Saskatchewan has large underdeveloped reserves of heavy, sulphurous crude oil primarily located in the Southwest (Fosterton-Dollard) and Northwest (Lloydminster) regions of the Province. Other than manufacturing small quantities of asphalt, there is no refining capability for this crude oil in Canada. This requires the crude to be exported into a very unstable market.
An agreement was reached in August of 1983 between Consumers' Co-operative Refineries Ltd. (CCRL), the Governments of Saskatchewan and Canada to proceed to develop a heavy oil upgrading facility. Through this agreement, CCRL and the Saskatchewan Government would hold equity positions in the project and both the Government of Saskatchewan and the Government of Canada would provide loan guarantees for the borrowed capital.
A new Company was famed, New Grade Energy Inc., whose purpose was to investigate the technical and economic feasibility of the proposed project, prepare an Environmental Impact Statement, prepare a cost estimate, establish the engineering design specifications of the overall project and provide the owners with a detailed report. The budget for these initial activities was $7.5 million.
The present capacity of the Co-op Refinery is a nominal 50,000 barrels per day of Alberta light sweet crude oil. It was therefore logical to use this as as starting point for establishing the capacity of the integrated complex (upgrader and refinery). In order to achieve an economic project, it was necessary to maximum the use of the existing refinery process units. The primary process selection criteria were as follows:
The process must be commercially proven.
Technology should optimize the use of the existing refinery capabilities.
Must produce products compatible with the refinery market requirements.
Must not create any significant environmental problems.
When the proposed heavy oil feedstock qualities are compared to Alberta Light (Table 1), the problems of upgrading became very apparent. Saskatchewan heavy crude oil contains unacceptable levels of sulphur, nitrogen, and metals (primarily nickel and vanadium). The heavy oils are deficient in naturally occuring light products and the cetane of the distillate pool is unsatisfactory for use as specification diesel fuel. Generally speaking, light sweet crude oil tends to produce 60% light refined products with 40% requiring further processing, whereas the reverse ratio is true for Saskatchewan heavy crude. Host of the contaminants and undesirable constituents of the crude oil tend to be concentrated in the 650 °F plus heavy end, which comprises 60% of the barrel of heavy crude. Sulphur levels are five to six times higher and metals are twenty times higher in Saskatchewan crude. The products from this crude would not be saleable and the metallic constituents would seriously effect the catalysts used in normal refinery processing.
There are two main approaches to upgrading heavy oil. One is carbon rejection (coking) and the other is hydrogen addition. The latter, more sophisticated approach was chosen in order to provide for the best utilization of the whole barrel of crude oil. This approach also met the other established selection criteria.