Page 141 - Synthetic Fuels Handbook

FUELS FROM TAR SAND BITUMEN 127

Strategies. The Canadian Government plan to extend the mining tax regulation to include in situ
operations. More than $3.4 billion in new projects and expansions have been waiting for the
resolution of fiscal terms to allow the industry to move forward with a number of the projects
that are in the initial stages of development. It is anticipated that such a move will encourage
further development of the Canadian tar sand resources.
There have been numerous forecasts of world production and demand for conventional
crude, all covering varying periods of time, and even after considering the impact of the
conservation ethic, the development of renewable resources, and the possibility of slower
economic growth, nonconventional sources of liquid fuels could well be needed to make
up for the future anticipated shortfalls in conventional supplies.
This certainly applies to North America, which has additional compelling reasons to
develop viable alternative fossil fuel technologies. Those reasons include, of course, the
security of supply and the need to quickly reduce the impact of energy costs on the balance
of payments. There has been the hope that the developing technology in North America
will eventually succeed in applying the new areas of nuclear and solar energy to the energy
demands of the population. However, the optimism of the 1970s has been succeeded by the
reality of the 1980s and it is now obvious that these energy sources will not be the answer
to energy shortfalls for the remainder of the present century. Energy demands will most
probably need to be met by the production of more liquid fuels from fossil fuel sources.
There are those who suggest that we are indeed faced with the inevitable decline of the
liquid fuel culture. This may be so, but the potential for greater energy availability from
alternative fossil fuel technologies is high. North America is rich in coal, oil shale, and oil
sands—so rich that with the development of appropriate technologies, it could be self suf-
ficient well into the twenty-first century.
There is very little doubt that unlocking energy from the tar sand is a complex and
expensive proposition. With conventional production, the gamble is taken in the search and
the expenses can be high with no guarantee of a commercial find. With oil sands, the oil is
known to be there, but getting it out has been the problem and has required gambling on the
massive use of untried technology. There is no real market for the bitumen extracted from
the oil sands and the oil sand itself is too bulky to be shipped elsewhere with the prospect
of any degree of economic return. It is therefore necessary that the extraction and upgrading
plants be constructed in the immediate vicinity of the mining operation.
To develop the present concept of oil from the oil sands, it is necessary to combine three
operations, each of which contributes significantly to the cost of the venture: (a) a mining
operation capable of handling 2 million tons or more, of oil sand per day, (b) an extraction
process to release the heavy oil from the sand, and (c) an upgrading plant to convert the
heavy oil to a synthetic crude oil.
For Suncor, being the first of the potential oil sands developers carried with it a variety
of disadvantages. The technical problems were complex and numerous with the result that
Suncor (onstream: 1967) had accumulated a deficit of $67 million by the end of 1976,
despite having reported a $12 million profit for that year. However, with hindsight it appears
that such a situation is not without some advantages. The early start in the oil sands gave
Suncor a relatively low capital cost per daily barrel for a nonconventional synthetic crude
oil operation. Total capital costs were about $300 million that, at a production rate of 50,000
bbl/day, places the capital cost at about $6000 per daily barrel.
It is perhaps worthy of mention here that a conventional refinery of the Imperial Oil
Strathcona-type (150 to 300 × 103 bbl/day) may have cost at that time $100 to $400 mil-
lion and have an energy balance (i.e., energy output/energy input) in excess of 90 percent.
A tar sand refinery of the Suncor-Syncrude type may have an energy balance of the order
of 70 to 75 percent.
The second oil sands plant erected by the Syncrude faced much stiffer capital costs.
In fact, it was the rapidly increasing capital costs that nearly killed the Syncrude project.