If you want something done right, you have to do it yourself—but you'll likely keep more of the profit too.
That's the logic behind one of the most ambitious, long-term, greenfield oil and gas refinery projects in North America in recent decades. In an era when almost all large-scale refinery projects on the continent are brownfield renovations of existing plants and almost all new refinery construction seems to be in Asia or elsewhere, the North West Redwater Partnership in Calgary, Alberta, is working to build a brand-new refinery to process bitumen from operations in the province's Athabasca, Cold Lake and Peace River oil sands regions into diesel fuel and other products. As its name implies, NWR is a partnership between North West Upgrading Inc. and Canadian Natural Resources Ltd.
"The founders, including our process engineering vice president, started with a vision in 2003 to build a merchant upgrader that could take producers' bitumen and process it. Their plan was delayed awhile and modified to a fee-for-service model due to the recent recession, but now we're building it and a whole new company at the same time," says Gordon Ellwood, P. Eng., NWR's chief automation engineer, who joined in 2010 after 28 years at Shell Canada. So far, the young firm has about 500 employees and consulting staff.
Because bitumens from oil sands regions have traditionally been pipelined to the U.S. for processing, Alberta's government has long wanted to do some of that refining closer to home to increase jobs and gain some of the revenue that value-added products can provide. After a tender, the province granted NWR a bitumen royalty in kind (BRIK) contract in February 2011, which means the refinery won't have to buy feedstock because about 75% of its Phase 1 feedstock will be supplied by the Alberta Petroleum Marketing Commission. Next, the refinery will process it into high-value products, such as ultra-low-sulfur (ULS) diesel, diluent, naptha, vacuum gas oil (VGO) and other products, and market them on behalf of the feedstock owners. The ULS will meet low-carbon fuel standards, which means it can be sold in European markets that often have low-carbon and low-sulfur regulations.
"I believe we're the only partnership that Alberta has like this," adds Ellwood.
Processing on the Prairie
Located on 1,200 acres to allow for future expansion, NWR's new refinery is about 45 kilometers northeast of Edmonton and immediately west of Agrium's Redwater fertilizer operation in Sturgeon County (Figure 1). This location has many advantages, including close proximity to major crude oil and diluent pipelines leading to Midwest and West Coast markets, established local support infrastructures, and a stable and skilled regional workforce (Figure 2).