Osdfnlreport

BITUMEN & VERY HEAVY CRUDE
UPGRADING TECHNOLOGY
A REVIEW OF LONG TERM R&D OPPORTUNITIES
Len Flint Ph.D, P.Eng
The Alberta Chamber of Resources has recently published the “Oil Sands
Technology Roadmap: Unlocking the Potential”. Other recent studies by
the Alberta Energy Research Institute and the Cleaner Hydrocarbons
Technology Futures Group have also addressed oil sands bitumen
upgrading technology development needs. This report expands on these
initiatives, and outlines opportunities for stable long term research and
development, with a special emphasis on the role of publicly funded
research to the year 2010. This includes pre-competitive R&D that should
be considered for joint industry and government funding. The report also
assesses the potential for greenhouse gas mitigation through new
technology.
March 31, 2004
LENEF Consulting (1994) Limited
i
Acknowledgements
This study was funded by NRCan, and through work-in-kind by Alberta

Energy Research Institute (AERI).
The Alberta Chamber of Resources has recently published the “Oil Sands
Technology Roadmap: Unlocking the Potential”. The author of this report
also led the development of the Technology Roadmap, and wishes to
thank the Alberta Chamber of Resources for permission to use exhibits
and selected text, sometimes edited, for certain sections in this report.
The author extends special thanks to the team of experts who were
collectively responsible for the central technical content of the work. The
report also incorporated helpful advice from an advisory board of other
key government and industry people. All are named on the final page of
the report.
The author acknowledges responsibility for most of the content and
recommendations on the future coordination, funding and management of
jointly funded R&D.
Bitumen & Very Heavy Crude Upgrading – Long Term R&D Opportunities ii
TABLE OF CONTENTS
Page
1. Executive Summary 1
2. Introduction: Upgrading in a Dynamic Market 6
3. Objectives and Approach to Review 11
4. Current Upgrading Practices, Limitations and 14
Upgraders of the Future
5. Greenhouse Gas Emissions and the Study Base Cases 18
6. Technology Development Needs in Bitumen and 22
Heavy Crude Upgrading
7. Summary of Long Term R&D Programs and 36
Public Funding Considerations
8. Potential for Greenhouse Gas Emissions Reduction 48
9. Links to Other Areas of Oil Sands and Related 55
Technology Development
10. Industry and Licensor Proprietary R&D 58
11. Issues in Government & Industry Jointly Funded R&D 60
12. Coordination of Government & Industry Jointly Funded R&D 61
13. Conclusions and Recommendations 64
References 70
Glossary of Terms and Acronyms 71
Appendices
A1 General Considerations on the Need for R&D, 75
R&D Providers and Funding
A2 Research and Technology Needs for Bitumen and 79
Heavy Crude Upgrading
A3 Canadian R&D Providers with Potential Role in 123
Government-Industry Joint Funded Upgrading Programs
A4 Background on EnergyINet 132
A5 The Study Team and Acknowledgements 136
Bitumen & Very Heavy Crude Upgrading – Long Term R&D Opportunities iii
1
EXECUTIVE SUMMARY
Background: The International Energy Agency (IEA) has predicted 70% growth in
worldwide demand for primary sources of energy by 2030. The IEA expects 88% of this
increased demand to be met by oil, natural gas, and coal. While production from other
renewable sources is expected to almost double, these sources will still meet only 2.5% of
overall demand. Oil will consequently remain a dominant factor in energy through this
century.
The Sands Technology Roadmap1 (OSTRM) set a long term vision for the sustainable
development of the oil sands industry. The economic scope of the oil sands opportunity is
enormous for the whole country. Highlighted here is the potential impact on the National
GDP currently standing at around $ 1 trillion annually. The plans to 2012, already well
underway, will lift the oil sands contribution to around 3% of current GDP by that time, and
the further development to 5 million barrels daily could add a further 4-5 % of current GDP.
added 1 million b/d

oil sands by 2012
energy sector added 3 million b/d
today with oil sands by 2030
current 12
35
oil sands 65
Canada
900 excl. energy
figures in billions of $ (2002)

Sources: NEB /OSTRM
Without further oil sands developments, Canada will become a net importer of crude within
the next 20 years. With oil sands development, Canada will not only maintain oil self
sufficiency, but with careful, sustainable development, can become a major energy source in
the world.
With the right technology and cost structure, the oil sands will provide a sustainable bridge
between non-renewable fossil fuels and other replacement energy options for the future. The
development of oil sands has long been acknowledged to need continuous technology
improvement and adoption for maximum economic benefit.
Bitumen & Very Heavy Crude Upgrading – Long Term R&D Opportunities 1
The OSTRM anticipated detailed assessment and development of R&D plans in:
• Mining-based extraction and the environmental footprint

• in-situ recovery
• Upgrading to higher value products
• Energy, Power and Hydrogen
• Air Emissions, with special emphasis on Greenhouse Gas emission abatement
Circumstances have led to the fast-tracking of this plan for Upgrading R&D, funded by
NRCan (Natural Resources Canada) with ‘in kind’ support from Alberta Energy Research
Institute (AERI). It is anticipated this work and its outcome will also provide a model for other
reviews to be developed in 2004 and 2005.
The Focus of this Review: This review has focused on the identification of emerging and
developing technologies that can, when fully developed, either be applied directly to
upgrade bitumen and very heavy crudes, or are integral to new approaches to upgrading.
Although very heavy crudes do not have the same reserve potential as the oil sands, and
are produced more conventionally, they are included in this report as they might also gain
from upgrading to lighter crudes using similar upgrading technology.
For oil sands bitumen, the review of technologies contributing to upgrading included parallel
consideration of newer recovery technology being investigated that might include a measure
of upgrading. For all upgraded, synthetic products, downstream refining market needs that
might impose new quality requirements are also reviewed. In addition, the survey considered
upgrader integration technologies, and emerging sciences or enabling technologies that
might help to transform the future science of upgrading processes. So the range of
technologies considered was significantly wider than the conventional concept of upgrading.
The study identified basic and applied research at the pre-competitive stage of development
which is ideally suited to scientific investigation in universities and government funded labs.
This is an area of research over which governments and industry jointly have planning and
management control. This is typically 10-25 % of all R&D funding. Extensions of this platform
of underlying research into development towards commercial operations are also
referenced, but are not normally suited to lab based study. These development areas do,
however, need to be accounted for, and in some cases involve joint industry and
government funding.
The continued expansion of oil sands and very heavy crude production and upgrading will
need to address one of the most pressing external challenges; significantly reduce or
eliminate reliance on natural gas for energy, power and hydrogen generation. Proposed
alternatives to natural gas are not confined to internally generated residues, but this
approach can have some important and economically attractive side benefits in the main
upgrading process selection.
R&D Programs Identified: The report uses the term ‘program’ to refer to a branch of
mission-oriented scientific study that addresses a particular long term technology need or
opportunity in oil sands and heavy crude upgrading. Each program will also have sub-set
projects, and these were also identified where possible.
The study team identified 42 program areas that can lead to new technologies impacting
upgrading. Many, but not all, are already under investigation, and this report estimated the
current effort directed towards oil sands and very heavy crude upgrading at about 145 direct
person years (DPY), after factoring effort for some integrated research programs with wider
applicability.
Of the 42 programs, some 27 were regarded as higher priority, and require greater attention
to planning to ensure that the effort expended on the more focused applied research
projects is appropriate. The other 15 projects include a broad level of basic research (more
difficult to prioritize). Some of these lower priority areas may include programs which need to
be reassessed for their potential contribution and cost effective continuation.
Greenhouse Gas Emission Reduction: Greenhouse gas emissions are reported in CO2E
(CO2 Equivalent), but CO2 itself comprises 85-95% of the total. Current CO2 emissions take
advantage of the high consumption of cleaner (hydrogen rich) natural gas. For example, the
integrated mining and upgrading complexes such as Syncrude or Suncor report CO2E (CO2
Equivalent) emissions in the range of 100-100 kg per barrel. Forward looking base cases
with maximum substitution of natural gas by residues or coal, along with higher hydrogen
demand for improved quality synthetics, predict increased emissions for integrated in-situ
(SAGD) and upgraders to 175 kg CO2 and mining-upgrader complexes to 125 kg
respectively for each barrel of synthetic crude production.
Four technology-dependent sources are responsible for 80-90% of the emissions. The
numbers in parentheses indicate the individual percentages of totals. The range for central
upgrading technologies - (c) and (d) - is due to the fact that recovery energy intensity is
different for the two combined recovery-upgrader options.
a) SAGD recovery (60%)
b) Mining recovery (20%)
c) Upgrader process energy ( 8-12%)
d) Hydrogen consumption in upgrading (30-45%)
The most promising area for reduced emissions is in in-situ SAGD recovery, where new
technology using solvents is already in advanced stages of piloting. The potential is to
reduce energy use by as much as 50% or more of the current levels. This would remove a
third of emissions (~50 kg per barrel) for an integrated in-situ / upgrading project. Other in-
situ recovery processes being proposed that reduce or eliminate natural gas involve some
form of in-situ combustion or gasification of the reserve, and are not yet proven to reduce
CO2 emissions.
No mining based technology using selective solvents on the full ore is expected to be
commercially available in a reasonable timeframe. Selective solvent based recovery from the
bitumen froth (recently commercialized by Shell et al) may have a small impact on CO2
emissions at the upgrader, but this is yet to be verified.
Direct energy savings for new upgrading processes are likely to be very small, if any.
The fourth category - reduced net hydrogen consumption - is the second most likely
contributor to reduced CO2 emissions. A combination of selective separations, targetted
hydrogen consumption, and recovery or regeneration of hydrogen from upgrader by-
products may all combine to reduce fresh hydrogen addition by a targeted 10%, or some 5-6
kg per barrel.
In summary, the combined potential of reduced emissions for the in-situ/upgrading
combination, including new solvent based in-situ recovery technology and reduced net
hydrogen consumption, could reduce associated CO2 emissions by 60 kg per barrel, and
bring these emissions below the Mining-Upgrading combination, where less potential for
reduction is foreseen.
Program Costs and Funding Roles of Industry and Government: The current
investment in university and government labs in the 42 programs is estimated at $25 million
annually. Costs are also shared in various ways by Industry. This is a substantial
commitment, but needs to be assessed from a different perspective - that of timely results -
to determine if it is sufficient for basic and early applied research. The work is in the
emerging technology development areas, and is estimated to be part of annual R&D costs in
the region of 100-150 million.
At this time, industry pays the majority of the R&D costs, largely through its almost exclusive
funding at the “development” end of the research spectrum, especially in field demonstration
or pilot projects.
The continued funding of well managed basic and applied research at universities and
government labs, and some logical extensions into development, should be relatively easy
to address in principle. It is already done today through core R&D programs and joint
industry consortia. One issue will need to be addressed; that is speedy agreement to
periodic one-off equipment purchases that do not lend themselves to normal approaches to
steady funding budgets, especially within governments. In addition, any tendency to try and
subdivide pre-competitive research and provide funding on a selective basis, governed only
by current individual company business interests, will need to be addressed and carefully
managed if the aims and cost effective performance of cooperative research are to be fully
realized.
Turning attention to the higher cost development work, major industry expansion will bring
economic benefits to industry and Governments alike. Philosophically, the basis is in place
for shared funding across the whole spectrum of R&D, including high cost pilots.
To make this happen, however, two historical issues need to be addressed; intellectual
property rights (including “right-to-use” commercially), and timely approvals for the
government portion of funding, so that projects are kept on schedule.
Industry and Licensor R&D: Pre-competitive research is typically the tip of the iceberg in
R&D spending. This report estimates as much as an added $75-125 million annually of
ongoing R&D that is not published. Industry has their own R&D capability, or contracts this
out for specific company-confidential needs, but at the same time advances technology
available for licensing to others. For the purposes of good future planning, it is desirable to
have an ongoing, non-confidential assessment of R&D by industry participants.
In addition, licensors engage in R&D that contributes to the knowledge base for bitumen and
very heavy crude upgrading. The industry needs to continue to encourage healthy
competition between key process licensors and others in the vendor community, and pose
challenges for them, where it is anticipated that they have the lead development role. That
will sometimes include joint venture funding and development.
Coordination and Leadership: EnergyINet is close to concluding a mandate and
approach to management of jointly funded R&D in the six strategic energy areas identified
through the joint industry-government dialogue initiated by AERI. Both levels of government,
and most of the industry and the majority of R&D providers are already in agreement. This
study assumes that EnergyINet will succeed in completing its organizational goals by the
end of this year, and it is recommended that jointly funded R&D in upgrading and other oil
sands and heavy crude areas be coordinated through EnergyINet. An Upgrading Advisory
group consisting of industry and government representatives is already in place.
In anticipation of the leading role through EnergyINet, a number of activities should start
immediately:
a) Develop a position of Program Director (perhaps shared with other technology areas)
to lead and support the work of the Advisory group.
b) Maintain a directory of key R&D providers, in Canada and externally, and plan for their
role in future jointly funded R&D.
c) Identify skill gaps in university and government labs.
d) Develop concise summaries of each of the sub-projects in shared programs, with
estimates of future effort and key locations for the work. Future effort for mission-
focused research needs to take account of the timeframe for result delivery in order to
be useful to industry.
e) The outcome of these steps will be a portfolio of R&D programs for consideration of
industry and government joint funding.
f) Put in place a process of annual review of progress.
g) As a parallel activity, develop a data base of industry R&D in the same area, and use
this as a means to check for duplication or gaps.
Beyond the main focus here - the coordination and management of the pre-competitive R&D
work - EnergyINet also needs to address the issues that currently limit major government
involvement in field pilots, to determine any barriers to future joint funding at all levels of the
technology development chain.
Linkages with Other R&D Plans: The development of other R&D plans for oil sands and
heavy crude development need to be aware of overlapping R&D programs discussed in this
report, and which can be supported partly on their contribution to upgrading:
(a) Recovery technologies for in-situ and mining
(b) Energy and hydrogen generation technologies (all under Integration Technologies)
(c) Upgrading Technologies with Air Emission Reduction Potential
In addition, some other technology needs were identified which did not fall into the mandate
for this report, and do not necessarily fit in the other four areas identified:
Materials Technology: Corrosivity associated with most of the bitumens require special
metallurgy to handle. Alternatively, selective separation technology (a feature of some of the
R&D programs identified in this report) may reduce the corrosivity of the bitumen.
Energy and Power Integration: This is a pervasive need for oil sands value adding steps,
and should be covered under a future plan for Energy, Power and Hydrogen.
These are listed here to ensure they are addressed in other plans.
2
INTRODUCTION: UPGRADING IN A DYNAMIC MARKET
The Oil Sands industry is in the midst of a second wave of development, begun in 1995.
Production is currently at 1 million barrels of daily production, and is rising to 2 million barrels
per day by 2012, through firm expansion plans and new production projects already close to
construction.
Concurrent with increased crude oil demand well into this century, there are marked declines
in North American production of conventional crudes and natural gas. Canadian oil sands, a
non-conventional source encompassing the Athabasca, Peace River, Cold Lake and
Wabasca deposits, is increasingly recognized as a strategic resource and a potential
contributor to North American energy security. In addition, conventional heavy crudes from
both Alberta and Saskatchewan, some which may require added processing to satisfy
refining market demand, will fulfill part of the market demand.
The Oil Sands Technology Roadmap1 (“OSTRM”) envisions an oil sands industry capable of
5 million barrels daily production by the year 2030 (see Figure 2.1).
Figure 2.1 Vision to 2030
million barrels per day
6 ls
E m ic a
AV h e
DSW roc
pet
N
SA s
5
3rd
OIL
e n fuel
gre
4
etic crude
3 synth
2 energy/power/H2
bitumen
1 conventional lig
ht and heavy cr
ude
2000 2010 2020 2030
Courtesy Alberta Chamber of Resources
The oil sands industry is currently dominated by two products - bitumen (shipped in dilute
form as “dilbit”) and synthetic crude (SCO). The later comes in several forms, but the
predominant synthetic crude product, is a light sweet crude, but with some significant quality
challenges. The OSTRM vision sees the industry evolving to a multiple energy and
petrochemical source by the year 2030. Even as unprocessed bitumen remains a major
product, upgrading is expected to expand in importance over the ‘vision’ period.
Technology development and adoption has rapidly reduced supply costs and increased the
economic viability of oil sands development. This cost reduction, combined with favourable
royalty regimes, and world crude prices at sustained levels at or above $ 20 (U.S.) per barrel
are all encouraging signs. However, there are a number of issues and challenges ahead of
the industry (see Figure 2.2) and the OSTRM discusses these in more detail.
Figure 2.2 Challenges to Achieve the Vision
Environmental
Natural Gas Footprint Air Emissions
Use
Diluent Water Use
Pipelines VISION Sulphur
Upgrading Coke
Markets Construction
Cost Structure Costs
The challenges that more directly underpin new technology needs in Upgrading are discussed below.
2.1 Markets
Expanded production will need to be matched by new markets. See Figure 2.3.
Figure 2.3 New Markets
Pacific Rim
Fort McMurray
PADD V
PADD IV PADD II
existing
pipelines
PADD I
new markets
PADD III Canadian
supplied today
Mexico
Courtesy Enbridge
Most of the oil sands output will still be marketed in Canada and the U.S., and will include
moving more deeply into PADD II (“Petroleum Administration for Defence District”) and
PADD III, as well as increasing exports to California and Washington State (PADD V).
Expanded pipeline infrastructure will also allow access to Pacific Rim markets. Overall, it
appears that there is sufficient market capacity and expanded end uses, including internal
energy needs to absorb the increased production. The optimal mix of unprocessed bitumen
and refined products will continually be adjusted to market needs.
2.2 Upgrading and Fuels of the Future

Centralized upgraders at Suncor and Syncrude convert mining-based oil sands bitumen into
about 500,000 barrels SCO daily. Expansions currently under way will double the Syncrude
production from mined ore. Suncor’s similar expansion will be based largely on in-situ
produced bitumen. Husky produces a further 60,000 barrels per day SCO from Alberta and
Saskatchewan in-situ produced bitumen.
In a more recent development, the Shell led consortium is processing 150,000 barrels per
day of mining-based bitumen in a Fort Saskatchewan (Alberta) upgrader. The product is
largely destined for the adjacent Shell Scotford refinery, with other special streams being
used by joint venture partners or marketed. The Newgrade upgrader in Regina similarly
processes conventional heavy crude to supply the adjacent Co-Op refinery.
There will continue to be a market for unprocessed bitumen in refineries suitably equipped to
handle the residues. However, upgrading provides an opportunity to increase the value of
finished products, and to respond to changing downstream refining pressures to produce
cleaner burning fuels. This includes flexibility to “leapfrog” to the crude quality demanded at
some anticipated point in the future. In addition, better quality SCO may make the recent
adoption of “Synbit” (bitumen and synthetic crude blends) more attractive to a wider market.
The quality of the majority of current SCO has certain unique characteristics that are
summarized in Figure 2.4.
Figure 2.4 Comparison of Cuts from Conventional and Synthetic Crudes
Conventional Synthetic Sweet

