opportunities,
such as the cost-effective mass
purchase of hydrogen.
As with many such projects, the North
West initiative operated “under the
radar” for a time. But set against the
backdrop of intensifying domestic and
international interest in the oil sands,
the North West project has attracted
significant interest since it moved into
the public eye in 2005. This was
triggered in large part by the project’s
move into the environmental planning
stage.
“Starting last summer, there was an
exponential increase in interest in what
we are doing,” noted Pearce. “We’ve
been inundated with calls for the last
six or seven months.”
The merchant-style upgrader is
significant because it will fill a growing
demand to handle production from oil
companies seeking to avoid the highly
capital intensive nature of
incorporating such projects within their
own operations. Under the stewardship
of a private company like North West,
however, the nature of the project shifts
to an externalized manufacturing
operation. That means “we can apply
lower costs of capital” relative to
expected rates of return, explains
Pearce. Indeed, Pearce points out, there
are parallels with pipeline ownership, in
that while oil and gas producers are
likely to own gathering systems, few
own their own pipeline networks but
instead contract for capacity.
The project will proceed in three
phases, each estimated at $2.4 billion.
The first phase is set to accept 50,000
barrels of bitumen per day by 2010,
pending regulatory approval expected
in 2007, with construction to start that
same year. A fourth phase is a long-term
consideration. North West chose to
phase the construction of the project in
order to contain costs. Beyond the
initial capital raising requirements that
are made more manageable by staged
planning, focusing on phased
development is intended to move the
project in lockstep with increasing
bitumen production, an approach that
also produces the added benefit of
maintaining the integrity of the price
differential so critical to heavy oil
economics, noted Pearce. ■
