December 27, 2018:

Alberta is seeking expressions of interest from companies prepared to build new refining capacity in Alberta. The proposed refinery must use Alberta bitumen or partially upgraded bitumen as its feedstock and produce marketable refined products like gasoline or diesel fuel. The project’s proponent must indicate what government supports it requires in order to proceed. Based on the results received by the fast approaching Feb. 8 submission deadline, the government will decide if it will proceed to a formal request for proposals.  There has been considerable debate about the potential for this initiative to be successful. Alberta currently exports over 1.5 million barrels per day of bitumen, while three existing refineries in the Edmonton region process about 425,000 barrels per day of oil into refined products. The new Sturgeon refinery will produce an additional 40,000 barrels per day of diesel once it reaches full capacity.  It is generally acknowledged that developing new refining capacity in Alberta is not economically attractive.

Factors that make new refining economically challenging include:  • a market that is already well served by existing refineries, meaning new capacity must be oriented to exports by pipeline and tanker to Asia;  • Alberta’s relatively high construction costs due to climate and distance from major ports;   • regulatory requirements that are not faced in other countries in the Pacific basin.  Alberta’s abundant, often deeply discounted bitumen production as a refinery feedstock and a highly skilled and underemployed labour force mitigate some of these disadvantages.  It is possible that proposals will be made by three types of proponents: existing refineries; refineries using new technologies; or refineries with Indigenous participation.  The newest refinery in North America, the $9.7-billion Sturgeon refinery, located north of Edmonton is currently in the startup process following years of construction, which included a $4-billion cost increase and more than a year of delay. Alberta was deeply involved in the development of this refinery and must provide 75 per cent of the diluted bitumen feedstock (about 55,000 barrels per day), and pay tolls of about $850 million per year for the next 30 years to have this feedstock turned into diesel. This refinery has regulatory approval to triple its initial capacity and is likely to put forward an expansion proposal. 

The incumbent refineries owned by Imperial, Suncor and Shell may also consider seeking government assistance to expand, but none has recently outlined expansion plans.  Value Creation Inc. has regulatory approval for a 260,000 barrel-per-day partial upgrader north of Edmonton, and recently received regulatory approval to include a refinery under this approval, and so is likely to put forward a proposal for government support.  Finally, Teedrum, as managing partner for the Alberta First Nations Energy Centre, recently announced a partnership for a proposed 167,000 barrel-per-day refinery north of Edmonton in conjunction with a subsidiary of Sinopec.  It is very likely that any proposals received will seek substantial government assistance to overcome the barriers that have prevented private sector investment in new refining capacity in Alberta. Developing a funding arrangement will be complex and time-consuming, and it is unlikely that significant construction could begin earlier than three years from now, and it would likely take at least three years to complete the project, for a minimum of six years wait.  So, although it is useful for Alberta to understand the opportunities that may be available, this initiative is not likely to provide meaningful employment benefits or to provide a significant new market for Alberta’s bitumen in the near term. Alberta must continue to press for improved market access through new pipeline capacity such as the Trans Mountain expansion and Keystone XL, as these projects are fundamental to the long-term health of its oil industry. 

Richard Masson is an executive fellow and the University of Calgary’s School of Public Policy, chief commercial officer for Fractal Systems Inc. and is former CEO of the Alberta Petroleum Marketing Commission.

By calgaryherald.com

December 27, 2018:

Air quality inspectors were at the Torrance Refinery Monday following up on a toxic chemical spill over the weekend.  Five gallons of Modified Hydrofluoric Acid leaked from a hose as it was being transferred from a tanker truck to a container at the Torrance Refinery.  When exposed to air, the acid can turn into a ground-hugging fog that can travel for miles and hurt or kill those in its path. In this case a worker doused the leaking vapor with water and the chemical stayed within refinery grounds.  The spill happened at 8:17 Saturday morning. Soon after, Torrance Fire Department posted to Facebook and Twitter that it was responding to a leak at the refinery. It did not name the chemical. And because the leak was small, Torrance did not use its citywide notification system, a spokesman said.    Sally Hayati, a retired scientist who has studied the chemical and pressed for it to be banned, says the city didn’t do enough to alert the public.  "Personally, I’d like to see the siren sound at every release and I’d like the emergency alerts to go out immediately to all people," she said.  The refinery owner did not respond to a request for comment about the release.  The Air Quality Management District’s board will review a proposal to add more safety controls over the chemical. That’s coming up in February.

By scpr.org

December 25, 2018:

Although the state suspended land acquisition for the project in November, proponents (Ratnagiri Refinery and Petrochemicals Ltd) took 13 villagers to PRPC on a two-day tour from December 18 to 20.  To allay the fear of having a refinery in their backyard, a few villagers from the project-affected areas of the suspended Nanar oil refinery project were taken to Panipat Refinery and Petrochemical Complex (PRPC) in Haryana. The villagers interacted with PRPC authorities and tried to understand the impact of the refinery on environment and economy.

Although the state suspended land acquisition for the project in November, proponents (Ratnagiri Refinery and Petrochemicals Ltd) took 13 villagers to PRPC on a two-day tour from December 18 to 20. The villagers from Konkan also visited residents of Baholi village that was affected by the PRPC project. Run by the Indian Oil Corporation (IOC) and commissioned in 1998, PRPC is spread across 4,222 acres in Panipat. The refinery caters to the petroleum demand (fuel refining and biofuel manufacturing) of the entire north-western region. “Since the [Nanar] refinery is being opposed, we are trying to allay fears of Rajapur villagers related to the refinery. The doubts raised by [Rajapur] villagers were answered by the sarpanch and senior members of Baholi, during which they highlighted how satisfied and happy they are with the development the refinery brought along,” said Ajit V Morye, public relations officer, RRPCL. Morye said although chiefs of all 16 villages, gram sabha members and residents losing large tracts of land for Nanar project had been invited, many backed out at the last minute.

