“We can meet carbon specs in California. We can send it to Europe. This is high-quality diesel.”
— Ian MacGregor
“Refine it where you mine it! Don’t rip-it-and-ship-it!”
— Andrew Leach, energy policy professor
Leach was quoting the typical refrain that he had heard from supporters of the notion that we should be processing bitumen within the province, instead of exporting it as raw material. After that, however, he went on to analyze why in-province processing would not be such a good idea.
His analysis seemed to be a solid one, except that one of the key cost figures that he trotted out was later challenged by an engineer responsible for initiating a revolutionary bitumen refinery just northeast of Edmonton. The engineer is Ian MacGregor, and the company is North West Redwater Partnership.
The refinery has everything going for it — even help from the provincial government. The help is in the form of the bitumen royalty-in-kind program (often shortened to BRIK). What happens is that instead of collecting royalties on bitumen production, the province has the option of collecting a portion of the black goo itself. And it can then use that black goo to help foster start-up companies which would create value-added products (in this case, low-sulphur diesel fuel and propane and a few other useful items) as well as local employment. For the North West Redwater example, the government will pay the company to refine its BRIK bitumen into diesel, in exchange for the cash which the diesel then gets at the pumps.
So, other than job creation, why would I care? I mean after all, there is always the bigger question of whether we should be slowing down the mad rush up in Fort McMurray (as Peter Lougheed hinted at a few years ago). And so far, Rachel Notley hasn’t addressed that question.
However, bitumen extraction is a reality, and we should support those operations that can deal with it in a responsible manner. After all, wind generation won’t — any time soon at least — keep us all warm in the winter or feed us.
But I digress. Back to North West Redwater. And one advantage that it has is that it captures CO2 during the refining process. The CO2 will be used for enhanced oil recovery by other companies. Sounds like a zero-sum game for climate change, but according to the Pembina Institute, when used to get at light, sweet crude instead of digging up more tar, there is a marginal benefit to the atmosphere. And if we ever decide to simply sequester the CO2 underground, the benefit would be more than just marginal.
Another benefit of the North West Redwater refinery is that it wouldn’t be sending a corrosive mixture of bitumen and diluent through pipelines. Now, industry experts say that this so-called dilbit is not corrosive, but a quick internet search will find a few other experts who aren’t quite so sure. And pipelines filled with dilbit have done some fairly significant spilling in recent history (like about a million gallons worth, in the case of the Enbridge spill in 2010). But that’s another column.
Another benefit is that North West Redwater wouldn’t produce petroleum coke (or petcoke), like conventional bitumen refineries do. Petcoke is the residual coal-like fragment which is even dirtier when burnt than real coal. But it still gets burnt. And it still piles up in place where people don’t want the stuff. Just do an image search on petcoke piles to see what one of Alberta’s less well known exports looks like. Then ask yourself how you would like one of those gruesome mountains in your neighbourhood when the wind is blowing from the wrong direction.
But, from my perspective, the biggest advantage coming from North West Redwater is that diesel and propane produced in Alberta is a form of home grown security. Diesel is a fuel for tractors and combines and buses and trains. And propane can keep us warm, cook our food, and generate electricity. So if a global calamity strikes, we can be somewhat more assured that we won’t be left freezing and starving in the dark. And if you think that global calamities are simply a thing of the past, then maybe you haven’t been reading enough of my columns.
Evan Bedford is a local environmentalist. Direct comments, questions and suggestions to email@example.com. Visit the Energy and Ecology website at www.evanbedford.com.