Copyright of the Daily Oil Bulletin 2017
Cenovus Hopes Partial Upgrading Will Cut $2 Billion A Year Spent On Diluent
The completion of engineering designs this year will give Cenovus Energy Inc. a better idea of the next step toward commercializing a partial upgrading process it has been testing intermittently since 2014, an executive said on Tuesday.
“And then we’ll decide what to do next and how fast to commercial this technology,” said Harbir Chhina, an executive vice-president of Cenovus and the company’s chief technology officer.
Speaking at the company’s investor day conference, Chhina said Cenovus has tested both Foster Creek and Christina Lake production at the 1,000-bbl-a-day pilot facility.
The Cenovus executive didn’t name the technology provider or the process, but the Bulletin previously reported the company is Fractal Systems Inc. and its process is called Enhanced JetShear with Acid Reduction Process (DOB, Feb. 15, 2017).
“I’m going to talk about one technology in particular,” Chhina said, “but I want to say there are three or four other things that we’re working on, on the upgrading side, that we’ll talk about once we reach the stage where we feel very comfortable that we can commercialize these technologies.”
Why partial upgrading?
Full upgrading of Cenovus’s bitumen is done at refineries in the United States, so why does the company care about partial upgrading? Because the bitumen still has to get to the U.S., and raw bitumen is too thick to flow through a pipeline.
For that reason the company expects to spend about $2 billion on diluent this year, Chhina told investors.
He said for every bbl of bitumen Cenovus produces, it has to be blended with 0.4 bbls of diluent to meet pipeline specifications of 19 degrees API gravity and 350 centistokes viscosity.
“So that gives us 1.4 bbls of blend that we need to transport. That’s very expensive. ... We expect we’ll spend in excess of $2 billion just on diluent,” Chhina said, using a rough estimate for 2017.
“So we pursued this technology to reduce the amount of diluent we need to use.”
He said the pilot plant heats the diluted bitumen to about 400 C and subjects it to 3,000 pounds per square inch of pressure. It is then instantly depressurized, which helps break the molecules, thereby reducing viscosity.
Fractal’s process combines thermal and mechanical effects. Instead of thermally cracking the large heavy oil molecules, it uses a low-severity hybrid approach that relies on hydrodynamic cavitation and heat to change the structure of bitumen molecules. Hydrodynamic cavitation (also called mechanical shearing — hence the name JetShear) is the bubble generation and bubble implosion that occurs when a flowing liquid is subjected to an increase in pressure, then a rapid drop in pressure.
However, the process creates olefins, which refiners don’t like, so hydrogen is used to remove the olefins, Chhina said.
“The end result of all of this is that 1.4 bbls becomes 1.2 bbls and it can be transported by pipeline. So you save 50 per cent of the diluent,” he said.
Reducing diluent requirements by 40 to 50 per cent would reduce Cenovus’s costs by $3 to $5 a bbl, the company estimates.
The partial upgrading process would reduce the total volume being transported by about 15 per cent since there would be less diluent per bbl of bitumen shipped.
And it would reduce the total acid number (TAN) of Cenovus’s oil to 0.5, thereby creating a higher-value product. “Most of the blends that we produce today are closer to [a TAN of] one,” Chhina said.
“This technology is scalable — anywhere from 5,000-10,000 bbls a day to 100,000 bbls a day,” he added.