Light / Heavy crude today
% volume crude blend
100
some ideal some questions
properties naphtha on hydrocarbon
mix
80 Jet Fuel
smoke point 15
24 poor quality
> 21
distillates limit
60 Diesel many refiners
Cetane 50
> 45
35 to 10% or less
of crude diet
40
Gas Oil to
conversion 11. 9 high volume
units
UOPk> 11.75 of low quality
20 11. 3 feedstock for
cat cracking
residue refineries
0
SCO has some distinct advantages for some refiners; essentially zero residue, and low
sulphur and nitrogen. However, severe thermally based primary upgrading (coking)
produces a highly aromatic crude, with poor quality distillates - jet and diesel fuel
components - and lower quality gas oils which are converted in the refinery to lighter
gasoline and distillates. In addition, the remaining sulphur compounds in distillates are the
most difficult species to remove, making future ultra-low sulphur fuels more of a challenge.
In summary, while the limitations vary from refinery to refinery, a large sector of the target
U.S. based fluid cat cracking refinery market is limited by as little as 10% SCO in the crude
diet because of distillate and gas oil quality deficiencies.
A target for future SCO quality is to produce a light, sweet crude, with properties and
response to conventional refining equal to or better than WTI or Brent. The SCO of the
future can be marketed with or without some residue. Extending bitumen upgrading to higher
quality synthetic crude with ultra low sulphur and other heteroatoms, can also results in
substantial production of finished ‘green’ distillate fuels, some of which can be marketed
separately for higher added value.
In addition, there is scope for the production of petrochemicals from bitumen or bitumen
derived streams. This is an important additional higher value end use to maintain a viable
petrochemicals industry in Western Canada when natural gas by-product supplies decline.
2.3 Natural Gas Use

Natural gas is currently a major building block in oil sands development, as Figure 2.5
shows. Continued use at this level under the vision to 2030 would mean unacceptable
aggregate consumption levels, in the face of expected declining production in Western
Canada. To conserve natural gas for other captive uses, such as home, office and small
industry heating, the oil sands industry will need to find ways to become internally sufficient
in energy and hydrogen.
Figure 2.5 Current Oil Sands Natural Gas Demand
standard cubic feet / barrel

all figures are estimates, and will vary
upgrader added future

hydrogen today upgrader hydrogen
250 Mining 250
400
In Situ 1000
80
upgrader fuel
(no coke burning)
Source: OSTRM / various .
The use of the least valuable residues from oil sands bitumen for energy and hydrogen will
have a significant and generally positive impact on upgrading the rest of the barrel, as the
heaviest residues currently require a disproportionate amount of capital investment and
operating costs to upgrade to marketable liquid products.
Hydrogen demand for upgrading (currently met by steam-methane reforming) is one obvious
principal target to reduce natural gas use. In addition to the upgrading step, some new
recovery technologies, particularly for in-situ production, hold the promise to reduce external
energy use and at the same time result in some bitumen upgrading or property modification.
This is an important consideration in the full upgrading chain.
2.4 Air Emissions

While there are many air emission challenges that the oil industry needs to address, concern
for climate change has pushed compliance with the Kyoto Protocol to the forefront. The
Kyoto accord specifically targets CO2E (carbon dioxide equivalent) emissions. There are
competing targets for addressing this issue between the Federal and Alberta governments,
but the industry is already conducting long term planning. Any new upgrading technology
that addresses CO2E reduction is an obvious contribution, especially in reducing energy and
hydrogen consumption. Section 5 goes into the Greenhouse Gas production and abatement
challenges for the production and upgrading steps in more detail.
2.5 Sulphur and Coke Co-Products

Bitumen contains on average close to 5% by weight sulphur. The removal of sulphur
(desulphurization) occurs through various upgrading processes, and is recovered via
hydrogen sulphide gas scrubbing. Recovered sulphur is either stockpiled or shipped to
markets, but the land-locked location of much of the oil sands industry makes this difficult,
with the current worldwide glut in sulphur, and consequent low prices at the closest western
export port, Vancouver. A good working number1 puts the potential long term production of
sulphur from expanded oil sands production at more than 10 million tonnes annually, well in
excess of Canada’s current substantial exports from non-discretionary production (natural
gas and refinery by-product). Such a volume has the potential to flood the market even
further, and depress prices for all producers.
New technologies to use the sulphur by-product in non-traditional ways, such as in cement,
sulphur enhanced road asphalt, as well as growing agricultural soil nutrient demand growth
all offer ways to mitigate the world supply-demand imbalance in the log term.
Coke co-product from upgraders which use some form of coking for the primary upgrading
step, is handled differently by the three major upgraders - Suncor, Syncrude and Husky.
Some is used for energy and power generation, and the rest is stockpiled. The future trend
to internally generated energy may lead to more use of the by-product for energy, power and
hydrogen.
-------------
All of these challenges are legitimate targets to be at least partially addressed by new
technology developments that impact upgrading, from “resource to wheels”.
3
OBJECTIVES AND APPROACH TO REVIEW
3.1 Overall Objective of the Study

The Sands Technology Roadmap1 (OSTRM) set a long term vision for the sustainable
development of the oil sands industry. The report reviewed key areas for technology
improvement, but left detailed assessment and development of R&D plans to follow up work.
In particular, the OSTRM encouraged the creation of such plans in key areas for
development:
• Mining-based extraction and the environmental footprint

• in-situ recovery
• Upgrading to higher value products
This report on Upgrading R&D, funded by NRCan with in kind support from AERI, is the first
detailed assessment of long term R&D opportunities since the OSTRM was published. It is
anticipated this work and its outcome will also provide a model for other plans to be
developed in 2004 and 2005. Specifically, this report includes consideration of upgrading
technology that will be of potential relevance to Oil Sands bitumens and very heavy crudes,
with the following premises:
• The work is intended to expand on technology development programs necessary in

the upgrading of bitumen and very heavy crudes. This also includes some novel
recovery technologies, and ways to address the need for more widely marketable
products.
• The overall vision from the OSTRM is reflected, but the primary intent is to advise
Federal & Provincial government funding agencies of the priorities for R&D
investment in this area to at least the year 2010.
• Any future technology development also needs to ensure sustainable growth - three
guiding principles are “economic viability”, “environmental responsibility” and “respect
for societal values”.
• The R&D opportunities must address incremental change for existing facilities, as
well as transformative technologies for new generation upgraders.
• Some overarching premises are assumed:
- current trends in cleaner hydrocarbon fuels will continue
- reduced Greenhouse Gas intensity is a continuing pressure
- dependence on natural gas for energy and hydrogen must be “managed
down “
• Public sector policy believes in adding maximum value to the reserve in Canada
• Moving “known resources” to “reserves” through new technology is desirable.
3.2 Broad Areas for Review
The value added links in the oil sands “resource to wheels” chain is depicted in Figure 3.1
Figure 3.1 Oil Sands Bitumen & Very Heavy crude

Value Added Links
Mining
& Extraction
Based
Bitumen recovery
Planned Primary
In Situ
& Secondary downstream
Bitumen recovery
upgrading refining
to refinery
Heavy Oil
unprocessed
Production
normally primary Energy, Power
or EOR & Hydrogen
The produced bitumen or very heavy crudes are either marketed directly to refineries
equipped to handle the residues, or are upgraded, largely to sweet, light synthetic crude
(SCO). Until recently, there were no major interrelationships between the recovery stage and
upgrading. Other than solids content and higher density (lower API) of mining-based
bitumen, bitumen quality was essentially the same from either recovery method, and
included similar hydrocarbon and heteroatom constituents. “Planned” upgrading technology
developed accordingly.
More recently, however, new technology developments in mining-based extraction, and
changes being proposed for in-situ recovery technology, promise to recover bitumen with
altered properties. In some respects, therefore, some upgrading may occur at the recovery
stage, and in turn impact process decisions at the “planned” upgrading complex.
In another development, the replacement of natural gas by bitumen-derived residues
(discussed in Section 2) may alter upgrading process selection even more radically.
At the refinery market end, synthetic crude quality needs to address increasing pressures
towards ultra-clean transport fuels, as well as other quality deficiencies that limit the market
(or value) of current quality synthetic crude.
With these fore words in mind the study has considered not only direct, “planned” upgrading
technology needs. In addition, we included:
a) Consideration of processes at the resource recovery stage that include a measure of
“unplanned” upgrading, which in turn affect planned upgrading.
b) Upgrader “integration” technologies, especially those that include alternative energy
and hydrogen production sources, which in turn impact upgrader process selection.
c) Downstream fuels refining and petrochemicals opportunities or changes that impact
future synthetic crude quality requirements.
3.3 Study Methodology

A team of experts from Industry, NRCan, AERI, ARC and universities was struck to help
guide the evaluation (see Appendix 5). This report is the result of a series of working
meetings and off-line work of that group during February and March 2004.
The main emphasis is on R&D at the pre-competitive level, and therefore is largely basic and
applied research (readers unfamiliar with this terminology are referred to Appendix 1). As
such, the spending on such research can best be likened to the tip of the iceberg. Industry
will pick up the best ideas from this early research, and largely fund the final and more
expensive stages of technology development themselves, often through sophisticated lab
based pilot units (for most upgrading processes) or large scale field pilots at close to
commercial scale for recovery technology. There may be instances, however, where
government co-funding is important at this stage as well.
The evaluation has determined a large number of program areas for R&D that need to be
considered for Government, or joint industry-government planning and funding. In each
program area, the main objectives of the work and current levels of effort are identified. The
review also identified follow-on development work, even where the timing and funding is
often beyond the control of Government.
Planning at the next stage will need to confirm or adjust current effort to fit priorities, and
timing of the industry needs, where that is possible. Detailed planning is, however, outside
the scope of this report. This report does not recommend the funding split between Industry
and Government, a question currently under review through AERI and EnergyINet.
4
CURRENT UPGRADING PRACTICES, LIMITATIONS

AND THE UPGRADER OF THE FUTURE
4.1 Upgrading Today

About 1 million barrels of combined mining and in-situ based bitumen is currently produced,
and some 65% of this production is upgraded, largely to a light, sweet synthetic crude oil
(SCO). To date, virtually all of the mining based bitumen is upgraded. Some in-situ produced
bitumen is upgraded by Husky in their Lloydminster, Saskatchewan upgrader. Much of the
synthetic crude is processed in Canadian refineries today, but increasingly large volumes will
be marketed in the northern tier US states as the industry expands output.
Figure 4.1 is reproduced from the previous section, and is used to orient the reader to
current upgrading practices, and some of the limitations.
Figure 4.1 Oil Sands Bitumen & Heavy crude

Value Added Links
Mining
& Extraction
Based
Bitumen recovery
Planned Primary
In Situ
& Secondary downstream
Bitumen recovery
upgrading refining
to refinery
Heavy Oil
unprocessed
Production
normally primary Energy, Power
or EOR & Hydrogen
To date the industry has become conditioned to think of upgrading as a separate and
subsequent step to recovery methods. The “quality” and character of recovered bitumen has
impacted the upgrading process selection and operation that we know today, and imposed
high severity primary upgrading to deal with the high metals and asphaltenes in the feed
stream.
Figure 4.2 Upgrading to SCO Today
gas treatment
hydroprocessing
coker units
synthetic
crude oil
bitumen coke
ebullated bed hydrogen

hydroprocess
residue
reform natural gas
In the current upgrading plants, coking has historically predominated as the choice for
primary upgrading. The lack of a catalyst handles the higher solids and water content in
mining based bitumen more easily. Coking is also the first step to produce a bottomless
(zero residue) SCO, and the coke by-product helps to trap solids, as well as concentrate and
remove the metals, and some of the sulphur and nitrogen. Essentially all of the Suncor and
Syncrude production involves coking.
Ebullated bed catalytic hydro-conversion processes require special feedstock handling with
high solids bitumen, and also do not fully convert the bitumen to zero residue. The Shell led
Western Oil Sands upgrader at Scotford, Alberta uses this primary upgrading process. The
Husky upgrader converts the bitumen first with an ebullated bed unit, and then processes
the unconverted residue in a coking unit.
Both of these primary processes - coking and ebullated bed units - produce a boiling range
of products not dissimilar from light crudes, but still with high concentrations of impurities,
such as sulphur and nitrogen. The secondary hydrotreating processes remove these
impurities, to produce sweet blending stocks for the SCO. Hydrotreating processes are not,
however, accompanied by substantial conversion to lighter products, and the SCO boiling
range is essentially controlled by the primary upgrader.
4.2 Quality Limitations

Section 2 and figure 2.4 summarized the quality of today’s SCO and some of its limitations in
an expanded market, especially in fluid cat cracking refineries that are the mainstay of the
U.S. refining industry. This market needs to be carefully developed for future major growth.
This will require higher quality distillates (jet fuel and diesel) and gas oils, and the ability to
remove residual distillate sulphur levels to ultra low levels (less than 10 ppm) in conventional
hydrotreaters.
4.3 Recent Developments in Recovery Technology and Impact on Upgrading

Recent developments in bitumen extraction from mining-based froth are an example of how
future recovery processes might perform some of the upgrading at this stage of the value
added chain, and in turn influence the “centralized” upgrader processes. Figure 4.3
illustrates the two options now available for the final bitumen recovery step from mining-
based froth. The initial industry practice by Syncrude and Suncor uses a relatively aromatic
naphtha to recover diluted bitumen from the froth of water, bitumen and solids produced at
the primary recovery stage. The result is a high level of bitumen recovery (98%+) from the
froth, but with relatively high solids and chloride-contaminated water content.
Figure 4.3 Main Froth Treatment Process Steps
from primary FROTH

separation step TANKS
naphtha paraffinic
solvent solvent
INCLINED PLATE
SETTLER
SEPARATORS
VESSELS
& CENTRIFUGES
solvent rec’y solvent rec’y
& recycle & recycle
bitumen with bitumen with
1-2 % water < 0.1 % water & solids
0.3-0.4 % solids
With the newer paraffinic solvent froth treatment process practiced by the Shell-led project at
Muskeg River mine, the bitumen quality is improved, with higher rejection of water and
solids, but with added rejection of heavier asphaltenes (in the range of 4-8% by weight of
bitumen) which report to the tailings. This apparent “loss” does however result in improved
operation of the primary upgrader of choice (an ebullated catalyst bed process).
There are similar trends to utilize solvents in in-situ recovery, where new approaches under
development, ostensibly designed to reduce steam use, may also achieve a level of
upgrading at the recovery stage.
4.4 Moderate or “Field” Upgrading
In the last few years, some producers have evaluated moderate upgrading processes. The
interest was driven by concern for the future supply of diluent (typically gas field condensate)
used to reduce bitumen viscosity for pipeline transport to distant refineries. The issue may
resolve itself in time: it is now anticipated that more bitumen will be fully upgraded, and
bitumen might increasingly be transported with synthetic crude. Consequently, there are
currently no projects that plan to employ field upgrading for transport purposes.
The kinds of processes that have been proposed for field upgrading typically involve solvent
based deasphalting or mild, pre-coking thermal processes, such as Visbreaking. The R&D
needs in these processes are considered in this report, but as primary processes equally
adaptable as options in full upgrading plants.
4.5 The Upgrader of the Future

In reviewing some of the challenges facing major development of the oil sands industry,
some themes emerge that point to the future “green field” plants. The upgrader of the future
will capitalize on, or address, the following trends:
(a) Take advantage of some relatively minor upgrading at the recovery stage
(b) Take advantage of the necessity to move to alternative energy and hydrogen
sources, particularly internally generated residues; a trend with very large impact on
main upgrader plant process selection
(c) Address major environmental concerns in an integrated way
(d) Meet future crude quality trends in current planning, not in a reactive way with
retrofits.
The major focus of this study is the identification of technologies that are directed to
transportation fuels via refineries, and addressing the niche opportunities afforded by such
as the petrochemicals industry.
The future development of the industry will also need to address the eventual, but not
sudden, adoption of alternative energies such as for fuel cells and even hydrogen. Many of
the technologies that will meet some of those long term needs are included in the review.
They include hydrocracking, gasification and syngas conversion. So, while the oil sands
upgrading step has been seen as a major cost in competing with, or replacing declining
conventional crudes, the very need for upgrading may lead to a resource more versatile in
addressing long term, radical changes in the energy economy.
Future R&D planning and priorities should keep all these oil sands industry priorities in mind.
5
GREENHOUSE GAS EMISSIONS AND THE STUDY BASE CASES
5.1 Life Cycle Emissions

Figure 5.1 illustrates that the end use is largely responsible for Greenhouse gas emissions,
but that all heavy crudes, including bitumen and SCO exhibit higher emissions compared to
conventional light crudes at the production stage.
Figure 5.1 Comparison of Life Cycle CO2E
kg CO2E per cubic meter crude

4000
production
3500
transport
3000 refining
by-product
combustion
2500
end use
2000
0
Canadian Mexico SCO Bitumen Venezuelan
Light Heavy Blend Upgraded
Source: T.J.McCann & Associates

5.1 Oil Sands Industry Trends

In absolute terms, Figure 5.2 shows how the future expanded development of oil sands
products will increase Greenhouse gas emissions. Even if the industry was able to rely on
continued use of natural gas (the least GHG-emission intensive hydrocarbon), the increase
is well beyond 2012 Federal targets. The anticipated future switch to alternative, higher
carbon content energy and hydrogen sources is of even greater concern. While the industry
necessarily needs to know of the future targets and the cost of Kyoto compliance well in
advance of planned new projects, the need to address the issue is well understood, and the
CO2E reduction challenge is clearly a large one.
Figure 5.2 Industry Greenhouse Gas Emission Trends
Mega-tonne per year CO2E
250
potential
impact of
200 residue/NG
substitution
150
2012 Kyoto target
100
oil sands ‘business as usual’

50
conventional oil
2000 2010 2020 2030

Source: OSTRM
At this time, it is essential for the industry to seek and encourage development of
greenhouse gas emission reduction strategies or technologies, as well as the pursuit of
sequestration for remaining emissions.
5.3 Project-Specific CO2E Emissions – The “Base Case”