Rajapur residents who visited PRPC said they are convinced that Nanar refinery will not cause large-scale environmental damage and create more jobs. “Allowing a refinery in Haryana resulted in 53% of local population getting employment. We were told how the rehabilitation process went smoothly,” said Nilesh Patankar, chartered accountant and resident of Gothivare village, who is likely to lose 64 acres of land with more than 2,000 mango trees. Another villager from Padve, who was part of the study tour, said agricultural land in Panipat remained intact despite construction of a refinery. “Necessary measures were taken related to safety. A digital board near the refinery and in Panipat shows current pollution levels. It also displays information whether safety standards for air and water pollution are being violated. The farms look intact,” he added. However, those opposing the refinery claimed the study tour was a ‘false propaganda’ to convince villagers to give up their land. “Out of 95 people who were invited, only 13 went to Panipat. These are the ones who will benefit by selling their land because their mango plantations are dying. There have been four back-to-back blasts at the refinery in past one year. The most recent occurred on January 22, in which one person died and four were injured,” said Satyajit Chavan from Konkan Vinashkari Prakalp Virodhi Samiti. A National Green Tribunal (NGT) order from November 15 highlighted a pollution issue at PRPC and directed state and Central agencies to submit a report .

By HinstanTimes

December 25, 2018:

The Arab Petroleum Investments Corporation (Apicorp), a Saudi Arabia-based multilateral development bank, announced a US$100mn investment as part of a consortium of international and regional banks to finance the construction of Duqm Refinery project. Situated within the Duqm Special Economic Zone, the refinery is joint venture between Kuwait Petroleum International and Oman Oil Company. In a press statement on its website, Apicorp said it has contributed US$100mn to the financing of the refinery, US$50mn sharia’a-compliant and US$50mn conventional tranche. This is a demonstration of Apicorp’s commitment to Oman with over US$380mn currently committed to the energy sector in country. Dr Ahmed Ali Attiga, chief executive officer of Apicorp said, “We are delighted to be working with Kuwait Petroleum International and Oman Oil Company on this prestigious project-Duqm Refinery. As the Arab energy sector’s most trusted financial partner, we look forward to further strengthening our existing partnerships with the governments of Kuwait and Oman. Once operational, the refinery will play a significant role in boosting Oman’s exports and will be a key driver for the growth of the region providing investment opportunities for new related projects.”

Nabil Bourisli, president of Kuwait Petroleum International and chairman of Duqm Refinery, said, “We are pleased to be working with Apicorp on Duqm Refinery. This reflects the trust and confidence of local, regional and international financial institutions in our economic ties that are deeply rooted in history. Our vision is aiming at maximising the value of our natural resources and driving the two countries towards expanding their economic potential, leading to balanced economic growth.” Duqm Refinery recently celebrated the laying of the foundation stone and the commencement of the US$5.75bn construction work for the project. Once the refinery is completed, it will have the capacity to process around 230,000 barrels of crude oil per day. Its primary products will be diesel, jet fuel, naphtha and LPG.

By Muscat Daily

December 14, 2018:

China’s November refinery throughput rose from a year earlier, heading for an annual record, official data indicated on Friday, although the runs eased from highs touched in the previous two months as product inventories swelled and sales slowed. Refineries in November processed 50.46 million tonnes of crude oil, or 12.28 million barrels per day, up 2.9 percent from the same month last year, according to Reuters calculations based on data from the National Bureau of Statistics.  The daily crude processing rates, however, came off 12.43 million bpd in October and a record of 12.49 million bpd in September, the statistics data showed. 

The fall from the September-October peaks came as the government lowered prices for gasoline and diesel in November to track a steep drop in global crude prices, and to counter a sharp slowdown in local sales that started in mid-October. “China’s state planner lowered gasoline and diesel prices three times in November. Both teapots and state refiners were under pressure to sell products to meet their annual sales target,” said Han Cong, products analyst with consultancy JLC.  She added that private refiners’ utilization rates fell to 63.22 percent in the first week of December from 65.71 percent at the start of November, further indication of the pressure plants are under to scale back operations amid slowing sales.  Still, for the first 11 months, refinery output gained 7.2 percent to 554.48 million tonnes, or 12.12 million bpd, on track for an annual record.  The slowing domestic products sales have also prompted state refiners to seek additional fuel export quotas to release some of the glut. 

Crude throughput is still expected to increase over last year levels in December as a new refinery starts up.  China’s private refiner Hengli Petrochemical said on Wednesday it plans test operations at its 400,000-bpd refinery in Dalian on Dec. 15, which is likely to be reflected more fully in the country’s refinery output in January. GAS AND CRUDE OIL China’s November natural gas production rose 10 percent to a record of 14.3 billion cubic meters (bcm), the data showed, to cope with heating demand that typically starts every year from around mid-November.  China ramped up both domestic output and imports to meet rising demand from households as the government switched another 3 million households to gas heating this winter. For January-November, gas output was up 6.6 percent from a year ago at 143.8 bcm.  China is expected to consume 270 bcm of gas this year, the chairwoman of Beijing Gas, the dominant gas distributor in China’s capital, said on Thursday. That represents a rise of 12.5 percent, in line with an earlier estimate by consultancy SIA Energy.  China’s crude oil output in November fell 1.3 percent from the same month last year, and was down 1.6 percent versus a year earlier for the first 11 months, the data showed.

By Reuters