Syncrude 21

Syncrude is a joint venture company formed to exploit the oil bearing sand at Athabasca, Alberta, Canada. The company mines and extracts bitumen from the Athabasca oil sands and upgrades it to a high quality synthetic crude oil for sale to the refinery market. The extraction facility at Mildred Lake is used to extract bitumen from the slurried oil-bearing sand and upgrade it to the final crude oil product.

The Syncrude project is operated by Syncrude Canada Ltd and owned by AEC Oil Sands LP, AEC Oil Sands Limited Partnership, Athabasca Oil Sands Investments Inc, Canadian Oil Sands Investments Inc, Gulf Canada Resources Limited, Imperial Oil Resources, Mocal Energy Ltd, Murphy Oil Company Ltd, Nexen Inc, Canadian Oil Sands Trust and Petro-Canada.

The Alberta oil sands are widely accepted as a reserve to equal the Saudi Arabian oil reserves. The overall expansion project is named ‘Syncrude 21’ because it represents a major expansion for Syncrude into the 21st century.

The expansion project is to be undertaken in five stages between 1996 and 2015. Stage three was completed as the latest stage of the expansion program (stage three) – in May 2006.

The joint venture owners of the mining area now plan to increase production to 350,000 barrels per day, which will total 128 million barrels per year. Following completion of the whole program in 2015, production should reach about 185–200 million barrels of crude oil (Syncrude sweet blend) annually.

Syncrude is Canada’s largest single source of crude oil and the world’s largest producer of oil from oil sands; the reserves are expected to last over 35 years at full production. Athabasca oil sands in Alberta cover an area as large as Ireland and contain an estimated 1.7 to 2.5 trillion barrels of heavy oil, which is enough to meet world needs for 15 years.

OIL SANDS EXPANSION PROJECT STAGES

The first two stages of the expansion were completed between 1996 and 2001. Stage one included the formation of the north mine at Athabasca, the debottlenecking of the upgrading process and also the development of the first hydrotransport system (which transports oil sand as slurry from the mine to the extraction process).

Stage two included the opening of the Aurora mine (2001) and further debottlenecking of the upgrader. The first two stages required a capital investment of $1.47bn.

STAGE THREE OF THE SYNCRUDE 21 EXPANSION PROJECT

Stage three included a suite of projects to expand the Aurora mine to two trains and expand the Mildred Lake (base plant) upgrader. The expansion was started in 2001 and was completed in 2006.

The upgrade required a capital investment of $8.4bn. Aurora Train two started production in late 2003 (cost of $700m). The additional bitumen froth from it fed the additional upgrading train at the Mildred Lake upgrader. Alberta’s Energy and Utilities Board approved the Mildred Lake upgrader expansion project in December 1999.

The new upgrader was expected to come into service in May 2006. The upgrader expansion (UE-1) includes new froth treatment and Diluent Recovery Units (DRU), as well as a new fluid coker, distillate hydroprocesser, hydrogen plant, sulphur plant, amine plant and a sour water treater.

A flue gas scrubber was also added to eliminate SO2 emissions. New utilities include cooling towers and a condensing turbine generator. As the upgrader comes on stream, Syncrude will produce a higher quality, low-sulphur crude oil.

UPGRADER EXPANSION DELAYS

Construction on UE-1 was completed in early 2006. Start-up was planned with a grand opening for June 2006.

In May 2006 following some testing procedures the plant was ordered to be shut down pending some investigations into noxious gases being emitted from the new plant (some reported amine-type smells). Syncrude investigated the problem after delaying the grand-opening and then announced that the problem was due to the start-up of the Flue Gas Desulphuriser (FGD), which is a totally new type of environmental unit installed on the coker 8-3 designed to significantly reduce SO2 emissions.

Syncrude is now working to repair the problem so the plant can begin work and local communities will not have to suffer the noxious smells. Start-up is expected by the end of July 2006. Alberta Environment will have to inspect the facility before it reopens.

Stage three is expected to boost productive capacity to average approximately 350,000 barrels per day. Product quality will also be enhanced to a new benchmark level that will be known as Syncrude Sweet Premium (SSP).

SSP will have a higher cetane rating quality and a higher smoke point on jet fuel than Syncrude’s current production blend. These qualities should differentiate Syncrude’s product in the market and help refiners meet stricter environmental regulations.

STAGE FOUR OF THE EXPANSION

Stage four, due to commence in 2006 and last until 2010, will include the start up of a third production train at the Aurora mine and include a further expansion of the Mildred Lake upgrader (UE-2).

Stage five, due to commence in 2011 and last until 2015, will include a fourth Aurora production train and further expansion of the Mildred Lake upgrader (UE-3).

SYNCRUDE 21 CONTRACTORS

In 1997 Syncrude entered into an agreement with SNC Lavalin Inc and Fluor Daniel Inc to form a joint venture (Alliance 21) for the execution of the engineering and design.

Alliance 21 in turn subcontracted certain portions of the projects to Delta Hudson Engineering and Veco Engineering to establish local engineering resources. Two further contractors, Honeywell and Cosyn Technology, were retained to provide engineering services and design input to the process automation.

The construction manager for all of the projects has been Kellogg Brown & Root (KB&R).

SYNCRUDE 21 HYDROGEN PLANT

One of the specific projects for UE-1 comprised the erection of a 200 million scfd Hydrogen Plant. PCL joined forces with Technip from San Dimas, California, to pursue this Engineer Procure Construct (EPC) lump sum project.

PCL is the contractor responsible for the overall construction of the unit, which included piling, earthwork, civil, structural steel, equipment, piping, electrical, instrumentation, insulation, fireproofing and painting. Also included were pipe fabrication, module assembly and pre-engineered buildings.

The construction portion of this work was valued at $60 million and was started in August 2001; the project was completed in late 2004. This is the plant which allows the synthetic crude oil to be purged of sulphur; sulphur is removed by processing the crude oil with hydrogen in a hydro-processor system with the sulphur being converted to hydrogen sulphide.