A rapidly expanding oil sands industry and a dwindling supply of feedstock for Alberta's ethane-based petrochemical industry have stimulated interest in evaluating bitumen for producing a broad slate of refined products, including petrochemicals. Two industry/government studies evaluated different process schemes for integrating oilsands, refining and petrochemical operations and convert heavy gas oils into both refined products and petrochemicals. Since market demand for fuels and refined products far exceeds that for petrochemicals, the performance characteristics of the heavy oil conversion processes are important to optimize the volume ratios of the products to meet market volume demands. The paper reviews different heavy oil processing technologies focusing on olefin to fuel product ratios and flexibility to change these ratios. The review includes conventional non-catalytic thermal (steam) cracking, as well as catalytic processes. These technologies are at different stages of commercial development for production of fuels and olefins, and must be evaluated and adapted to meet Alberta's aromatic bitumen-derived heavy gas oils. Work is underway in an industry/government study towards developing an integrated process for the combined production of refined fuels and petrochemical feedstocks. In addition, two workshops will be held in February 2005 to address the business and regulatory gaps that must be addressed before such a process can be commercialized; the results from the workshops will also be discussed in the paper.


Alberta has an enviable position as a North American energy hub, providing oil and gas to United States markets through an extensive pipeline network. In addition to conventional oil and gas, Alberta has large reserves of coal and coal bed methane, as well as the massive oil sands deposits that underlie 140,800 square kilometers of the province.

The oil sands have outstripped conventional oil reservoirs as the primary source of oil in the province. According to the Alberta Department of Energy, production of bitumen and synthetic crude oil was close to one million BPD in 2003, as opposed to 630,000 BPD of conventional oil production. If all new projects, and expansions to existing projects currently planned, take place as scheduled, Alberta's bitumen production is expected to triple by the year 2030.

However, the continued expansion of Alberta's oil sands faces significant challenges. Diluent availability is already a problem, water use is facing restrictions, and natural gas is becoming more costly and less available. A further problem is the ability of Canadian and U.S. markets to absorb additional bitumen and synthetic crude production. Refineries in the U.S. Midwest (PADD II), which is the largest traditional market for oil sands products, cannot process the projected increase of heavy feedstock without additional residual upgrading capacity. The alternative is to build upgrading capacity in Alberta, which could increase production costs and make Alberta crude less competitive in the export market. competitive in the export market.

Natural gas cost and availability is an issue for more than the oil sands industry. The rapid expansion of Alberta's petrochemical industry during the previous two decades was based on an abundant supply of low-cost ethane derived from natural gas liquids.

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