Because this review is long term in outlook, we choose to evaluate CO2 emission reduction
potential against two future-oriented cases, where maximum residue use replaces natural
gas:
(a) mining combined with upgrading - see Figure 5.3
(b) SAGD combined with Upgrading - see figure 5.4
The Mining-Upgrader combination without maximum use of residues (or coke) for energy
and hydrogen would exhibit calculated CO2E emissions of about 80 kg per barrel of SCO,
and this is more or less in line with current operations at Syncrude and Suncor, without
consideration of their levels of coke utilization for some energy and power. Maximum
substitution of natural gas by residues, combined with added hydrogen for higher quality
SCO (~40o API), will raise this to about 125 kg per barrel.
Figure 5.3 Base case Emissions for Mining-Upgrader Combination
MINING - UPGRADING
200
* CO2E intensity will vary with
primary upgrader process selection
175
150
CO2E emissions, kg/ barrel
UPGRADER *
125 miscellaneous
added H2 for
40 API SCO
100
MINING H2 for
34 API SCO
75
purchased power (coal based)
50 Upgrader net fuel
ponds/misc.
diesel fuel
25 purchased power (coal based)
Impact of residues to
Recovery energy replace natural gas
0
Figure 5.4 Base case Emissions for SAGD - Upgrader Combination
SAGD - UPGRADING
200
UPGRADER *
175 miscellaneous
added H2 for
40 API SCO
150
H2 for
34 API SCO
125
SAGD *
upgrader net energy
100
miscellaneous
75
50
recovery
energy * CO2E intensity will vary between individual
recovery & upgrader process options
25
impact of residues to
replace natural gas
0
In-situ (SAGD) recovery energy raises the emissions for this combination to around 175 kg
per barrel, of which about 70 kg per barrel is due to the anticipated switch from natural gas
to residues or coal for all energy and hydrogen generation. It is noteworthy that the
anticipated move to higher quality SCO adds around 20 kg of CO2E emissions per barrel of
SCO, based on residue use.
6
TECHNOLOGY DEVELOPMENT NEEDS

IN BITUMEN & HEAVY CRUDE UPGRADNG
6.1 Background
The main intent in this study is to identify areas for pre-competitive (basic and early applied
research) that should be the main focus for government-industry jointly funded R&D. This is
expected to cover a wide variety of technology options, at the scouting level, where technical
or scientific uncertainty is also higher.
Only the more successful work proceeds to extended applied or development phases,
characterized by fewer options, with significant chance of success, but now at significantly
higher R&D spending. This level of development is normally led by industry, and can often
include the development of proprietary know how or intellectual property. Government
funding at this pre-commercial level is sometimes justified, but needs to be evaluated
carefully.
As shown in Figure 3.1, Upgrading is conventionally considered that part of the value chain
between production of the resource and the refining market, most often to convert the
bitumen or heavy crude into an essentially sweet, light synthetic crude. While most of the
upgrading does result from this combination of primary and secondary processes outlined in
Section 4, new factors are forcing a reevaluation of the central upgrading steps:
(a) Newer recovery processes are, sometimes inadvertently, also changing the structure
of the hydrocarbon produced. This may not always be a positive change, and may be
limited in extent, but this does lead to a reevaluation of following upgrading steps.
(b) If the future trend to reduce or eliminate natural gas for fuel and hydrogen
materializes, and if the industry uses its own least valuable residues, then the whole
makeup of the primary and secondary processes needs to be evaluated. In the most
extreme case (in-situ and upgrading) and assuming current SAGD energy intensity,
as much as 25-30% of the original bitumen is required. This removes the need to
upgrade most of the “difficult” hydrocarbons, and reduce the severity of upgrading
required for the balance.
(c) Changing refinery needs in the coming “clean fuels” era, and the desire to expand
synthetics use in the market place, will require the oil sands industry to be aware of,
and anticipate increasing crude quality requirements
6.2 Links to the Oil Sands Technology Roadmap

The Oil Sands Technology Roadmap1 (OSTRM) covered the future technology development
needs and opportunities for Upgrading, and this section will only summarize some of the
content in that document. The related industry challenges for upgrading have been covered
in sections 2, 4 and 5 of this report. In terms of the technology development response, the
OSTRM identified:
(a) Continuous Improvement of Current Technology
Upgrading technology has largely been the domain of U.S., and to some degree European
based refinery process licensors. The oil sands industry by its very size, is in a position to
influence technology development for their relatively unique needs. It is important to identify
the possible avenues for better upgrading technology for current and future projects. Figure
6.1 lists the most important technology developments for existing commercial processes.
Figure 6.1 Continuous Improvement Opportunities
• Coking technology
• Ebullated bed process developments
• Moderate primary upgrading
• Taciuk kiln
• Hydrotreating
• Hydrocracking
• Catalyst Development
• Residue gasification
• Petrochemical Processes
It is anticipated that Licensors will undertake most of the developments in these largely
mature technologies, with one or two notable exceptions. Catalysis is a pervasive process
technology, with both mature elements (standard industry catalysts) and emerging trends.
The latter is captured in Figure 6.2. Gasification, while considered by many to be relatively
mature, may require strategic government investment to target developments to the special
characteristics of oil sands residues.
(b) Upgrading Technology Tomorrow

If major oil sands development envisaged by the OSTRM are to happen, future upgraders
will probably be designed to use a portion of the production for hydrogen and other energy
needs. Using some of the production for hydrogen, ideally the heavier asphaltene-rich
residue, also has generally positive implications for the primary, and perhaps secondary
upgrading step as well. Some of the technologies that may be part of the longer term future
for upgrading are discussed below.
Figure 6.2 Step-Out Upgrading Technology
• Links with bitumen recovery processes

• Moderate upgrading processes
• Hydrogen utilization
• Advanced catalysis
• Synthetic Hydrocarbons
• Physical separation technology
• Biotechnology
Compared to Figure 6.1 the technology development opportunities in Figure 6.2 have an
increasing reliance on new science and means for its application. As such, these aspects
feature prominently in the report recommendations. These kinds of developments are often
referred to as “business pull” ideas, as they extend current thinking to improved processes.
The OSTRM also highlighted some emerging fundamental sciences that may eventually
result in new upgrading technology through “technology push”. Figure 6.3 summarizes new
sciences that might impact upgrading, many of which are already actively being researched
within universities, and feature in a number of recommendations in this report.
Figure 6.3 Emerging Sciences
• Multiphase Computational
Fluid Dynamics
• Nanotechnology
• Petroleomics
• Computational Chemistry
• Biotechnology
6.3 Methodology Used to Determine Future Programs for Consideration

of Government-Industry Jointly Funded R&D
The study team representing a cross section of industry, government and R&D providers
assessed the future R&D needs in seven separate areas:
1. In-situ Recovery technology that will alter bitumen quality during recovery
2. Mining and extraction technologies that will alter bitumen quality during recovery
3. Primary Upgrading processes
4. Secondary upgrading processes
5. “Integration” technologies that are linked to upgrading process selection (e.g. residue
gasification); or potentially assist upgrading “value added” (e.g. light ends
management, syngas conversion); or provide other services key to upgrading (e.g.
hydrogen production).
6. Enabling (pervasive) technologies, typically at the emerging end of the development
scale, and not necessarily solely related to oil sands industry. Their development will
enhance our knowledge, and provide new leads to advance upgrading technology.
7. Refining and Petrochemicals technologies, knowledge of which can enhance our
understanding of any limits to synthetic crude acceptance in downstream refineries.
There may be some overlap between these for some of the program areas recommended.
In subdividing the program review this way, particularly in the consideration of some
recovery technologies, there is some overlap with other areas for which future R&D plans
need to be developed. In addition, technologies with only a very loose association with
upgrading were identified. Section 9 reviews these links with other links in the oil sands
value chain to ensure no “double accounting”, or non-consideration of a future R&D need.
As a first step in the evaluation of the seven areas above, the ‘S’ curve (see Appendix A1
and the associated text) was used to place future technology needs in some perspective of
their current broad level of maturity. In using this depiction, it needs to be emphasized that
any broad “technology” is often the sum of several sub-technologies, each of which may be
on a separate scale or timeframe of development. For example, the secondary upgrading
technology we refer to as “hydrocracking” is considered quite mature, but some catalysts for
the future advancement of the process may currently be only at a very early stage of
development. Nevertheless, the use of the ‘S’ Curve helps to place discussion of the R&D
needs in some order of technology maturity.
K-O basic M-O basic Applied Research

Research Research & Demonstration
Technology Maturity
Development &
Demonstration
Time or effort
To orient the reader less familiar with the ‘S’ curve depiction of technology development,
Basic research depicts new scientific discoveries. “K-O” stands for “knowledge oriented”
research, where the intent of the work does not necessarily have any defined commercial
intent, but is designed to “extend the frontiers of knowledge”. This kind of research is largely
the domain of universities, often funded through government research grants. “M-O” stands
for “Mission Oriented” research, where enlightened industry can now see a potential
commercial value, and will start to fund added research to help accelerate scientific
understanding, but now more focused towards specific commercial objectives. Basic
research is characterized by relatively inexpensive experimentation and frequent failure or
dead ends.
Science or technology that successfully crosses the initial scouting hurdles then proceeds to
even more focused Applied research. With even more intensive funding and effort, ideally
shared by government and industry, Applied research is normally responsible for the most
accelerated phase of the technology development or understanding, assuming no major
hurdles arise. During this phase of research, technologies typically move from pre-
competitive status towards the potential for commercial application, and individual industry
players will move to sole-funded development to meet commercialization timeframes.
At the end of this phase, technology is now close to commercial reality (at least, technically),
and further work is devoted to development (often with large scale prototype operation).
This expensive phase of R&D is primarily to develop the know how to design equipment, and
develop operating know how, and should be funded by industry in an ideal world. There may
be exceptions to this, but they should be very carefully scrutinized.
There now follows some summary comments on more than 40 of the most promising areas
for research to advance upgrading technology, subdivided in the seven areas identified on
page 24. More details can be found in Appendix 2, including further detailed subdivision of
the program areas.
6.4 in-situ Recovery Technology that Alters Bitumen Quality During Recovery
IN SITU BITUMEN RECOVERY TECHNOLOGY **

In Situ
Technology Maturity
Solvent
Recovery
Paraffinic
Solvent
Above-ground
Treatment Thermal/
Solvent
Partial
combustion/gasification
Development &
Demonstration
** processes where bitumen Time or effort

quality likely altered
Paraffinic Solvent Above-Ground Recovery: Further development of the paraffinic

solvent based process for mining-based froth treatment (now commercially applied at the
Muskeg mine) may offer new leads to above ground treatment of in-situ produced bitumen,
and at the same time reject some asphaltenes from the bulk of the production.
Partial Combustion or Gasification: To eliminate natural gas use for steam

generation, the mobilization of reservoirs by partial combustion or gasification of the bitumen
is not a new idea, and still has many hurdles to overcome before it can be considered close
to commercial. The bitumen produced is likely less viscous, but property changes such as
high olefin content from cracking are not necessarily positive.
Solvent Recovery: The application of light hydrocarbon solvents to reduce or eliminate
natural gas for steam generation has received significant recent interest. These light
hydrocarbons also have a natural tendency to “drop out” asphaltenes, offering promise of
some in-situ upgrading. Vapex is the most advanced process in this area.
Combined Thermal-Solvent Recovery: An extension of solvent recovery is the

combined use of solvents and thermal stimulation to achieve reduction in natural gas for
steam generation, with some unspecified level of in-situ upgrading. Several companies or
joint ventures are known to be piloting variations of this approach.
6.5 Mining and Extraction Technologies that will
Alter Bitumen Quality During Recovery
MINING-BASED ALTERNATIVE EXTRACTION TECHNOLOGIES **

Technology Maturity
Froth Treatment
Thermal
Alternative Processing mined ore
Conditioning
Development &
Demonstration

Alternative Conditioning: The application of solvents to recover bitumen from oil sands is
an old technology that might benefit from more fundamental understanding of solvent
behaviour, and ways to reduced solvent loss to the bulk of the sand.
Thermal Recovery from Oil Sand: Processes such as the Taciuk Kiln can recover
bitumen, but some property changes, such as high olefin content from cracking are not
necessarily positive. Heat recovery from the large body of heated sand is also an issue.
Froth Treatment: The application of light hydrocarbon solvents to treat froth in the final
stages of mining-based extraction has led to a rapid commercial development, but did so
partly at the expense of a thorough investigation of the underlying science. The balance
between the primary intent (water and solids removal) and the concurrent asphaltene drop
out is not fully researched. In addition, the impact of asphaltene drop out on following
primary upgrading processes is not well understood.
6.6 Primary Upgrading Processes
Primary Upgrading of produced bitumen presents many R&D opportunities. Primary
upgrading today is undertaken by variants of two processes, both capable of handling the
high metals and asphaltenes in produced bitumen. Coking predominates, converting
residues by rejecting coke along with all the metals and some of the sulphur and nitrogen.
Ebullated bed hydroconversion is a newer approach. Three factors are combining to allow
improved operations in these processes, and open up the field to other options:
• a minor factor is a degree of upgrading that may occur in new recovery methods
• a potentially major factor is the likely conversion of bitumen-based residues in future
for energy, power and hydrogen at production or upgrading stages
• the possible application of mild field upgrading to reduce dependence on diluent for
transport to distant refineries
Many mature primary upgrading processes are custom developments of processes already
used in conventional refineries. New ideas are also put forward, either as stand alone
process options, or as means to enhance existing processes.
PRIMARY UPGRADING TECHNOLOGY

Coking
Catalysts Fixed Bed H+
Technology Maturity
Deasphalting
Alternate Ebullated Bed H+
Activation
Froth
Upgrading Bulk Thermal Processes
Slurry Reactor H+
New Thermal Processes
Demetall
-ization Thin-film coking
Oxygen-Water Potentially linked to
Upgrading targetted H addition
Selective separations
Development &
Hydro-Retorting
Demonstration
Time or effort
Hydroretorting: The benefits of introduction of hydrogen during retorting, in such as the

Chattanooga process, are not well quantified.
Alternate Activation: The study of different approaches to add energy to bitumen to
facilitate the upgrading step.
Demetallization: The possible application of selective separations to remove the
hydrocarbon structures trapping metals. Metals are a significant inhibitor to catalyst based
primary upgrading.
Direct Froth Upgrading: The current mining-based upgraders (using coking and
ebullated bed processes) require essentially water and solids free bitumen for the primary
upgrading step. Other processes might be adapted to less “clean” bitumen, and reduce
overall upgrading costs.
Upgrading with Oxygen and Water: Partial oxidation in the presence of steam (water)
may produce hydrogen for immediate pick up, and result in integrated recovery and
significant upgrading.
Selective Separations: Physical and chemical separations into fractions that might
lead to segregated and more targeted process steps, including more efficiently targeted
hydrogen addition. There may be some overlap here with demetallization.
Thin Film Coking: The coking processes use ‘bulk’ thermal conversion , where the
residence time for reaction can be very broad, resulting in uncontrolled reactions and over-
cracking. Thin film coking is to some extent a feature of some processes today, such as fluid
coking and the Ensyn process. Thin film coking may offer better cracking reaction control.
New Thermal Processes: A number of new processes offer different configurations for
thermal upgrading. Many are “black boxes”, wherein the expertise and knowledge is
deliberately kept confidential. Knowledge of the potential use of these processes is often
hampered by lack of engineering expertise by the developers.
Slurry Reactors: There are many process claims for systems including fine catalyst
particles carried by the oil and hydrogen in a suitably designed high pressure reactor.
Bulk Thermal Processes: Visbreaking and variants, and the recently demonstrated
ORMAT process are example of bulk thermal processes that convert residues without
progressing all the way to solid coke, These processes have significant potential integrated
with deasphalting to produce residues of varying yields on bitumen to meet future alternative
energy and hydrogen production needs.
Ebullated Bed Hydroconversion: This is now a well established process offered by two
Licensors, and used in varying degrees in three of the four major bitumen-based upgraders.
Deasphalting: A very mature process, using light solvents to selectively remove high
molecular weigh asphaltenes, and the associated high metals. A process that may have an
increasing role in primary upgrading, possibly in conjunction with milder thermal processes,
where residues are needed for alternative energy and hydrogen production.
Fixed Bed Hydroprocessing: A process that is normally associated with conventional
heavy crude residues, with less concentration of metals, asphaltenes and clay solids.
Delayed and Fluid Coking: Very mature processes, but subject of ongoing development
work by Licensors. There are some special operating issues with oil sands feeds, such as
foaming.
Catalysis: Development of catalyst resistant to fouling and providing more targeted
hydrogen addition.
6.7 Secondary Upgrading Processes
Secondary Upgrading of products from primary upgrading steps is currently largely based on
hydrogen addition to remove heteroatoms (sulphur, nitrogen and oxygen) as the primary
upgrading processes used today already convert most of the heavy components to close to
an acceptable “synthetic crude” boiling range. Two factors are combining to promote
improved operations in these processes, and open up to other options:
• the potential move to less severe primary upgrading will place more emphasis on
“conversion” at the secondary stage as well as hereroatom removal.
• the desire to reduce overall hydrogen consumption will place emphasis on lower
light by-product production and targeted hydrogen addition to SCO cuts.
Many secondary upgrading processes are custom developments of processes already used
in conventional refineries, and are relatively mature.
SECONDARY UPGRADING
K-O basic M-O basic Applied

Research Research Research
Selective Physical/ Hydroprocessing

Technology Maturity
Chemical separations & Hydrocracking
Deep FCCU &Fixed Bed Cracking

(see also Refining/Petrochemicals)
Membrane Rx
Potentially linked to
Catalysts targetted H addition
Ring opening
Development &
Demonstration
Time or effort
Membrane Reactors: The integration of membranes within reactors may reduce over-
cracking and contribute to selective hydrogen addition.
Selective Physical & Chemical Separations: Physical separations into fractions that
might lead to segregated and more efficiently targeted hydrogen addition. This might also
include chemical reactions to isolate species prior to physical separation. The overall
approach is also tied to targetted hydrogen addition. There needs to be associated study
into how to handle separated hydrocarbons.
Ring Opening Catalysts: Also discussed under “catalysts” below, this objective
recognizes the highly aromatic nature of bitumen-derived feedstocks, and the need to open
the aromatic rings to produce more straight chain or alky paraffins.
Deep FCCU & Fixed Bed Cracking: Covered under Refining & Petrochemicals as
processes designed to address upgrading to higher value added petrochemicals feedstocks.
Hydroprocessing & Hydrocracking: There is a continuum between hydrogen addition
processes, from relatively mild conditions designed for heteroatom removal (“hydrotreating”)
to more severe operations involving a high degree of conversion as well. The processes are
considered relatively mature, but there are new approaches that might enhance the
efficiency of operations.
Catalysis: Catalysis research for secondary upgrading covers a wide spectrum of
opportunities, from the search for new forms of catalysts, perhaps relying on new
nanotechnology developments, to the tailoring of catalysts for specific roles, such as ring
opening. Publicly funded R&D also needs to pursue links with catalysts suppliers to
encourage testing and adoption of new ideas.
6.8 “Integration” Technologies

