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Opportunities for the NGL Industry in the Oil Sands

Learn about Aux Sable's developments, midstream opportunities, and risks/challenges in oil sands extraction. Discover ASC initiatives and NGL industry trends in Alberta.

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Opportunities for the NGL Industry in the Oil Sands

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  1. Opportunities for the NGL Industry in the Oil Sands CGPA Conference Calgary, AlbertaMay 9, 2008 Tim Stauft Executive Vice President Aux Sable Canada

  2. Outline • Aux Sable: Past, Present and Future • Oil Sands Industry Environment • Midstream Opportunities • Risks/Challenges • ASC Key Initiatives and Projects • Conclusions

  3. Who Is Aux Sable/Sable Canada? • Aux Sable is a private company owned by Enbridge, Fort Chicago and Williams • Aux Sable Liquid Products (ASLP, US affiliate) owns and operates 2.1 bcf/d world scale extraction/frac plant at terminus of Alliance Pipeline (Chicago area) • Sable Canada is owned by Enbridge and Fort Chicago • Sable Canada is developing fee-based businesses • Announced offgas alliance with Dow Chemical • Growth in Canada on Fort Saskatchewan site • First Canadian offgas project for BA Heartland Upgrader under construction (Aux Sable) • Evaluating/developing other Fort Saskatchewan offgas and extraction projects (Sable Canada)

  4. Aux Sable US Facilities

  5. ASLP Channahon Facility • 2.1 bcf/d capacity plant • Capable of extracting and fractionating approximately 87,000 bbl/d of spec NGL products (ethane, propane, normal butane, iso-butane, and natural gasoline) • Isomerization unit – to convert normal butane to iso-butane • 16 spot rail loading rack • 200,000 bbl/d of on-site storage (spec products and mix) • Access to multiple pipelines, products terminals, and refineries

  6. C2 Ethane C3 Propane C4 Butane C5+ Pentanes Plus Natural Gas Processing 101 Upgrader Gas/Oil Well Gas/Oil Separator Gasoline Oil Diesel Kerosine Gas + Gas Liquids Remove Contaminants H2S CO2 Etc. Gas and Gas Liquids Gas Liquids Extraction Gas Liquids Fractionation Gas Liquids Gas Methane Gas to Consumers

  7. Conventional Midstream Challenges • Conventional natural gas supply on the decline • Intra-Alberta natural gas consumption increasing • Reduction in natural gas flows past major export points (primary source of ethane) • Cochrane • Empress • Natural gas quality, from NGL perspective, eroding • Coal bed methane production increasing (high CO2) • NGL content of natural gas declining • Regulatory uncertainty (NGL Inquiry, NCC)

  8. Alberta Natural Gas Supply Source: ERCB

  9. Alberta Natural Gas Demand Source: ERCB

  10. Alberta Natural Gas Supply/Demand Source: ERCB

  11. Oil Sands Opportunity • Significant oil sands production growth expected • Upgrading of oil sands produces “off gas” streams • Off gas is typically higher NGL content than conventional gas • Alberta Government bitumen upgrading policy • Upgrader credit, bitumen “in kind” royalties, other? • Environmental benefits (CO2 credits) from using processed vs raw offgas as fuel • IEEP credits for petrochemical C2/C2= consumers

  12. Off Gas Risks/Challenges • Olefinic content / composition of off gas • Markets for “unique” products (olefin/paraffin mix) • Small scale of operation vs straddle plants • Isolated locations / distance from NGL infrastructure • Use of existing/new natural gas/NGL infrastructure • Fuel gas energy balance for upgrader • Reliability of off gas operations critical to upgrader

  13. Canadian Crude Oil Supply Source: CAPP

  14. Potential Off Gas and C2+ Supply from Alberta Upgraders Source: ERCB applications and public data

  15. Fort Saskatchewan Upgrader Activity NORTHWEST UPGRADING & SYNENCO (< 2 KM) KINDER MORGAN ACCESS FORT HILLS BA ENERGY PROVIDENT/ WILLIAMS ENBRIDGE KING TECH MAPLE RESOURCES SUNCOR SHELL CN ATCO SUNCOR STATOIL GULF CHEMICALS TRANSCANADA PIPELINES TOTAL E & P CANADA CN AUX SABLE PETRO- GAS BP DOW GEMINI CORPORATION KEYERA

  16. Aux Sable Heartland Facility

  17. Heartland Offgas Project • Heartland Phase 1 upgrader offgas 15 mmcf/d • 2,200 bbl/d of C2 (40% ethylene) • 2,000 bbl/d of C3+ • Startup matched with Heartland Upgrader (Q3/4 2009) • C2/C2= to Dow Chemical • C3+ to local/export markets • Residue gas returned to upgrader • All regulatory approvals received • Construction commenced in August 2007

  18. Conclusions • Alberta conventional midstream business in decline • Dramatic growth in oil sands production • Addition of significant bitumen upgrading capacity in Fort McMurray and Fort Saskatchewan areas • Increasing availability of off gas for C2+ extraction • Processing of off gas presents unique challenges • Aux Sable companies poised to expand off gas processing business, leverage on land position, off gas experience, extraction assets

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