Oct-2009

Has the time for partial upgrading of heavy oil and bitumen arrived?

Partial or field upgrading of heavy oil produces transportable synthetic crude oil and eliminates the need for diluents for transportation to refiners

JIM Colyar
Colyar Consultants

Article Summary

Heavy oil and bitumen — from the Athabasca region of Alberta, Canada, for instance — are too heavy and viscous to be transported via pipeline from the field to refining facilities. Options currently practised include dilution with natural gas condensate to produce DilBit, dilution with synthetic crude oil (SCO) to produce SynBit, or upgrading to produce a bottomless SCO. Currently, only full upgrading of Western Canadian heavy oil and bitumen is applied commercially. Full upgrading produces SCO that resembles high-quality light oil and contains very little or no vacuum residue.
Partial or field upgrading of heavy oil and bitumen involves the conversion of only a portion of the vacuum residue and the production of a sour SCO containing 5–25% residue. Partial upgrading facilities can be constructed for less than half the cost of full upgrading. Analytical inspections of partially upgraded SCO will resemble those of a DilBit in terms of gravity and sulphur content. This partially upgraded SCO must meet pipeline specifications and be stable to completely eliminate the need for diluent. Due to a low residue content, the largest potential market for partially upgraded SCO is light oil refineries. However, these refineries may need to increase their hydro-genation capacity to process the 
sour SCO.

Partial upgrading has not been commercialised due to the lack of technology that can economically produce a specification SCO, issues related to stability and concerns about adequate pricing of the sour SCO. Thanks to improved technology and the current financial situation, lower-cost partial upgrading may now be a viable alternative for exploiting heavy oil and bitumen.

This article provides background information on the current methods for delivering heavy oil and bitumen to the market, with an emphasis on Western Canada, and a summary of the most promising partial upgrading technologies, including preliminary economics and a comparison with DilBit production.

Heavy oil and bitumen resources
Heavy and extra-heavy oils are loosely defined as crude petroleum with API gravities below 20° and 10°, respectively. Bitumen is considered a special classification of heavy oil that is associated with tar sands deposits. It has an API gravity of 7–10° and is very viscous (over 10 000 cPs at reservoir conditions). Worldwide, there are vast quantities of heavy oil and bitumen, which are concentrated in Western Canada, with over 1700 billion barrels in place, and Venezuela, with over 1000 billion barrels in place.^1,2 Current economic proven reserves of heavy oil from these two countries are estimated at 173 billion barrels for Canada and 58.2 billion barrels for Venezuela, with each value representing 10% or less of the oil 
in place.³

Current Canadian production of heavy oil and bitumen is approximately 1.4 million barrels per day, with a large percentage exported to the US. The discussion below refers to “bitumen”, which is a generic term for mined or in-situ bitumen and other heavy oils with an API gravity of less than 20° that require diluent to be transported. Currently, this bitumen is diluted with natural gas condensate (NGC) to produce a DilBit, diluted with SCO to produce a SynBit, or upgraded to produce a bottomless (no vacuum residue) SCO.

A breakdown of Canadian bitumen and SCO production4,5 for 2007 is shown in Table 1. Of the total 1.4 million barrels per day of bitumen produced, approximately 58% is via mining, with the remaining 42% from in-situ operations. The bulk of the mined bitumen is sent to dedicated upgraders, which produce a high-quality, fully upgraded SCO. A small portion of the in-situ bitumen is upgraded, while most is blended with diluent to produce a transportable DilBit or SynBit. The total SCO produced was 659 million barrels. In-situ production includes steam assisted gravity drainage (SAGD) and other thermal techniques. Given that the estimated Canadian bitumen reserves are just 20% mineable, and that SAGD recovers a much larger portion of the in-place bitumen, in-situ production is expected to be the dominant production technique in 
the future.

Athabasca bitumen is currently produced via mining and the SAGD in-situ method. When oil sands are mined, the resulting bitumen froth produced from the primary extraction process can be further treated by two broad techniques: using naphtha or using paraffin solvents, including pentane or hexane. With naphtha froth treatment, the bitumen product may contain excess solids (clay fines) and may not meet the Canadian pipeline basic sediment and water (BS&W) specification of less than 0.5 V%. In general, naphtha froth bitumen cannot be diluted and sold as a heavy oil blend and thus is associated with a dedicated upgrader. In the paraffin froth treatment process, the reject streams contain both the clay fines and a portion of the bitumen heavy asphaltenes. The net bitumen product recovery is 5–10% lower than for naphtha froth treatment, but the recovered bitumen is essentially solids free and easier to process, since it contains reduced asphaltene content. With no solids, paraffin froth bitumen can be diluted and sold as a heavy 
oil blend.

Heavy oils such as Cold Lake and Lloydminster are characterised by API gravities in the 10–14° range and viscosities significantly lower than those of Athabasca bitumen. These heavy oils are obtained using thermal techniques including SAGD and cyclic steam stimulation (CSS) and cold heavy oil production with sands (CHOPS).

Marketing options
Bitumen from mining or in-situ production must be diluted or upgraded to be fluid enough to be transported to refineries for final processing and production of saleable products. In the cases of dilution with light oils or partial upgrading, the blended heavy oil or SCO must 
meet Canadian and US pipeline specifications to be transported. Canadian specifications are shown in Table 2 and include gravity, viscosity and solids/water values.

Bitumen dilution
Bitumen is typically diluted with either natural gas condensate (DilBit) or a fully upgraded SCO (SynBit) to meet Canadian pipeline specifications. The quantity of required diluent is normally set by the pipeline viscosity specification. DilBits generally use a natural gas condensate with the following inspections: 62 °API, less than 0.1 wt% sulphur and 0.6 cSt viscosity at 40°C. Fully upgraded SCO has an approximate 34 °API, less than 0.1 wt% sulphur and 3 cSt viscosity at 40°C. 

Typical blending ratios and blended heavy oil inspections (DilBit) are shown in Table 3. For an Athabasca DilBit, 29 V% condensate is required to meet the pipeline viscosity specification. This results in a 21 °API blend with 3.8 wt% sulphur and 
41 wt% vacuum residue. For the less viscous Cold Lake and Lloydminster heavy oils, less diluent is required; however, as is shown in Table 3, the final DilBit inspections are fairly similar.