“Integration” technologies are defined for our purposes as those that:
- are affected by upgrading process selection (e.g. residue gasification)
- potentially assist upgrading “value added” (e.g. light ends management, syngas
conversion)
- provide other services key to upgrading (e.g. hydrogen production).
There may be overlap with R&D plans that are developed for other oil sands areas.
INTEGRATION TECHNOLOGIES

Steam Methane
Reforming Energy/Power
Materials integration
technology
Technology Maturity
Novel Hydrogen
Generation Combustion/FGD
Gasification
Light ends management
Synthesis
Gas Conversion
Advanced ‘flow Development &

sheet’ analysis Demonstration
Time or effort
The study considered a number of issues around materials to better handle some of the
corrosive characteristics of oil sands, such as dealing with naphthenic acids. But the
connection with the aims and objectives of upgrading technology was not strong, and we
discuss this important area of technology development in Section 9, to ensure its
consideration in other plans. Likewise, energy and power integration needs to be reviewed
in an anticipated plan around an “Alternative Energy” plan.
Novel Hydrogen Production & Steam Methane Reforming: The high cost of hydrogen
requires the industry to seek new ways to recover “non-productive” hydrogen from by-
product streams, as well as pursue improvements in the steam methane reforming process.
Also see “Gasification” below.
Advanced Flow Sheet Analysis and Process Modelling: Integration of processes is
sometime an empirical art, and will benefit from advanced modelling techniques. Prediction
of a number of processes will also benefit from advanced modelling that could in time result
in better process control.
Synthesis Gas Conversion: Synthesis gas conversion to hydrocarbons is a natural
technical progression when considering gasification for hydrogen and energy. Synthesis gas
products as fuels or petrochemical intermediates have higher added value. CO2 is also
generated in more easily sequestered form.
Light Ends Management: Reduction in yields of light ends (ethane/ethylene to
butane/butylenes) were also discussed in “Secondary Upgrading”. Efficient recovery
techniques and consideration of higher value use are all integral to improving overall oil
sands value chain economics.
Gasification: Gasification of residues (or perhaps coal and coke) is increasingly viewed
as the future direction for hydrogen production without natural gas. However, in the future it
may also feature as the first step in bitumen to light oils conversion, via syngas shift and
conversion to synthetic hydrocarbons. Some consider this a mature technology, where the
potential “size of the prize” is sufficient for Licensors to do their own development work on
the unique characteristics of oil sands bitumen residues. This needs a priority review in
terms of government funding, as its pervasive impact on the oil sands development is
potentially very large.
Residue Combustion and Flue Gas Desulphurization: Where hydrogen or other higher
value added products or uses are not an objective, residue combustion is likely more cost
effective than gasification for energy alone. All producers have a vested interest in ensuring
developments in residue combustion and flue gas desulphurization.
6.9 Enabling Technologies
Enabling or pervasive technologies, typically at the emerging end of the development scale,
are not solely of interest to one industry. However, their development in some areas will
enhance our knowledge, and potentially provide new leads to advance upgrading
technology.
ENABLING TECHNOLOGIES

Sensor
technology
& modelling
Technology Maturity
Bitumen
Characterization & Computational
Thermodynamics Fluid Dynamics
By-product use
Compatibility Stability
Development &
Bio-Upgrading Demonstration
Time or effort
Bio-Upgrading: Bio-Upgrading is placed in this section, as its development could impact

many steps in the upgrading chain, from simple viscosity reduction for production or
shipping, to direct conversion or removal of the more difficult hydrocarbon species, to
heteroatom removal in partially upgraded streams. In these kinds of applications,
Biotechnology requires steady long term funding to achieve success.
Characterization of Bitumen & Derived Distillates: The character of bitumen and
derivates is still only understood at the macro level. More fundamental research, including
new analytical techniques, are largely the domain of university research or integrated into
government lab programs.
Compatibility & Stability: Fouling, largely from asphaltenes, had been a continuing
problem in the production, transport and upgrading of oil sands and heavy crudes. Study of
the molecular forces at work and ways to mitigate the problems need research.
Co-Product Use: The production of sulphur and coke and how to handle these, is a
growing industry challenge. The search for, and potential development of new end uses is
desirable.
Computational Fluid Dynamics: Accurate prediction of multiphase fluids at the micro-
scale will assist in modelling production processes, and possibly in upgrading process
models. The objective is a better basis for design of processes and equipment.
Sensor Technology & Modelling: Accurate, on line measurement of processes and key
variables in the same multi-phase systems will lead to better real time control.
6.10 Refining and Petrochemicals Technologies

A key driver in future oil sands and heavy crudes is maximum upgrading to higher value
products in Canada. Knowing the issues facing Refining (in the U.S. and Canada) and
Petrochemicals (Canada) is important to directing research and development to help the
marketing of oil sands products and upgrading targetted to expanded end uses. Figure 6.4
outlines the key issues for this industry.
Figure 6.4 Refining & Petro-Chemicals Industry Challenges
DOWNSTREAM REFINING DRIVERS
- ultra low sulphur fuels

- higher diesel cetane
- aromatics on jet fuel
- future G/D ratios lower ?
- vacuum gas oil quality
and more LCO recycle
- reformer feed quality
- C4/C5 content in SCO
- future fuel cell products ?
DOWNSTREAM CHEMICAL DRIVERS
- reformer feed qualities (aromatics)

- ethylene feedstock enhancement/cost
reduction
- added Propylene production/cost reduction
- need for mono-ring aromatics
- opportunities for many special chemical
industry derivatives
DOWNSTREAM REFINING & PETROCHEMICALS

CRU performance
with SCO Naphthas
Technology Maturity
Ultra-low S fuel
Deep FCCU
& Fixed Bed
FCC performance
with SCO Gas Oils
Development &
Demonstration
Time or effort
FCCU Performance with SCO Gas Oils: The aromatic nature of SCO and virgin gas oils
creates problems for Fluid cat cracker operators. Relative to conventional gas oils, the
operator must plan to burn more coke or accept reduced conversion to valuable gasoline or
gasoline precursors. The treatment of gas oils in the production of SCO needs more
research.
Catalytic Reformer Performance: At the other end of the molecular scale, synthetic
naphthas can have high concentrations of molecular species that give problems to some
catalytic reformer designs.
Deep FCCU & Fixed Bed Crackers: Deep conversion of synthetic gas oils may be the key
to future security of supply for petrochemicals industry, where declining natural gas and co-
products are expected to reduce the industry’s traditional supply base for ethylene crackers.
By-products from conversion of gas oils will also provide platforms to expand the
petrochemicals industry in Alberta.
Ultra Low Sulphur Fuels: Distillate fuels sulphur is being legislated to levels that will
stretch current refinery processes, and in many cases, refineries are planning now to
upgrade facilities. There is a need to ensure future SCO quality at increasing volumes in
refinery diets, is compatible with the conventional hydrotreating in the receiving refineries.
7
SUMMARY OF LONG TERM R&D PROGRAMS

AND PUBLIC FUNDING CONSIDERATIONS
7.1 Introduction
This section deals with current R&D in programs discussed in section 6. There is current
work ongoing in most areas already. The team has also estimated the current level of effort,
and this is done in “direct person years” or DPY (see section 7.2). The analysis of the
programs included an assessment of the highest priority areas as judged by the team, and
this judgement is extended into recommended direction for future R&D. This is a difficult
task, and such judgements inevitably rely on history. It is also not the intention to pick
“winners and losers”, as history tells us we are collectively indifferent judges of that.
Nevertheless, we feel confident that general statements found here will help the
reassessment of what is done today, and whether the R&D effort needs to be increased or
redirected in future.
7.2 Survey of Areas Recommended for R&D in Upgrading

Table 7.1 is a summary of the 42 science or technology programs suggested as needing
research. They were summarized in Section 6 and described more fully in Appendix 2. The
columns in Table 7.1 require some explanation.
Program Effort in DPY

A “direct person” is a research employee directly engaged in the research work, without
reference to professional status. Typically, in a university, most of the active researchers
hold degrees (engineers, chemists, physicists, mathematicians…). In other labs (government
or industry), where the scope of equipment is much more diverse, there are also large
numbers of qualified technicians, typically 1-2 support technicians for every degree-holding
researcher. A “direct person-year” (DPY) applies equally to these staff. Excluded from the
term “direct” are managers and other administrative staff. The table also includes a
reconciliation of DPY and involved staff at major locations, to ensure no double accounting.
The estimated total of 183 DPY needs some qualifiers. Included are 55 DPY in four areas in
the Integration Technologies and the Enabling Technologies where (not unexpectedly) the
work identified is not solely undertaken to benefit the Oil Sands industry. If we count only
30% (a notional number) of those DPYs, the survey suggests some 145 DPY on oil sands
related R&D in the areas shown, largely at the basic and early applied (or “pre-competitive”)
end of the R&D spectrum. Discussion of costs is covered in Section 7.5.
Figure 7.1 is an estimated distribution by each of the seven areas selected and by division
between universities and government labs.
Figure 7.1 Summary of DPY Distribution by Area
35 Universities 58
Govt. labs 87
30 Total 145
25
20 Universities
DPY
Govt.Labs
15 Totals
10
5
Multi-functional
Programs in
0 In Situ Primary UG Integration Ref/PetChem
Integration and
Primary UG
In Situ
Mining
Secondary UG
Integration
Enabling
Ref/Petchem
Enabling technologies
Factored by 30%
Theme Impacts
The review also includes an assessment of the R&D programs by their likelihood to impact
five key themes in a positive way. This is not necessarily directly related to overall priorities,
but adds some insight to the general level of cross-benefit impact. The five themes selected
were:
1 - Greenhouse Gas Impact (relative to Base Cases - see section 5.3)
2 - Impact on other Local Environmental Issues
3 - Natural gas reduction potential
4 - Cost reduction, or improved operating margin potential
5 - Refinery market “value added” potential
We excluded a “reserve additions” impact (i.e. ability to bring new reserves, particularly
those at intermediate depths into the recoverable category) as this theme more properly
belongs in future R&D program plans for recovery technologies. With respect to impacts #1
and #3, these might appear to be two sides of the same issue. That is not necessarily the
case, however, as the impact on Greenhouse gas emissions in this report (see section 5)
assumes a future industry that will already have moved to less dependence on natural gas.
Theme #3 covers technology trends that might help us get there, whatever the future
replacement energy form used.
Priorities
As mentioned in the introduction above, it is not the purpose of this report to “pick winners”.
However, the team work did include an assessment of the highest priority areas, using our
best collective judgement. The criteria used included such as:
- Probability of success on the science side
- Can results be made available in a timeframe benefiting the next development wave
- Skills and track record in our R&D community
The “All” column represents the judgement of the whole team, including academic and
government research leaders, experienced Consultants, and Industry representatives. The
smaller Industry group (“Ind” column) - two representatives during this discussion - identified
17 of the 42 areas as higher priority. The combined group identified 26 programs, all of
which embraced the Industry priorities, so there is significant consensus. The implications of
this priority review are discussed more fully in Sections 7.3 and 7.4.
General Observations on Table 7.1

One feature stands out in the list of proposed research programs; the smaller number of
opportunities in secondary upgrading (4) compared to primary upgrading (15). Given the
context, this is appropriate. The most difficult and relatively unique challenges for this
industry are at the primary conversion stage; processes that will likely remain the principal
“work horses” in secondary upgrading are more mature and well established, can adapt to
any changes in primary upgrader output. A good example of this is evident in the OPTI-
Nexen Long Lake project, where the selection of combined deasphalting and thermal
conversion at a lower severity than coking, is compensated for by replacing hydrotreating
with hydrocracking at the secondary stage, an equally mature process.
Table 7.1: Summary of Program Areas Assessed and Prioirities
Key to columns
1 = Favourable Greenhouse Gas Impact (relative to Base Cases- see section 5.3)
2 = Favourable Impact on Other Local Environmental Issues
3 = Natural gas reduction potential
4 = Cost reduction or improved margin potential
5 = Refinery market “value added” potential
“All” Collective priorities of full team - “Ind” is industry priorities
Area of Research & Development DPY 1 2 3 4 5 All Ind.
in-situ
1 Above Ground Recovery via Paraffinic Solvents 1 x
2 in-situ Combustion / Gasification 2 x x x ■
3 Solvent Extraction – Diffusion & Chamber growth 8 x x x x x ■ ■
4 in-situ Thermal/Solvent combinations 4 x x x x x ■ ■
Mining-Based Extraction & Recovery

5 Alternative Conditioning via Solvents 5 x x x x x
6 Thermal Recovery (whole sand) M x x x
7 Froth Treatment 8 x
Primary Upgrading
8 Hydro-Retorting (e.g. Chattanooga) 2 x x x x ■
9 Alternate Activation (new energy, Ionic Solvents) 1 ■ ■
10 Demetallization via new approaches 1 x x ■ ■
11 Direct Froth Upgrading 1 x x x ■
12 Upgrading with Oxygen and/or Water 2 x x x
13 Selective Separations 2 x x ■ ■
14 Thin Film Coking 6 x ■ ■
15 New Thermal Processes (‘black box’) M x x x x
16 Slurry Reactors 3 ■ ■
17 Bulk Thermal Processes (e.g. Visbreaking, ORMAT) 2 x x x x ■
18 Ebullated Bed Hydroconversion 1
19 Deasphalting (17 & 19 potentially linked) 3 x x ■ ■
20 Fixed Bed Hydroconversion 0
21 Delayed & Fluid Coking 2
22 Catalysis 1 x x x ■ ■
Secondary Upgrading
23 Membrane Reactors 1 x x x
24 Selective Physical/Chemical Separations 8 x x x ■
25 Hydroprocessing / Hydrocracking 9 ■
26 Catalysis ( +“ Ring Opening “) 14 x x x x ■ ■
1. Details on the individual program sheets
2. The table does not include any subsequent field pilot work beyond lab based R&D.
3. ‘M’ is monitor / small effort
4. ‘#’ indicates work is of a fundamental interest to more than oil sands exploitation
Table 7.1 (continued): Summary of Program Areas Assessed and Prioirities
Key to columns
1 = Favourable Greenhouse Gas Impact (relative to Base Cases- see section 5.3)
2 = Favourable Impact on Other Local Environmental Issues
3 = Natural gas reduction potential
4 = Cost reduction or improved margin potential
5 = Refinery market “value added” potential
“Ind” is industry priorities
“All” Collective priorities of full team
Area of Research & Development dpy 1 2 3 4 5 All Ind.
Integration Technologies
27 Novel or Improved Hydrogen Production 3 x x x ■ ■
28 Advanced Flow Sheet Analysis & Proc.Modeling (#) 15 x x x ■
29 Synthesis Gas Conversion 3 ■ ■
30 Light Ends Management 2 x x x ■ ■
31 Gasification (#) 6 x x x ■ ■
32 Residue Combustion & Flue Gas Desulphurization 0 x
Enabling Technologies
33 Bio-Upgrading 5 x ■ ■
34 Characterization of Bitumen / Derived Distillates 8 x ■ ■
35 Compatibility, Stability and Fouling 6 x
36 Co-Product use 3 x x ■ ■
37 Computational Fluid Dynamics (#) 13
38 Sensor Technology & Control Modeling (#) 21 x ■ ■
Refining & Petrochemicals

39 FCC Performance & Catalysis 4 x ■
40 Catalytic Reformer Performance 0 x
41 Deep Fluid Cat Cracking & Deep F/bed Cracking 3 x
42 Ultra-Low Sulphur Fuels 4 x
total 183
factored to include 30% of the (#) projects 147
Approximate DPY distribution by R&D Location

NCUT 46
AST 7
ARC 53
U of A 27
U of C 18
Other NRCan labs (Canmet, Varennes) 7
Oher universities (UNB,UoW,UoS,UBC) 25
183
3. ‘M’ is monitor / small effort
7.3 Summary of Priority Areas and Discussion of Current Effort
Table 7.2 summarizes the priority areas, as judged by the working group, and split between
all members and the industry-only members (refer to “Priorities”, page 38).
Table 7.2: Summary of Higher Priority Program Areas
Area of Research & Development DPY 1 2 3 4 5 All Ind.
in-situ
2 in-situ Combustion / Gasification 2 x x x ■
3 Solvent Extraction – Diffusion & Chamber growth 8 x x x x x ■ ■
4 in-situ Thermal/Solvent combinations 4 x x x x x ■ ■
Primary Upgrading
8 Hydro-Retorting (e.g. Chattanooga) 2 x x x x ■
9 Alternate Activation (new energy, Ionic Solvents) 1 ■ ■
10 Demetallization via new approaches 1 x x ■ ■
11 Direct Froth Upgrading 1 x x x ■
13 Selective Separations 2 x x ■ ■
14 Thin Film Coking 6 x ■ ■
16 Slurry Reactors 3 ■ ■
17 Bulk Thermal Processes (e.g. Visbreaking, ORMAT) 2 x x x x ■
19 Deasphalting (17 & 19 potentially linked) 3 x x ■ ■
22 Catalysis 1 x x x ■ ■
Secondary Upgrading
24 Selective Physical/Chemical Separations 8 x x x ■
25 Hydroprocessing / Hydrocracking 9 ■
26 Catalysis ( +“ Ring Opening “) 14 x x x x ■ ■
27 Novel or Improved Hydrogen Production 3 x x x ■ ■
28 Advanced Flow Sheet Analysis & Proc.Modeling (#) 15 x x x ■
29 Synthesis Gas Conversion 3 ■ ■
30 Light Ends Management 2 x x x ■ ■
31 Gasification (#) 6 x x x ■ ■
33 Bio-Upgrading 5 x ■ ■
34 Characterization of Bitumen / Derived Distillates 8 x ■ ■
36 Co-Product use 3 x x ■ ■
38 Sensor Technology & Control Modeling (#) 21 x ■ ■

39 FCC Performance & Catalysis 4 x ■
total 137
‘#’ indicates work is of a fundamental interest to more than oil sands exploitation
Firstly, it should noted that more than 75% of the total DPY effort is being expended on
these programs. However, in the areas that are further up the development chain and
have become more focussed, the future planning process needs to assess if the
current effort is going to get results in a timely fashion (examples of this kind of applied
research are “Thin Film Coking” or “Gasification”).
Three projects currently have only 1 DPY assigned them, a level that at best keeps up with
the literature and limited productive research. One of these is Catalysis in primary upgrading,
but a close look indicates this is university work devoted to understanding catalyst fouling.
Noteworthy is the fact that in three R&D areas related to the marketability of our products in
the refinery sector, only one (FCCU performance) is considered a high priority. This may
indicate a poorer understanding of the other two issues, especially as volumes of synthetics
reach higher levels in the average refinery diet. How will gasoline-intensive U.S. refining
markets adjust to any unusual characteristics in synthetic naphtha ?
7.4 Summary of Other Areas and Discussion of Current Effort

Figure 7.3 summarizes the other projects. It must be emphasized that this does not
mean that they are not valid projects. As will be discussed in Section 7.5, there is a need
for a solid grounding of basic and early applied research over a broad front, to ensure that
opportunities are not missed. The history of technology development is replete with
examples of the R&D process being hijacked by “current knowledge-based myopia” when
confronted by new ideas, even from noted experts !
The level of work on solvents on various fronts in the recovery (in-situ, and in particular,
Mining) are justified by priorities unrelated to their connection with upgrading (see Section 9).
The minimal effort in the three more mature Primary Upgrading technology areas are largely
to assess the impact on conversion with asphaltene-reduced feed stocks. Can this kind of
information be generated through the process Licensors ? (This comment does not apply to
new coking technology developments, like Thin Film coking).
The 6 DPY on Compatibility, Stability and Fouling, is largely basic research at the
universities. It is closely allied with the Bitumen Characterization in Table 2, and is justified to
provide more understanding of the complex molecules with which the industry deals, as well
as address real issues today.
Computational Fluid Dynamics is an area of enabling technologies important in many other
areas of modelling, and will be justified over a broader front than upgrading.
Notwithstanding these comments, the future continued planning process needs to assess if
the current effort is going to get results in a timely manner, or in some cases should be
scaled down in favour of greater effort on the higher priority areas.
Table 7.3: Summary of Other Programs
Area of Research & Development DPY 1 2 3 4 5
in-situ
1 Above Ground Recovery via Paraffinic Solvents 1 x

5 Alternative Conditioning via Solvents 5 x x x x x
6 Thermal Recovery (whole sand) M x x x
7 Froth Treatment 8 x
Primary Upgrading
12 Upgrading with Oxygen and/or Water 2 x x x
15 New Thermal Processes (‘black box’) M x x x x
18 Ebullated Bed Hydroconversion 1
20 Fixed Bed Hydroconversion 0
21 Delayed & Fluid Coking 2
Secondary Upgrading
23 Membrane Reactors 1 x x x
32 Residue Combustion & Flue Gas Desulphurization 0 x
35 Compatibility, Stability and Fouling 6 x
37 Computational Fluid Dynamics (#) 13

40 Catalytic Reformer Performance 0 x
41 Deep Fluid Cat Cracking & Deep F/bed Cracking 3 x
42 Ultra-Low Sulphur Fuels 4 x
total 46
‘M’ is monitor / small effort

‘#’ indicates work is of a fundamental interest to more than oil sands exploitation
7.5 Current Program Costs

In estimating current program costs, we use a typical “all in” DPY rate, which is much higher
for government or industry labs than for universities. The DPY rate is the cost of ongoing
operations at the labs (excluding major “one time” capital requirements) divided by the
number of direct technical staff employed. The figure therefore includes the average non-
technical administrative and building and facility maintenance costs. A survey of the
operating costs for University of Alberta, Alberta Research Council and the National Centre
for Upgrading Technology provides enough information to develop current program costs.
government labs conducting the kind of R&D being reviewed here have a DPY rate that is
typically in the range of $ 200-250 thousand (assume $ 225,000), of which salaries and
burden are only about 40-50% of the total. University numbers are less easy to estimate, but
is thought to be about half, or $110 thousand per DPY. Using these numbers, Figure 7.2
estimates current R&D investments by theme.
Figure 7.2 Estimated Current Program Spending
6 Universities 7
Labs 18.25
5 Total 25.25
$ million per year
4
Universities
3 Govt.Labs
Totals
2
0 In Situ Primary UG Integration Ref/PetChem

Secondary UG
Primary UG
Integration
Enabling
In Situ
Mining
Ref/Petchem
To put this level of current investment in context requires an understanding of the full R&D
spending, including company–confidential R&D. While this report recommends that this
review be undertaken, it was not possible in the mandate given this study. However, some
comments or judgements can be made.
Figure 7.3 helps to put the R&D that is the principal focus of this study in some context.
Appendix 1 also gives some background. The pyramid is a schematic representation of the
full R&D chain from basic research, populated by many ideas, often generated through
university based knowledge-oriented research. This is a largely funded by governments
through various grant programs, but more enlightened industry players also see the value in
encouraging the research, often through shared government-industry partnerships for ‘core
R&D‘ programs, or through such targetted research programs as the Froth Treatment
consortium. In very focussed areas, this can also include industry funding of its own
proprietary “development” contract work, taking advantage of the well equipped government
labs.
As options from research begin to focus on ever fewer opportunities that now show
commercial potential, industry will today fund its own confidential development work in its
own labs (a limited resource today in Canada, but sometimes available through affiliate labs
in the U.S. or in Europe), in Licensor facilities (for primary or secondary upgrading, where
scale up from lab based pilots is generally well established) or in large scale demonstration
units for totally new upgrading processes, such as ORMAT and Ensyn. Recovery processes
and some newer primary processes need large field pilots to scale up from bench work,
which can in these instances be very uncertain with today’s technology.
Figure 7.3 Historical Distribution of R&D Funding
R&D investment $ commercialization
Industry field pilots or

Funding major demos
technology
development
Basic R&D program…largely Government funding
Government Funding
On the left hand part of Figure 7.3 is a schematic representation of the funding of R&D.
Even though fewer opportunities are being addressed at the more mature technology levels,
funding requirements accelerate dramatically as a result of the need for large scale pilots,
particularly for field based recovery processes.
The total R&D spending chain is normally dominated by the development phase in relatively
mature industries. The pilot stage is the largest component in spending by a significant
margin. Typically, it is expected that the majority of the programs recommended in the body
of this report represent only 10-25 % of the total ongoing R&D spending. For primary and
secondary upgrading processes, where later technology development stages are more likely
to be undertaken on lab pilots (much less costly than field demonstration units or pilots)
where there is well established scale up confidence, 20% is the more likely level. Using this
factor, in an ideal research environment, the $ 25 million estimated in Section 7.5 is likely a
part of some $ 100-150 million total spending on oil sands upgrading related R&D today.
There is currently no way of confirming this, but it would be useful to develop an inventory of
such R&D, as mentioned above, in part to help avoid major duplication.
7.6 One-Time Capital for Major Equipment
An issue in government funded labs is how to fund the periodic, uneven addition of high cost
equipment. A large lab-based pilot plant might cost in the range of $1-5 million, and cannot
be handled by a budget process that projects annual budgets from smooth historical figures,
covering only maintenance of existing capital assets. The future planning process must
address this, because without speedy installation of new equipment, the effectiveness of the
R&D process will be seriously compromised. This is generally less of a problem industry,
where the long term R&D culture is stronger.
7.7 Future Program Costs

There are no “hard and fast” measures of an appropriate level of R&D funding, but the
relatively mature conventional oil industry, through to refining and product support, spends
about 0.5 % of revenues on R&D. Using a notional figure of 1% for the oil sands industry
(with its greater challenges) and assuming about $ 50 billion annual value added potential by
the year 2030, implies an expected sustainable R&D funding of about $ 500 million annually,
but for all areas of oil sands related R&D, including recovery technology.
In summary, the current investment level of about $25 million on future idea-generating
(basic research) or early applied research for upgrading technology is a significant
contribution, and may be appropriate. However, such a general guide needs to be balanced
by a more detailed review of the recommended program areas, assessment of the
sustainable level of effort and funding to provide results in an appropriate timeframe, the skill
base and how fast it might grow, and the ability to expand key R&D facilities to conduct any
added work.
7.8 Distribution of Funding

Who pays the bills? Historically, for Canada and much of the developed world, industry has
accepted the major share of R&D costs, and has chosen to do so as a means of achieving
competitive advantage. Governments have concentrated on funding a level of research that
is designed to provide a base of research and innovation, and has helped sustain a viable
research climate in Canada, mainly through universities, but also in government-funded labs.
Financial benefits to government from such early R&D spending are difficult to judge, and
have remained largely an article of faith. However, governments do benefit from successfully
commercialized technology through such as higher corporate taxes and job growth.
In some limited instances, governments have also helped to fund development of processes
and products well beyond their normally accepted role of basic and early applied research,
to assist new industry development in fledgling companies, often for perceived national or
regional priorities.
The oil sands industry growth potential is an enormous opportunity, and has been described
as a national project. Its development along the lines envisaged will see major growth in
jobs, infrastructure and government tax and Royalty take over the long term. During the
development phases of projects, projected to be as much as $ 90 billion over the next two
decades, benefits will be widely spread across the country. After the construction phase, the
new jobs are naturally more concentrated in the provinces of Alberta and Saskatchewan.
In a national project of such proportions, both levels of government stand to gain in equal
measure with industry participants. The EnergyINet initiative (discussed more fully in
Sections 11 and 12) will be proposing an equal share of funding between the two levels of
governments and industry “across the board”. As can be seen from Figure 7.3, this level of
government funding is only achievable by significant investment in the field pilot or
demonstration phase, and needs to address some historical hurdles to such investments
from both sides. The future distribution of shared versus industry-confidential R&D may
follow the model depicted in Figure 7.4. In particular, there is a need for government to
consider funding more of the high cost development work jointly with industry where risk and
reward to both warrant.
Figure 7.4 Potential Model for Oil Sands R&D Investments
R&D Areas are generally indicative of

funding Industry-Government funding split
model
Applied
Research
R&D which is
Basic Development
the principal focus
Research & Demonstration
of this report
Largely government funded, in university and government research labs. Principal

objective is knowledge or mission-oriented basic research over broad science front
Government and industry shared R&D, more focussed in applied research in University
and government labs. Principal objective is to move the better leads from basic research
towards a distant commercial goal. Joint industry-government consortia are included.
Instances of sole industry funding occur in this region of technology development.
Increasingly expensive development work, in industry labs & field demo projects. Largely
funded by Industry, but there are notable exceptions where shared funding is justified.
8
POTENTIAL FOR GREENHOUSE GAS

EMISSIONS REDUCTION
8.1 Background
Greenhouse gas (GHG) emission reduction is a prime concern of the Federal government in
its mandate to meet commitments under the Kyoto accord. The current plan to meet Kyoto
targets by direct action or by emissions trading has a “$ cost” associated with tonnages
emitted above pre-set industry targets to the year 2012, but there is currently no clarity
beyond then. Notwithstanding guarantees of $15 per tonne cost for failure to meet the 2012
targets, the oil sands industry has a time horizon beyond 2012, and all responsible industry
players are seeking ways to reduce GHG emissions, or deal with CO2 emissions in other
ways, of which sequestration by enhanced oil recovery or coal bed methane projects, or
storage in depleted oil and gas reservoirs are most favoured at this time.
In section 5 two base cases were established, for “in-situ recovery-upgrading” and “mining
recovery-upgrading”. In both cases, the assumption was made that the long term future
includes maximum substitution of natural gas with either residues or coal. While nuclear
power is a possible source for energy, its impact on CO2 emission reduction is not
considered, although it could be very large. The two base cases are repeated in Figure 8.1,
with emphasis on emissions that might be favourably impacted by new technology.
Figure 8.1 Summary of Base Case GHG Emissions
200
SAGD + UPGRADER MINING + UPGRADER
175 miscellaneous sources

not materially impacted by
upgrading technology
See Figures 5.3 & 5.4
150
H2 for
40 API SCO
125
upgrader net H2 for

100 energy 40 API SCO
75
upgrader net
50 recovery
energy
energy
CO2E intensity will vary
25 between individual
recovery & upgrader
process options
8.2 Currently Recommended R&D Programs with
Potential to Reduce CO2 Emissions
Table 8.1 identifies the proposed R&D programs with potential to favorably impact CO2
emissions. With two exceptions (Alternative Conditioning via Solvents for mined sand and
Upgrading with Oxygen and/or Water) the projects ranked highly on the priorities.
Other in-situ recovery processes being proposed that reduce or eliminate natural gas involve
some form of in-situ combustion or gasification of the reserve, which may or may not result
in CO2 emission reduction. Firstly, there is as yet no proof of reduced energy intensity per
barrel of production, and secondly the cracking of the molecules will add to hydrogen
consumption in above ground upgrading.
Table 8.1: Summary of Program Areas for Potential Positive

Impact on Greenhouse Gas Emissions
Area of Research & Development DPY All Ind.
in-situ
3 Solvent Extraction - Diffusion & Chamber growth 8 ■ ■
4 in-situ Thermal/Solvent combinations 4 ■ ■

5 Alternative Conditioning via Solvents 5
Primary Upgrading
8 Hydro-Retorting (e.g. Chattanooga) 2 ■
11 Direct Froth Upgrading 1 ■
12 Upgrading with Oxygen and/or Water 2
13 Selective Separations 2 ■ ■
Secondary Upgrading
23 Membrane Reactors 1
24 Selective Physical/Chemical Separations 8 ■
26 Catalysis ( +“ Ring Opening “) 14 ■ ■
27 Novel or Improved Hydrogen Production 3 ■ ■
28 Advanced Flow Sheet Analysis & Proc.Modeling (#) 15 ■
30 Light Ends Management 2 ■ ■
31 Gasification (#) 6 ■ ■
33 Bio-Upgrading 5 ■ ■
Refining & Petrochemicals (none)
TOTAL 78

Figures 8.2 and 8.3 summarize the DPY and estimated current level of costs for these
program areas.
Figure 8.2 Summary Current DPY Levels for Table 8.1 Programs
25 Universities 24
Govt. labs 27
Total 61
20
15 Universities
DPY
Govt.Labs
10 Totals
5
Multi-functional
Programs in
0 In Situ Mining Primary UG Sec.UG Integration Enabling
Integration and
Primary UG
In Situ
Secondary UG
Mining
Integration
Enabling
Enabling technologies
Factored by 30%
Figure 8.3 Summary Current Costs for Table 8.1 Programs
3.5 Universities 2.6

Labs 8.6
3 Total 11.2
2.5
$ million per year
2 Universities
Govt.Labs
1.5 Totals
1
0.5
0 In Situ Mining Primary UG Sec.UG Integration Enabling

In Situ
Primary UG
Mining
Secondary UG
Integration
Enabling
About a third of the R&D program areas discussed in Sections 6 and 7 may contribute to
CO2 emission reductions, although that is not the original or major driver behind the
research. These programs represent about 40% of the current effort and spending.
The expected level of reduction does vary considerably. Sections 8.3 to 8.5 regroup the
programs under more definitive headings, with notes of the nature and potential extent of
CO2 reduction.
8.3 R&D Programs With Potential for Recovery Energy Reduction
DPY
3 in-situ - Solvent Extraction - Diffusion & Chamber growth 8
4 in situ - Thermal/Solvent combinations 4
5 Mining –Based - Alternative Conditioning via Solvents 5
8 Primary Upgrading - Hydro-Retorting (e.g. Chattanooga) 2
33 Enabling Technologies - Bio-Upgrading 5
total 24
These programs may result in new technology where recovery energy is very significantly
reduced. As is evident in Figure 8.1, recovery energy is responsible for more than half the
CO2 emissions in the in-situ / upgrader combination. If successful, recovery techniques in
programs 3 and 4 (which include processes like Vapex or steam/solvent combinations) are
expected to result in a dramatic energy reduction, perhaps by as much as 50%, or more
where only solvent is used.
However, these new recovery processes will likely have a modest impact on advancing
upgrading, confined to selective removal of some of the asphaltenes.
For mining, the recovery energy is a lesser factor, but still considerable. The use of heavier
solvents here would have even less impact on the “upgrading” chain. Energy reduction by
eliminating the hot water recovery technology needs to be balanced against energy needed
to recover the solvent from the sand. Also, any solvent losses to sand will add to
hydrocarbon based emissions. It is noted that this approach has already undergone major
industrial R&D in the 1960s - notably by Shell Oil – and failed to develop the technology to
commercial status. Potential to replace the water based extraction process for mined ore
has not been highly rated, neither by the study team nor during the Oil Sands Technology
Roadmap process.
8.4 R&D Programs With Potential to Reduce Hydrogen Use
or Enable Novel Hydrogen Recovery
DPY
Reduced Hydrogen Use
12 Primary Upgrading - Upgrading with Oxygen and/or Water 2
13 Primary Upgrading - Selective Separations 2
23 Secondary Upgrading - Membrane Reactors 1
24 Secondary Upgrading - Selective Physical/Chemical Separations 8
26 Secondary Upgrading - Catalysis ( +“ Ring Opening “) 14
Hydrogen Recovery or Production
27 Integration Technologies - Novel or Improved Hydrogen Production 3
30 Integration Technologies - Light Ends Management 2
total 39
Hydrogen production by either the currently favoured Steam Methane Reforming (SMR) or
by gasification results in heavy CO2 emissions. Referring to Figure 8.1, hydrogen generation
is responsible for about 55-60 kg CO2 per barrel of SCO, assuming this is generated from
residues. The grouping of programs that might help reduce this burden include research that
will allow more targeted hydrogen addition, or upgrading and recovery via some form of
integrated hydrogen generation by water and/or oxygen reaction with some of the resource,
or through better catalysis.
Figure 8.4: Approximate Distribution of Hydrogen Consumption

for High Quality (40o API) SCO
hydrogen content of
secondary upgrader feeds *
added H2 @ 1600
scf per barrel
losses to
fuel gases &
unrecovered H2
H2 in upgrader feed Sulphur Propane &

Butane
3% 6% 7%
C5+
Hydrocarbons 84%
* including ebullated bed unit distribution of hydrogen

if used as primary upgrader
to main products
Figure 8.4 shows an approximate hydrogen balance, including the significant hydrogen
already present in the bitumen derivatives prior to secondary upgrading. The added
hydrogen is approximately what is necessary to produce high quality SCO (40o API-plus)
from primary process products. Actual hydrogen distribution will vary depending on the
primary and secondary processes selected.
While it is not possible to trace where hydrogen from the two feedstock sources is ending up,
of the combined hydrogen in the system some 80%+ is routed to the C5+ liquid products
(the synthetic crude oil). Within this “consumption”, some of the added hydrogen is likely
being used to “over treat” certain fractions. There is probably significant potential to improve
here, with more selective hydrogen addition to pentanes-plus fractions. This is the aim of
research into selective separations that may allow more targetted hydrogen addition.
In addition to improved hydrogen consumption processes, there are possible alternative
ways to produce hydrogen without the associated GHG emissions. For example, developing
processes which recover hydrogen consumed in non-discretionary by-products (hydrogen
sulphide) or from lower value upgrading by-products (light products such as propane and
butane). Other alternative hydrogen generation processes are summarized in Appendix 2.
Between these two approaches - more targetted hydrogen addition and recovery and reuse
of hydrogen lost to by-products – a reasonable target to aim for is hydrogen reductions of
the order of 5-10 % of the total today, and a similar reduction in greenhouse gas emissions.
8.5 R&D Programs With Potential to Impact Upgrading Energy Reduction
DPY
12 Primary Upgrading - Upgrading with Oxygen and/or Water 2
28 Integration Technologies - Advanced Flow Sheet Analysis & Proc.Modeling 15
TOTAL 24
From Figure 8.1, upgrader energy consumption is responsible for about 15 kg CO2
emissions per barrel of SCO. The four projects identified that might reasonably be expected
to influence upgrader energy use are too poorly defined to make any estimate, or set any
target for reduction at this time. It is likely that any energy savings, and associated GHG
reductions, are limited.
Another factor not evident from viewing the list of programs in isolation is the potential trend
to entirely different primary and secondary upgrader combinations as a result of the desire to
replace natural gas with residues. For example, how do we compare between a coker or
ebullated bed primary process and associated hydrotreating (with maximum residue use)
and the Nexen-OPTI approach with less severe primary upgrading and hydrocracking?
There is no such industry comparison possible today; practical data is more important here
than research.
8.6 Summary of Greenhouse Gas Reduction Potential
This section has reviewed the potential for CO2 emission reduction from new technologies in
the “upgrading” chain. It should also be emphasized that the main intent of the R&D in the
case of recovery technology is not upgrading per se, but is focussed on reduced recovery
cost through energy reduction.
Nevertheless, Figure 8.5 is a depiction of the possible impacts on potential reduction in CO2
emissions, the major Greenhouse gas contribution.
Figure 8.5: Summary of CO2 Emission Reduction Potential of

Processes in the Upgrading Chain
likely CO2 reduction potential

from R&D considered in this report
125
precise impact of 100%

100 Solvent or mixed
thermal/solvent processes H2 reduction / recovery
needs verification
75
50
25
Upgrader
net energy
0
SAGD MINING–BASED
RECOVERY UPGRADER
RECOVERY
ENERGY ENERGY
The successful development of solvent-based in-situ recovery has enormous potential for
energy reduction and consequent CO2 emission reduction. This level of reduction will at
least halve the combined recovery-upgrading combination, and bring levels down to, or even
below those for the mining-upgrading combination.
For the upgrading process units, the combined impact of three areas of research:
- selective separations to enhance more targetted hydrogen addition
- catalyst developments to assist the same and to reduce light ends production
- novel means to produce hydrogen, including recovery from by-products
The study to date has not identified major emission reduction potential in any novel mining-
based recovery processes. An expected review of R&D needs of all mining-based
processes (outside our current scope) may identify such technology options, however.
Opportunities for energy reduction in the upgrading processes themselves are also
considered to be minor, or unclear at this time.
9
LINKS TO OTHER AREAS OF OIL SANDS & RELATED

TECHNOLOGY DEVELOPMENT
9.1 Introduction
The Oil Sands Technology Roadmap encouraged the creation of detailed R&D plans in key
areas for development, including at least:
• Mining-based Extraction and the Environmental footprint (including water use)

• In-situ recovery (including water use)
• Upgrading to Higher Value Products
This section highlights potential duplication between this report and others to follow. Also
covered here are ideas on R&D needs that did not fit the mandate for this study, and may
not be covered under the other areas listed above.
9.2 Potential Duplication

This study was designed specifically to review long term R&D needs associated with third of
the five areas listed above: technology that can impact upgrading of oil sands bitumen and
heavy oils in future.
Figure 9.1 Schematic Representation of Influences on Upgrading
current recovery deep conversion

primary upgrading+ HT
today technology
+ coping technology for
distillate improvement
downstream refinery
limitations vary
and
may be increasing
new recovery
technology new approaches to
which alters primary & secondary
bitumen quality upgrading
future
Residues for
energy/power
& hydrogen potential major
Impact
This also required the study team to review the potential of processes or end uses both
before (recovery processes) and after (refining industry processes) those normally
considered main upgrading processes. Figure 9.1 illustrates the direct value chain linkages.
The future plans in other value chain areas most notably affected by the output from this
report are:
(a) Recovery Technologies for in-situ and Mining that have been identified as
contributing to upgrading, and may be supported partly on any beneficial impact on
subsequent central upgrading processes:
DPY
1 in-situ - Above ground recovery using paraffinic solvents 1
2 in-situ - Combustion and-or gasification 2
3 in-situ - Solvent Extraction - Diffusion & Chamber growth 8
4 in-situ - Thermal/Solvent combinations 4
5 Mining - Alternative Conditioning via Solvents 5
6 Mining - Thermal Recovery (whole sand) M
7 Mining - Froth treatment 8
total 28
(b) Energy & Hydrogen Technologies (all under Integration Technologies) that have been
identified as contributing to upgrading, and may be supported partly on any beneficial impact
on subsequent central upgrading processes:
DPY
27 Novel or Improved Hydrogen Production 3
30 Light Ends Management 2
31 Gasification 6
32 Residue Combustion & Flue Gas Desulphurization 0
total 11
(c) Upgrading Technologies with Air Emission Reduction Potential have already been
identified and discussed in Section 8.2. In all these case, however, CO2 emission reduction
potential has not been the primary motivator behind the research to date.
9.3 Other Technologies or R&D that need to be covered in other plans
During this review, some other technology needs were identified which did not fall into the
mandate for this report, and do not necessarily fit in the other four areas identified. These
are listed here to ensure they are covered in some way in future planning.
Materials Technology: The high tan numbers associated with most of the bitumens,
particularly the Athabasca bitumens, require special equipment metallurgy. Advanced
materials may be a way to combat this issue, along with innovative approaches to
understand and combat corrosion mechanisms. Alternatively, selective separation
technology (a feature of some of the R&D programs identified in this report) may reduce the
corrosivity of the bitumen.
Energy and Power Integration is a pervasive need for oil sands value adding steps, and
should be covered under a future plan for Energy, Power and Hydrogen.
10
INDUSTRY AND LICENSOR PROPRIETARY R&D
Figure 7.3 is repeated here in Figure 10.1 as it is germane to the short discussion in this
section. R&D is characterized by a large number of options being studied at the basic
research stage. However, exploratory research is relatively inexpensive, requiring modest
facilities at the bench scale. Success is more a function of the quality and track record of the
researchers. As the research proceeds, a large number of original ideas prove to be false
trails, and the number of projects that move on to the next phase of study (early applied
research) is correspondingly smaller, but the effort begins to expand, and overall costs for
R&D (particularly equipment and its operation) begin to accelerate.
The closer new technology gets to commercial application, very expensive R&D normally
becomes necessary in the form of prototypes or pilots. Traditionally, the main funding for this
phase of the work (in Canada) has been by industry.
Figure 10.1 Historical Distribution of R&D Funding
R&D investment $ commercialization
Industry field pilots or

Funding major demos
technology
development
Basic R&D program…largely Government funding
Government Funding
For upgrading, this high cost development work is typically by single industry participants,
the Syncrude consortium being a notable exception. For this kind of research, large scale
piloting of the process is currently normally performed at the labs owned by process
licensors, to confirm design criteria for performance guarantee purposes. Recent examples
of this are PetroCanada with coker and ebullated bed processes that were intended for the
planned upgrader adjacent to the Edmonton refinery, and the Shell-led ebullated bed
upgrader in Scotford. This kind of work will typically cost $10 million per company over one
or two years. Similar kinds of pilot facilities at NCUT are used by industry for confidential
work as well, before licensors are engaged. Newer processes, such as the ORMAT
demonstration unit and planned Ensyn process prototypes, cost much more.
In addition, licensors have their own R&D that contributes to the knowledge base for bitumen
and heavy crude upgrading.
Because this study also looked at certain recovery technologies, it is necessary to comment
on this area as well. Recovery processes, especially those in deep reservoirs have not
developed the same level of process modelling and predictability as, say, refinery-style
upgrading processes. This has led to more expensive field pilots that are actually conducted
at commercial scale conditions, but with fewer wells. Recovery development pilots often
involve joint venture R&D, sometimes because of joint field ownership. One pilot of this
nature will typically cost in the range of $ 10-25 million annually, and can go for several
years before significant results are achieved. There are probably five to ten such pilots
operating today to prove out new in-situ technology or processes, such as Vapex and
THAITM.
This general rationalization was the basis for the conservatively estimated $ 100-150 million
annual average spending on upgrading-related research and technology development cited
in Section 7.5. While a non-confidential data base of all such industry or licensor technology
development work is not available, it would be useful to survey those industry participants
willing to share such information, while maintaining confidentiality on the results of the work.
11
ISSUES IN GOVERNMENT & INDUSTRY JOINTLY FUNDED R&D
The oil sands industry has a long history of joint industry-government funding for R&D at the
resource recovery level. In recent years, CONRAD has been an active group to promote
such cooperation. This kind of cooperative research has not been the case in a major way to
date with upgrading process research, where operators are sometimes technology licensors
in a highly competitive oil processing industry.
Section 12 discusses the future organization of jointly funded R&D. The organization
presently best placed to lead that - EnergyINet - has a proposal that calls for joint industry-
government funding for R&D over the full development chain. This would imply one third
each for industry and the two levels of government. This is probably justified on the basis of
long term gains fro industry and governments. However, for this to happen, Figure 7.3 and
the associated discussion in Section 7.8 imply that the government funding share would
need to expand greatly, as governments are currently not universally “visible” in jointly
funding high cost pilots.
In addition, there have been some traditional industry concerns for government funding at
this near commercial level of technology development. Two key concerns are:
- delays in funding while moving through the typical government bureaucracy
- the ownership of intellectual property arising
These issues need to be addressed in a cooperative fashion if this level of government
funding is to be sought and achieved.
From the industry side, and addressing any future jointly funded pre-competitive research,
there may be a tendency to try and subdivide some of the research and provide funding only
on a selective basis, governed largely by current business interests. This will need to be
addressed and carefully managed if the aims and cost effective performance of cooperative
research are to be fully realized.
12
COORDINATION OF GOVERNMENT & INDUSTRY JOINTLY FUNDED R&D
12.1 Coordination and Funding of Oil Sands Upgrading R&D Today

Cooperative technology development is a key to enhancing the industry’s ability to reduce
costs and meet the increasing environmental challenges. It is important to recognize
previous work, and the cooperative R&D structures already in place, or developed since the
National Task Force on Oil Sands Strategies reports published in 19952. This report is
focussed on Upgrading technology development, but it is important to note that many of the
“champion” organizations and the R&D centres that undertake research in upgrading also
perform R&D directed to other oil sands areas. The following summary is taken partly from
the Oil Sands Technology Roadmap.
Leaders in Encouraging Innovation

Since the mid-1990s, two organizations have emerged that have catalyzed innovation in the
upstream oil and gas industry, while encouraging collaboration, information exchange and
shared intellectual property rights.
CONRAD was formed in 1994, and members include mining and in-situ producers, research
providers, academic institutions, and governments. The network promotes and coordinates
collaborative research and development in four principal areas: the environment, in-situ
recovery, upgrading, and mining and extraction. Competitive advantage for CONRAD
members is achieved through integration of communal intellectual property into individual,
unique commercial operations. From its inception the CONRAD platform has been used to
launch approximately 200 projects valued at a total of more than $100M.
PTAC has a broader mandate than the oil sands industry, and has brought forward new
technology opportunities in seminars open to industry stakeholders.
R&D Providers
Key R&D centres active in upgrading R&D have been listed in Appendix 3. Two jointly
funded government labs have taken on key R&D roles, and have grown through additional
industry use of their expanding facilities and services. The Devon, Alberta Research
Centre houses two R&D organizations; part of the Alberta Research Council and the
CANMET Energy Technology Centre (CETC). This lab houses the National Centre for
Upgrading Technology (NCUT), a joint Canada-Alberta heavy crude upgrading research
alliance, which has developed facilities to undertake R&D in primary upgrading and
secondary upgrading, with added emphasis on refinery acceptance of synthetic crudes.
Their work has also grown through industry contract work. In the same laboratory,
CANMET’s Advanced Separations Technology group (AST) has an expanding role in
fundamental studies that are currently focused on bitumen recovery technology.
Alberta Research Council (ARC) and its subsidiary CFER, continue to provide
technologies to improve recovery, reduce cost, and minimize environmental impact. ARC
works through consortia programs, such as the AERI/ARC Core Industry (AACI) Research
Program, and directed contract research and technology development and deployment.
Through the Sustainable Energy Futures Centre of Excellence, ARC is developing cost-
effective technologies, processes and capabilities for the safe capture of Greenhouse gases
from combustion and waste gas streams. ARC is also helping to improve understanding of
the linkages between energy systems, such as gasification, and emission capture
technologies.
The University of Alberta and the University of Calgary have active collaborative
research programs, sponsored and supported by industry and government. The principal
researchers are investigating many aspects of the oil sands industry, including fundamentals
of in-situ production, upgrading and land reclamation. This research provides the basis for
long-term development of new technology, opportunities for reducing costs in current
operations, and trained graduates for the oil sands industry. The Alberta universities are well
positioned to support the industry in the future, but an ongoing challenge is attracting top
faculty members and graduate students to oil sands research.
Outside Alberta labs across the country perform R&D in other areas of interest to the oil
sands and heavy crude industry. These include the National Research Council (NRC), which
has established significant capabilities in the development of wear resistant bulk materials
and overlays at its facilities in Vancouver and Boucherville, Quebec. Others indentified in
Appendix 3 include NRCan labs in Varennes (Quebec) and Ottawa, and universities across
the country.
Recent Studies
In addition to ongoing R&D, there have been recent reports or studies that have addressed,
in part, long term oil sands technology development needs. During 2001 AERI developed a
plan for many industry technology roadmaps 3 and has helped lead the EnergyInet initiative
described above. AERI also commissioned a recent survey of upgrading technologies. In a
separate study, the Cleaner Hydrocarbon Technology Futures Group issued a report in
February 2003 4.
Current Organization
AERI (Alberta Energy Research Institute) is the lead agency for energy research in the
Alberta provincial government, and has expanded the role once played by AOSTRA. AERI
was formed in 2000 to provide leadership for Alberta in funding, coordinating and the
harmonization of energy innovation and technology development and transfer, all as part of
a cleaner energy strategy. One of AERI’s six strategic research areas 3 is the upgrading of
Alberta’s petroleum production, including the oil sands. Of the other five areas, two are also
directly linked to upgrading; CO2 Emissions and Alternative Energy. AERI, together with the
federal government and industry, is working to build a joint program management structure,
EnergyINet, which will act as a catalyst to integrate all the work going on and make Alberta a
world center in upgrading. More information on EnergyINet is found in Appendix 4.
12.2 Recommended Organization for Future Oil Sands Jointly Funded R&D
Since 1995 there has developed an impressive group of R&D centers capable of a wide
range of pre-competitive research. Some government labs are natural centers for the focus
of certain areas of the work, and should be responsible for awareness of all R&D in those
areas. NCUT in core upgrading technology, and ARC on energy and hydrogen technologies
are examples.
However, overall coordination of a body of R&D work covering all oil sands needs cannot be
undertaken by a single lab or research authority. The EnergyINet organization is close to
concluding its mandate and approach to management of jointly funded R&D in the six
strategic resource areas. Both levels of government, and most of the industry and the
majority of R&D providers are already in agreement. Some of the Federal government
funding agencies (e.g NSERC) are not included, but administer funds over a much broader
base.
Among EnergyINet’s proposed and developing operational principles that directly target
R&D program planning and management are:
a) An integrated and collaborative approach to energy science and technology
innovation.
b) Project and program based shared federal and provincial funding in energy science
and technology innovation.
c) Funding mission oriented (fundamental, applied and demonstration) projects or
programs that are supported by business plans, while respecting the investment
strategy of each government.
d) Develop a common portfolio approach for jointly managing public sector investments
and working towards greater efficiency and effectiveness in intelligence gathering,
proposal evaluation, proposal approval mechanisms, and project or program
monitoring and knowledge dissemination.
On the assumption that EnergyINet will succeed in completing its organizational goals, it is
recommended that jointly funded R&D in this and other oil sands areas be coordinated
through this body. Section 13 includes a number of recommendations on what can be done
in parallel to assist EnergyINet in expediting planning in the Upgrading area.
13
CONCLUSIONS & RECOMMENDATIONS
Through the oil sands resources, Canada will not only maintain oil self sufficiency, but with
careful, sustainable development, can become a major energy source in the world. The
development of oil sands has long been acknowledged to need continuous technology
improvement and adoption for maximum economic benefit.
The recently published Oil Sands Technology Roadmap anticipates a new era of innovation,
towards a profitable low cost bitumen recovery and upgrading business that is self-sufficient
in energy and hydrogen production, with a sustainable environmental record. The Oil Sands
Technology Roadmap is a “platform” of technology needs and opportunities, without spelling
out the detailed plans to get there. Follow up R&D plans are expected to take most of 2004
to develop.
This review has focused on the identification of emerging and developing technologies that
can, when fully developed, either be applied directly to upgrade bitumen and very heavy
crudes, or are integral to new approaches to upgrading.
In order to facilitate continued expansion of oil sands and heavy crude production and
upgrading, one of the most pressing external challenge is to significantly reduce reliance on
natural gas for energy, power and hydrogen generation. New projects may eliminate the use
of natural gas. Proposed alternatives to natural gas are not confined to internally generated
residues, but this approach can have some important and economically attractive side
benefits in the main upgrading process selection.
13.1 The Basis for this Review

While the central objective was to review the R&D needs in oil sands bitumen and heavy
crude upgrading, this can only be complete by parallel consideration of (a) newer recovery
technology being investigated that integrate a measure of upgrading, and (b) downstream
refining market needs that might impose new quality requirements on synthetic crudes. So
the range of technologies considered was significantly wider than the conventional concept
of upgrading. In addition, the survey considered upgrading process integration technologies
that are influenced by technology change, and enabling technologies that might impact the
future science of upgrading processes.
13.2 The R&D Portfolio for Joint Industry-Government Funding

The principal objective of this study was the identification of basic and applied research at
the pre-competitive stage of development. This is research that is ideally suited to scientific
investigation in universities and government funded labs, over which industry and
government do, or can in future, have joint planning and management control, and joint
funding responsibility. Extensions of this platform of underlying research into development
towards commercial operations are also identified, but are not normally suited to lab based
study.
The report uses the term ‘program’ to refer to a branch of mission-oriented scientific study
that addresses a particular long term technology need or opportunity in oil sands and heavy
crude upgrading. Each program will normally also have sub-set projects, and these were
identified where possible. However, ongoing change and redirection is, and should be, a
feature of research at this level.
The study team identified 42 program areas that can lead to new technologies impacting
upgrading. Many, but not all, are already under investigation, and this report estimated the
current effort at about 183 direct person years (DPY). Because four of the programs have
objectives and applicability outside of oil sands and heavy crude development, current effort
in these programs was “scaled” to better reflect the work directed to oil sands and heavy
crude technology. This reduced the applicable effort to 145 DPY, and is estimated to cost
approximately $25 million annually. This is a substantial commitment, but needs to be
assessed from a different perspective - that of timely results - to determine if it is sufficient as
a base level of basic and early applied research.
In addition, the work is in the lab based, early development areas, where costs are more
modest. It is estimated that these programs are likely part of total annual R&D costs in the
region of 100-150 million, most of which is borne by industry for their own confidential R&D.
Of the 42 programs, some 27 were regarded as higher priority, and require greater attention
to planning to ensure that the effort expanded on the more focused applied research
projects are appropriate. The other 15 projects may include a broad level of basic research
(more difficult to prioritize), but also may include programs which need to be reassessed for
their potential contribution and cost effective continuation.
There was an assessment made of the potentially positive impact that successful R&D in
these programs might have in five industry development themes. These were Greenhouse
gases, other local environmental issues, natural gas reduction, upgrading cost reduction or
refinery market “value added” potential. Other than the Greenhouse gas impact, no
particular conclusions were drawn at this time, but it may be of value to readers with specific
interests on future funding considerations.
13.3 Greenhouse Gas Emission Reduction

The interest in Greenhouse gas abatement, particularly CO2 emissions, prompted a more
thorough review of the potential for upgrading based technology development to assist that
objective. Companies such as Syncrude and Suncor, with integrated mining recovery,
currently emit about 100 kg of CO2 per barrel of production, relying largely on natural gas,
with some burning of co-product coke. While there are currently no integrated SAGD in-situ
and upgrading projects, the same reliance on natural gas, with today’s recovery and
upgrading technology, would lead to emissions of around 100 kg per barrel.
The major sources of CO2 emissions from current operations are from natural gas used to
fuel the recovery, and for hydrogen generation. These two sources account for more than
50% of CO2 emissions in mining based, and 75% of in-situ based integrated projects.
Contribution from upgrader net energy is a distant third source, at 8-12 %.
Two future trends, almost certain to materialize with large expanded oil sands development,
will raise this bar considerably. Firstly, a move away from natural gas towards residues (or
coal) to provide energy and hydrogen will increase CO2 emissions by about 50% for the
same unit of energy or hydrogen. Secondly, an anticipated move to higher quality synthetic
crude, leading to significantly higher hydrogen consumption, will increase emissions from
hydrogen production alone by at least another 50-60%.
These two trends lead to future projected emissions rising to 125 and 175 kg per barrel
respectively for mining and SAGD based integrated recovery and upgrading without new
technology. These are considered future “base cases” against which the beneficial impact of
new technology needs to be gauged.
There are four emission-intensive upgrading steps where new technology might have a
positive impact on CO2 emissions reduction:
a) in-situ recovery technologies that replace SAGD, with radically reduced steam
injection and some coincident upgrading during production
b) Mining recovery technologies requiring less steam energy or reduced water, and
some coincident upgrading during production
c) Upgrader process energy
d) Technologies that lead to reduce net hydrogen consumption in upgrading.
The most promising new technology in the areas considered is in (a), where new in-situ
recovery using solvents is already in advanced stages of piloting. While not proven
conclusively at this time, as much as 50% of the current energy requirement - perhaps more
- may be eliminated, for a CO2 emission reduction potential of around 50 kg per barrel, or
some one third of the total for an integrated in-situ / upgrading project. It should however be
remembered that the primary intent of such developments has been energy reduction, not
the modest level of upgrading that also results.
Other in-situ recovery processes being proposed that reduce or eliminate natural gas involve
some form of in-situ combustion or gasification of the reserve, and are not yet proven to
reduce CO2 emissions.
Mining based technology using selective solvents on the full ore is not expected to be
commercially available in a reasonable timeframe. Selective solvent based recovery from the
bitumen froth, which does result in asphaltene removal, may have a small impact on CO2
emissions at the upgrader (e.g. via reduced hydrogen consumption) but is yet to be verified.
New upgrading process energy savings are likely to be very small, if any. Of interest (but
not the subject of any research) is a comparison between coker and ebullated bed based
primary upgraders, and those (such as the Nexen-OPTI Long Lake upgrader) relying on less
intensive thermal conversion and deasphalting. However, plant data is subject to too much
“noise”, and engineering studies may be a more reliable guide.
The fourth category - reduced net hydrogen consumption - is the second most likely
contributor to reduced CO2 emissions. A combination of selective separations, targetted
hydrogen consumption, and recovery of “wasted” hydrogen by reverse conversion of
byproducts to recover and recycle hydrogen may all combine to reduce fresh hydrogen
addition by a targeted 5-10%, or some 3-6 kg per barrel.
In summary, the combined potential of reduced emissions for the in-situ / upgrader
combination, by new solvent based in-situ recovery and reduced net hydrogen use could
reduce associated CO2 emissions by 60 kg per barrel, and bring these emissions below the
Mining-Upgrading combination, where less potential for reduction is foreseen.
13.4 The Respective Funding Roles of Industry and Government
At this time, industry pays the majority of the R&D costs, largely through its dominant role in
funding at the “development” end of the research spectrum, especially in field demonstration
or pilot projects. There is generally sharing only for the university and government lab based
pre-competitive research, but which sometimes extends into development work.
The funding of basic and applied research at universities and government labs, and some
logical extensions into development, should be relatively easy to address in principle. It is
already done today through core R&D programs and joint industry consortia. At the
government lab-based R&D program level, one issue will need to be addressed, and that is
speedy agreement to periodic one-off equipment purchases that do not lend themselves to
normal approaches to budgeting.
In addition, any tendency to try and subdivide pre-competitive research and provide funding
on a selective basis, governed only by current individual company business interests, will
need to be addressed and carefully managed if the aims and cost effective performance of
cooperative research are to be fully realized.
Turning attention to the higher cost development work, the scope of industry expansion
envisaged in the Oil Sands Technology Roadmap implies the benefits to industry and
governments are likely to be shared, the latter through royalties and business taxes, but
even more so through an expanded employment tax base. Philosophically, the basis is in
place for shared funding across the whole spectrum of R&D, including high cost pilots.
To make this happen, however, two historical issues need to be addressed; intellectual
property rights (including “right to use” commercially), and timely approvals for the
government portion of funding, so that projects are kept on schedule.
13.5 Strategy to Encourage Industry and Licensor R&D

Pre-competitive research is typically the tip of the iceberg in R&D spending. This report
estimates as much as an added $75-125 million annually of ongoing R&D that is not
published. While some is contracted out to independent labs, many industry participants
have their own R&D capability, and will focus their internally funded R&D on specific
company needs, but at the same time advance technology available for licensing to others.
For the purposes of good future planning, it is desirable to have a non-confidential
assessment of ongoing R&D by industry participants.
In addition, licensors engage in R&D that contributes to the knowledge base for bitumen and
heavy crude upgrading. The upgrading industry need to continue to encourage healthy
competition between key process licensors and others in the vendor community, and pose
challenges for them, where we anticipate they have the lead development role. That will
sometimes include joint venture funding and development.
13.6 Coordination and Leadership

Since 1995 some R&D centers, capable of a wide range of pre-competitive research, have
developed and have become natural centers for the focus of work, and should maintain
awareness of all R&D in those areas at the technical level. NCUT in core upgrading
technology, and ARC on energy and hydrogen technologies are examples.
More recently, the EnergyINet organization is close to concluding a mandate and approach
to management of jointly funded R&D in the six strategic resource-based areas. Both levels
of government, and most of the industry and the majority of R&D providers are already in
agreement. This report assumes that EnergyINet will succeed in completing its
organizational goals, and it is recommended that jointly funded R&D in this and other oil
sands and heavy oil areas be coordinated through EnergyINet.
In anticipation of the leading role through EnergyINet, a number of activities should start
immediately:
a) Develop a position of Program Director (perhaps shared with other technology areas)
to lead and support the work of the EnergyINet Advisory group.
b) Maintain a directory of key R&D providers, in Canada and externally, and plan for
their role in future jointly funded R&D.
c) Identify skill gaps in university and government labs
d) Develop concise summaries of each of the sub-projects in shared programs, with
estimates of future effort and key locations for the work. Future effort for mission-
focused research needs to take account of the timeframe for result delivery in order
to be useful to industry.
e) The outcome of these steps will be a portfolio of R&D programs for consideration of
industry and government joint funding.
f) Put in place a process of annual review of progress.
g) As a parallel activity, develop a data base of industry R&D in the same area, and use
this as a means to check for duplication or gaps.
Outside of the main focus here - the coordination and management of the pre-competitive
R&D work - EnergyINet needs to address the issues that currently limit major government
involvement in field pilots, to determine any barriers to future joint funding at all levels of the
technology development chain.
13.7 Linkages with Other R&D Plans

The development of other R&D plans for oil sands and heavy crude development need to be
aware of overlapping R&D programs discussed in this report:
(a) Recovery technologies for in-situ and Mining that have been identified as contributing to
upgrading, and may be supported partly on any beneficial impact on subsequent central
upgrading processes.
(b) Energy & Hydrogen Technologies (all under Integration Technologies) that have been
identified as contributing to upgrading, and may be supported partly on any beneficial
impact on subsequent central upgrading processes.
(c) Upgrading Technologies with Air Emission Reduction Potential
In addition, some other technology needs were identified which did not fall into the mandate
for this report, and do not necessarily fit in the other four areas identified. These are listed
here to ensure they are covered in some way in future planning.
Materials Technology: The high tan numbers associated with most of the bitumens,
particularly the Athabasca bitumens, require special metallurgy to handle. Alternatively,
selective separation technology (a feature of some of the R&D programs identified in this
report) may reduce the corrosivity of the bitumen.
Energy and Power Integration: This is a pervasive need for oil sands value adding steps,
and should be covered under a future plan for Energy, Power and Hydrogen.
REFERENCES
1. “Oil Sands Technology Roadmap: Unlocking the Potential”

Alberta Chamber of Resources
January 30, 2004.
2. “The Oil Sands: A New Energy Vision for Canada” National Task Force on Oil
Sands Strategy, Alberta Chamber of Resources, 1995
3. “A Vision of Our Future: Energy Technology Roadmaps in Alberta”

Alberta Energy Research Institute (AERI)
November 15, 2001
4. “Cleaner Hydrocarbons: Technology Challenges for the Western Canadian

Hydrocarbon Energy Sector”
The Cleaner Hydrocarbons Technology Futures
Group (Canada), February, 2003
5. "Science and Technology for the New Century: A Federal Strategy"

Government of Canada, March 1996 (Cat No. C2-290/1996)
GLOSSARY OF TERMS & ACRONYMS
API Measure of oil density used in crude supply and refining

ARC Alberta Research Council
AERI Alberta Energy Research Institute, a division of AE and responsible for
the Alberta energy related R&D investments
ASRA Alberta Science and Research Authority
AST Advanced Separations Technology group (at CETC-Devon)
CANMET Canadian Centre for Mineral and Energy Technology
CONRAD Canadian Oil Sands Network for Research and Development
CO2E Emissions based on equivalent-to-CO2 impact as Greenhouse gases
CETC CANMET Energy Technology Centre-Devon
(formerly CANMET Western Research Centre)
EB (unit) Ebullated bed, hydrogen addition process for bitumen upgrading
EnergyINet Joint government-industry organization currently working towards
leading the AERI vision in six strategic areas
NCUT National Centre for Upgrading Technology (CETC,Devon, Alberta)
NINT National Institute for Nanotechnology
NRCan Natural Resources Canada
OSTRM Oil Sands Technology Roadmap
PADD Petroleum Administration for Defense District; five areas of the U.S.
and used as sectors for energy reviews.
PTAC Petroleum Technology Alliance Canada
PTRC Petroleum Technology Research Centre based in Saskatchewan
R&D Research and Development
SCO synthetic crude oil
SRC Saskatchewan Research Council
U of A University of Alberta
U of C University of Calgary
UBC University of British Columbia
U of S University of Saskatchewan
U of W University of Waterloo
UNB University of New Brunswick
UCDN Upgrading Catalyst Development Network
Terms Related to Research and Technology

applied research the second stage of R&D, when commercial application evident
base technology technology that is not a strategic lever for a specific industry
basic research the early stages of research, some times referred to as exploratory
Canada Inc. term used to refer to Canadian socio-economic interests
condensate light pentanes-plus stream separated from natural gas in gas plants
development final stages of technology development to commercial reality
enabling technology a sub-technology that initiates further development in or assists
the commercial effectiveness of a process unit technology
key technology commercially used technology that can be strategic lever
pacing technology not currently commercial; future key technology
technical support support for operations, can also further improve technology
Glossary of Other Selected Terms Used in this Report
o
API: A measure of liquid gravity common in the oil industry. Water is 10, and a typical light
crude is from 35-40. Bitumens are by convention typically from 8-11 oAPI.
Aromatics: Hydrocarbon species which occurs in unusually high concentrations in bitumen
and some derived products, and confers poor quality in distillate fuels.
Asphaltenes: The heaviest and most concentrated aromatic hydrocarbon fractions of
bitumen.
Barrel: Generally accepted measurement of oil. One barrel of oil equals 159 litres One
cubic meter contains 6.29 barrels.
Bitumen: Naturally occurring viscous mixture of hydrocarbons that contain high levels of
sulphur and nitrogen compounds. In its natural state, it is not recoverable at a commercial
rate through a well because it is too thick to flow. Bitumen typically makes up about 10 % by
weight of oil sand, but saturation varies.
Carbon Dioxide (CO2): see Greenhouse gases
Catalyst: Used in upgrading processes to assist cracking and other upgrading reactions
Cetane Number: A measure used to describe the combustion characteristics of a diesel
fuel. A high Cetane Number indicates a better fuel.
Coke: Solid, black hydrocarbon which is left as a residue after the more valuable
hydrocarbons have been removed from bitumen by heating the bitumen to high
temperatures.
Coking: A process commonly used as the first step in bituen upgrading. The bitumen is
cracked by application of high temperatures.
Condensate: Mixture of light hydrocarbons recoverable from gas reservoirs. Condensate is
also referred to as a natural gas liquid, and is used as a diluent to reduce bitumen viscosity
for pipeline transportation
Conventional Crude Oil: Mixture mainly of pentane and heavier hydrocarbons recoverable
at a well from an underground reservoir and liquid at atmospheric pressure and temperature.
Unlike bitumen, it flows through a well without stimulation and through a pipeline without
processing or dilution. In Canada, conventional crude oil includes light, medium and heavy
crude oils, like those produced from the Western Canada Sedimentary Basin. Crude oils
containing more than 0.5 percent of sulphur are considered "sour", crudes with less than 0.5
percent are "sweet".
Cracking: Process of breaking down the larger, heavier and more complex hydrocarbon
molecules into simpler, lighter molecules.
Deasphalting: A family of processes that use light solvents to selectively reject highly
aromatic or ‘asphaltenic’ fractions
Diluent: see Condensate
Ebullated Bed Process: A residue conversion process that employs hydrogen, and keeps
the solid catalyst in a semi-fluid state to allow continual addition and removal without halting
the process.
Extraction: A process, unique to the oil sands industry, which separates the bitumen from
the oil sand using hot water, steam and caustic soda.
Fines: Minute particles of solids such as clay or sand.
Froth Treatment: The means to recover bitumen from the water, bitumen and solids froth
produced in hot water extraction (in mining-based recovery)
Gasification: A process to partially oxidize any hydrocarbon, typically heavy residues, to a
mixture of hydrogen and carbon monoxide. Can be used to produce hydrogen and various
energy by-products.
Greenhouse Gases: Gases commonly believed to be connected to climate change and
global warming. CO2 is the most common, but include other light hydrocarbons (such as
methane) and nitrous oxide.
Heavy Crude Oil: Oil with a gravity below 22 degrees API. Heavy crudes must be blended,
or mixed, with condensate to be shipped by pipeline.
Hot Water Extraction: An extraction process whereby oil sand, hot water, steam and
reagents are mixed to extract bitumen at a temperature of about 800C.
Hydrocarbons: Organic chemical compounds of hydrogen and carbon atoms that form the
basis of all petroleum products. Hydrocarbons may be liquid, solid or gaseous.
Hydrocracking: Refining process for reducing heavy hydrocarbons into lighter fractions,
using hydrogen and a catalyst. Can also be used in lupgrading of bitumen.
Hydroprocessing: An upgrading process for reducing heavy hydrocarbons into lighter
fractions through the catalytic addition of hydrogen.
Hydrotreater: Unit that removes sulphur and nitrogen from the components of synthetic
crude oil by the catalytic addition of hydrogen. A final stage in the upgrading process.
in-situ: in-situ recovery refers to methods to extract the bitumen component of a deposit
without removing the rock matrix from its bed. In situ deposits are buried too deeply to be
mined by open pit techniques.
Light Crude Oil: Liquid petroleum with a gravity of 30 degrees API or higher. A high quality
light crude oil might have a gravity of about 40 degrees API. Upgraded crude oils from the oil
sands currently are around 33-33 degrees API (compared to 32-34 for Light Arab and 37-40
for West Texas Intermediate).
Oil Sands: Bitumen-soaked sand, located in four geographic regions of Alberta: Athabasca,
Wabasca, Cold Lake and Peace River. The Athabasca Deposit is the largest, encompassing
more than 42,340 square kilometres.
Petroleum: A substance composed of a number of hydrocarbons in various combinations.
Its most familiar form is crude oil.
Pilot Plant: Small model plant for testing processes under actual production conditions.
Steam Assisted Gravity Drainage (SAGD) : An in-situ production process using two
closely spaced horizontal wells, one for steam injection, the other for production of the
bitumen/water emulsion.
Steam Methane Reforming: A process commonly used to convert natural gas to hydrogen
for upgrading.
Synthetic Crude Oil: A high quality, light, sweet crude oil, manufactured by upgrading
bitumen extracted from oil sands. Mixture mainly of pentane and heavier hydrocarbons
derived from crude bitumen through the addition of hydrogen or the removal of carbon.
Thermal Recovery: Any process by which heat energy is used to reduce the viscosity of
bitumen in situ to facilitate recovery
Unconventional Crude Oil: Crude oil which is not classified as conventional. An example
would be bitumen and synthetic crude oil.
Upgraded Crude Oil: See Synthetic Crude Oil.
Upgrading: Conversion of bitumen or heavy crude into a lighter, sweeter, high-quality crude
oil either through the removal of carbon (coking) or the addition of hydrogen
(hydroconversion) .
Viscosity: The ability of a liquid to flow. The lower the viscosity, the more easily the liquid
will flow.
Visbreaking: A process designed to reduce residue viscosity by thermal means, but without
appreciable coke formation.
Appendices
A1 General Considerations on the Need for R&D,

R&D Providers and Funding
A2 Research and Technology Needs for Heavy Oil
and Bitumen Upgrading
A3 Canadian R&D Providers with Potential Role In Government-
Industry Joint Funded Upgrading Research Programs
A4 Background on EnergyINet
A5 The Study Team and Acknowledgements
Appendix 1
GENERAL CONSIDERATIONS ON THE NEED FOR R&D,

R&D PROVIDERS AND FUNDING
There are a number of criteria that must be examined to ensure that R&D should be either
wholly government funded, or in joint association with industry consortia. The key ones are:
- how mature is the technology under review ?
- is this a strategic technology for “Canada Inc.” ∗?
- does industry need and support the work today and into the future ?
A1.1 Technology Development through R&D - the 'S' Curve

Technologies are conventionally viewed as developing along an 'S' curve, shown
conceptually in Figure A1.1 (the blue line). Early concepts or ideas move through stages of
“basic” and ”applied” research and (where justified) to the “development” stage. These
stages are not well defined transitions, but are notional in concept. Effort or costs (dashed
red line) are relatively modest in the early stages, where basic and applied research are
characterized by small scale experimentation to advance knowledge or prove concepts.
Some refer to this stage as developing “pre-competitive” or “enabling” technologies.
Figure A1.1 Technology Development and Associated Expenditure
Commercialization
basic applied
research research
Technology
Cumulative
Maturity
Costs
technical
development support
time
When the understanding of a given technology has reached a certain level, work begins in
the development phase to focus on means to commercialize the technology, and this moves
into the much more costly work, often with intensive piloting and large scale prototypes. In
the context of the work under review here, this stage is often funded by the eventual user, as
* “Canada Inc.” is a term used to cover the socio-economic benefits, such as employment, taxes,
infrastructure, environmental sustainability and general economic development.
the development of marketable commercial know how and other intellectual property is
involved, typically protected by new patents, and is consequently kept confidential.
Using a recent example, the Shell Canada-led group that built the Muskeg River mine
invested first in the joint industry-government consortium that funded the basic and applied
research into the new paraffinic solvent froth treatment process. This research was
conducted at CETC-Devon, with about 6-8 person years of effort using bench scale and lab-
based pilot equipment. Shell’s cost share for this research is confidential but was less than
one million dollars over the period of the consortium’s existence, some eight years now (it is
still ongoing). At a certain period, the research had confirmed the underlying science to a
level of confidence allowing Shell to move to the development stage, with a commercial time
scale to consider. This phase required more lab work, but also other resources beyond the
capacity of the Devon lab to provide, to design of a full scale field pilot largely funded by the
Shell group, with some government assistance. This pilot phase probably cost of the order of
$50 million in capital and operations. In other models of cooperative R&D the pilot stage
might be jointly funded by an industry and government consortium, as is the case with
Vapex. Each case needs to be judged on individual merits.
Once commercial, added developments can occur, but there is also ongoing technical
support that does not necessarily advance the underlying technology.
A1.2 Government-Funded Labs within the R&D Providers

The stages of technology development in Figure A1.1 can be used to discuss the relative
roles of the major R&D providers. The depiction in Figure A1.2 does not necessarily hold
true for all industries, but it does take into account the reality of the decline of the Canadian
oil-industry as major independent lab-based R&D performers, and the consequent erosion of
the laboratory facility base. In addition, some new oil sands industry entrants (for example,
CNRL and Nexen-OPTI) have no access to their own R&D labs.
This characterization is not meant to imply the absence of the oil producers in broad
technology development investments. A number of producers (current and new) undertake
their own field-based R&D fund basic. They also co-fund basic and applied R&D in both
universities and independent and government-funded R&D labs such as CETC-Devon and
ARC. Investments in “core R&D” programs is a vehicle often used by industry, to provide a
window on new research over a broad range of technologies. Also, as noted above, at the
other end of the technology development chain, industry will need to lead and fund the
demonstration (often large scale pilots) at this pre-commercial stage of development, and
move them through engineering design to commercial operation.
Basic R&D (the creation of new knowledge) is often performed in universities, as well as
government labs themselves. Bridging the gap between basic research and high cost
development is the logical domain for much of the research undertaken in government-
funded labs and other independent labs, providing improved understanding of the processes
and development issues towards the more commercial stage of development.
Figure A1.2 Relationship Between R&D Providers
applied
research technical
support
cumulative
basic costs
research
development
Academia and others (with some Industry support)

Government Facilities (with some Industry support)
Industry
The role of government-funded research facilities for development and technical support in
Figure A1.2 is deliberate. Undertaking some shorter term client contract work is to be
encouraged for several reasons: it represents a cost contribution to maintaining the facilities;
the results of such work add to the data bank of knowledge; the industry-laboratory links
allow research scientists to become more acquainted with industry problems, leading to new
ideas; and the ability to attract industry funding raises the credibility of the R&D staff when
called upon to advise governments in these areas. In addition, they provide lab based
services to those producers without their own.
However, the acceptance of industry shorter term technical service needs to be properly
managed to ensure that it does not adversely affect progress on the fundamental research
of greatest impact to the large body of industry and to Canada Inc.
A1.3 Universities as R&D Providers

University research has historically been viewed as a major contributor to new ideas at the
basis research end of the spectrum. Their research also provides a valuable training ground
for future scientists and engineers. The quality of research is almost entirely dependent on
individuals, and their ability to attract funding though established reputations. Funding is
though governments and various tailored grant systems, and industry consulting. The
nature of basic research, normally with small scale lab-based equipment and student-based
research assistants, makes this research the most cost-effective on a “person-year” basis.
In Alberta there is already a well established level of coordination between key universities
and government research labs, to make future cooperative research programs in Oil Sands
more effective.
A1.4 The Fit with Federal and Provincial R&D Strategies
The Federal Science and Technology Strategy5 published in 1996 established seven
operating principles to guide policy for Federal investments in technology development:
- increasing the effectiveness of federally supported research
- capturing the benefits of partnership
- emphasizing preventative approaches and sustainable development
- positioning Canada competitively within emerging international regulatory, standards and
intellectual property regimes
- building information networks; the infrastructure of the knowledge economy
- extending science and technology linkages internationally; and
- promoting a stronger science culture
AERI (Alberta Energy Research Institute) is the lead agency for energy research in the
Alberta provincial government, and has expanded the role once played by AOSTRA. One
of AERI’s six strategic research areas is the upgrading of Alberta’s petroleum production,
including Oil sands upgrading. Others include closely allied technology needs in clean
hydrocarbon fuels, recovery, CO2 management and alternative energy. AERI, together with
the federal government and industry, is working to build a joint program called EnergyINet,
which will act as a catalyst to integrate all the work going on and make Alberta a world
center in upgrading.
Appendix 2
RESEARCH & TECHNOLOGY NEEDS FOR BITUMEN &

HEAVY CRUDE UPGRADING
The basic output from the team discussions is included in this Appendix. Section 6 provides
summary descriptions of the program areas that should be considered for detailed planning
and funding by governments and industry. Section 7 discusses future priorities and Section
8 summarizes those with potential to impact Greenhouse gas emissions.
It should be noted that Estimated Effort identified (in direct person years, or DPY) is the
current effort, and in some cases is zero. The appropriate future effort will be the subject of
further detailed planning.
In the 42 areas for future mission oriented research and development, we attempt to gauge
where the broad technology sits today on the ‘S’ curve. But for more mature technologies,
individual elements of research may be at a less mature level, and this is covered by sub-
division of the 42 areas into distinct sub-science headings.
Sub-sciences or technology headings in bold type are those the team believes should be
conducted in universities and government labs, and are appropriate foe consideration of joint
government and industry funding.
A2.1 in-situ Bitumen Recovery
This sub-section only includes in-situ technologies with potential to modify the bitumen quality, and therefore
impact main upgrader process selection.
IN SITU BITUMEN RECOVERY TECHNOLOGY **

In Situ
Technology Maturity
Solvent
Recovery
Paraffinic
Solvent
Above-ground
Treatment Thermal/
Solvent
Partial
combustion/gasification
Development &
Demonstration

Technology: Above Ground Bitumen Cleanup via Paraffinic Solvents
Overall Maturity: Applied Research
Comments:
The development of the paraffinic froth treatment process for mining-based froth treatment (now
commercially applied by the Albia Sands mine) may offer new leads to above ground treatment of
in-situ produced bitumen, and at the same time reject some asphaltenes from the bulk of the
production.
GHG Impact: Could improve bitumen quality and reduce GHG’s at the upgrader/refiner
Program Long Term Objective & Effort
Apply mining based Basic Selective solvent use to remove water and solids
froth treatment & from in-situ production
science to above Applied
ground thermal Location for work:
production treatment CETC-Devon (AST)
and cleanup
Estimated Effort: 1 dpy
Technology: in-situ Combustion / Gasification

Overall Maturity: Applied (for oil sands reserves)
Comments:
To eliminate natural gas use, the mobilization of reservoirs by partial combustion or gasification of
the bitumen is not a new idea, still has many hurdles to overcome before it can be considered
close to commercial. The bitumen produced is likely less viscous, but some property changes,
such as high olefin content from cracking are not necessarily positive.
GHG Impact: Near elimination of external thermal energy at recovery stage.
Changes in quality need investigation for GHG impact assessment
Modeling and Basic Ability to mobilize the bulk of the reservoir bitumen by partial
laboratory scale R&D & combustion or gasification of part of the reserve.
of underground Applied Examining potential in thinner reserves where thermal costs
combustion are very high.
Investigate the use of catalysts in the production well bore
for some upgrading in-situ.
Location of work:
ARC 2
UK – University of Bath
Estimated Effort 2 dpy

Pilot development of Prove out concept in pilot setting
in-situ processes.
Location for work:
THAI (toe-to-heel injection) pilot planned for 2004
Typical pilot costs: $ 10 -20 million per year.
Technology: Non-thermal in-situ Solvent Stimulated Processes
Comments:
The application of light hydrocarbon solvents to eliminate natural gas use has received significant
recent interest. These light hydrocarbons have a natural tendency to “drop out” asphaltenes,
offering promise of some in-situ upgrading. Vapex is the most advanced in this area.
GHG Impact: Significant reduction in thermal energy at recovery stage.
Could also improve bitumen quality and reduce H2 for upgrading
Mechanisms of mass Basic Reduce uncertainty about cold solvent process behaviour
transfer and phase and economics through improved understanding of
behaviour controlling mechanisms.
Diffusion Coefficients Location of work:

& chamber growth U of C 1
U of Waterloo 1
ARC 2

Investigate different Applied Evaluate economic performance of different solvent
solvents, injection processes and reduce the uncertainty of the predicted
schemes, operational performance.
strategy
Location of work:
ARC 2

Vapex-style pilots Devel. Improve technology transfer and quality of application of
for startup and & solvent processes in the field.
operating Dem
conditions Location of work:
ARC 2
Typical pilot costs: $10-$20 million per year

- DOVAP at the UTF site
- EnCana at Foster Creek
- Nexen at Soda Lake/Plover Lake
- Baytex at Lloydminster
Technology: in-situ Thermal/Solvent Processes
Comments:
An extension of solvent recovery is the combined use of solvents and thermal stimulation to
achieve reduction of natural gas use, with some unspecified level of in-situ upgrading. Several
companies or joint ventures are known to e piloting variations of this approach.
GHG Impact: Significant reduction in thermal energy at recovery stage.
Could improve bitumen quality and reduce H2 for upgrading.
Mechanisms of heat & Basic Reduce uncertainty about thermal solvent process
mass transfer and behaviour and economics through improved understanding
phase behaviour of controlling mechanisms. These processes are typified as
heated solvent or solvent with small amounts of steam. They
are dominated by solvent, not steam behaviour.
Location of work:
ARC 2

Investigate different Applied Evaluate economic performance of different thermal solvent
solvents, injection processes and reduce the uncertainty of the predicted
schemes, operational performance.
strategy
Location of work:
ARC 2

Industry Pilots Devel. Improve technology transfer and quality of application of
& solvent processes in the field.
Demo Solvent recovery & reuse
Location of work:
Industry Pilots (e.g. Suncor Energy)
Typical pilot costs: $10-$20 million per year
Other Hybrid Thermal/Solvent Processes, where the steam behaviour dominates,

are not included here.
A2.2 Mining Based Extraction Technology
This sub-section only includes technologies with potential to modify the bitumen quality, and therefore impact
main upgrader process selection.
MINING-BASED ALTERNATIVE EXTRACTION TECHNOLOGIES **

Technology Maturity
Froth Treatment
Thermal
Alternative Processing mined ore
Conditioning
Development &
Demonstration

Technology: Alternative Conditioning via Solvents
Overall Maturity: Basic/Applied
Comments:
The application of solvents to recover bitumen from oil sands is an old technology that might
benefit from more fundamental understanding of solvent behaviour, and ways to reduced solvent
loss to the bulk of the sand. Likely improved bitumen quality. Some significant R&D in the
1960/70s (Shell US). Major economic problem has been solvent loss, but it represents water-free
extraction (water: cost/societal issues)
GHG Impact: Impact on current extraction and changes in quality need investigation for
GHG impact assessment
Program Long Term Objectives and Effort
Phase behavior with Basic Prediction of asphaltene and other constituent behaviour
alternate solvents Interface and bulk fluid behaviour
and/or selected Synergies with Solvent extraction in in-situ recovery.
additives, including Need for overall coordination.
selective Asphaltene
rejection. Locations for work:
U of A-Petroleum Thermodynamics (included elsewhere)
U of C (Chem. Eng) (included elsewhere)
CETC-Devon(AST) 1
ARC 2

Application to Applied Reduced energy
recovery and evaluate & Reduced water use
products in Primary Devel. Tailings reduction/elimination
upgrading processes Improved product quality
Locations for work:

ARC - 2
NCUT - (included in Primary Upgrading)
Technology: Thermal (whole sand)

Comments:
Processes such as the Taciuk Kiln can recover bitumen, but some property changes, such as
high olefin content from cracking are not necessarily positive. Heat recovery from the large body
of heated sand is also an issue.
GHG Impact: Changes in quality need investigation for GHG impact assessment
Monitor developments Devel. Advances in whole sand processing to be monitored.
&
Demo Location:
NCUT
Estimated Effort: monitor / small
Technology: Froth Treatment
Overall Maturity: Developed & Under Development
Comments:
The application of light hydrocarbon solvents to treat froth in the final stages of mining-based
extraction has led to a rapid commercial development, but did so partly at the expense of a
thorough investigation of the underlying science. The balance between the primary intent - water
and solids removal -and the concurrent asphaltene drop out is not fully researched. In addition,
the impact of asphaltene drop out on following primary upgrading processes not well understood.
First generation process commercialized by Shell. Fundamental research still needed
GHG Impact: Changes in quality and impact on GHG thru’ to the upgrading need
quantification
Fundamental studies Basic Extensions of the basic research behind the recently
on treatment & Developed ‘first generation’ paraffinic froth treatment
conditions that impact Applied process.
solids, water & More complete information on operating conditions
asphaltenes reduction Influence on optimum solids/water & asphaltene removal
Influence of higher pressure on equipment design
Location for work:

CETC-Devon (AST) 4
U of A 2
U of C 2
Vessel engineering & Devel The first generation footprint is large, and impacts capital
piloting & costs. Need to re-engineer
Demo
Location for work:
Industry / Piloting
Typical Pilot/Prototype costs: $ 25 million per year

(not including capex)
A2.3 Primary Upgrading
PRIMARY UPGRADING TECHNOLOGY

Coking
Catalysts Fixed Bed H+
Technology Maturity
Deasphalting
Alternate Ebullated Bed H+
Activation
Froth
Upgrading Bulk Thermal Processes
Slurry Reactor H+
New Thermal Processes
Demetall
-ization Thin-film coking
Oxygen-Water Potentially linked to
Upgrading targetted H addition
Selective separations
Development &
Hydro-Retorting
Demonstration
Time or effort
Technology: Hydro-Retorting
Overall Maturity: Basic Research
Comments:
The introduction of hydrogen during retorting, in such as the Chattanooga process, is not well
quantified. Altered bitumen quality via rejected metals/asphaltenes.
GHG Impact: Overall GHG reduction
Hydroretorting Applied Reduced energy
Concept Reduced water use
Tailings reduction/elimination
Improved product quality
NCUT work has identified a number of hurdles to be overcome
Location for work:

NCUT
Technology: Alternate Activation
Overall Maturity: Basic
Comments:
The study of different approaches to add energy to bitumen to facilitate the upgrading step.
GHG Impact: Unknown
Understanding the Basic Reduced capex
behaviour of bitumen Lower energy
subjected to alternate Initially need proof of concept
energy sources
Location for work:
U of A - Petroleum Thermodynamics - 0
U of C – Chemical Engineering - 0.5
Estimated Effort: 0.5 dpy
Application of Ionic Basic Reduced capex

liquids to bitumen Lower energy
processing Initially need proof of concept
issues include materials, water use and recovery/regen of
ionic liquid
Location for work:

U of Regina
SRC
NCUT (0.25)
Technology: Demetallization
Comments:
The possible application of selective separations to remove the hydrocarbon structures trapping
metals. Metals are a significant inhibitor to catalyst based primary upgrading.
GHG Impact: Unknown
Alternative ways to Basic Metals removal by selective separation.
separate porphorin
structures Location of work:
U of A 1
Universities/IMP in Mexico (bio-processing)
Estimated Effort: 1 dpy (Canada)
Technology: Froth upgrading (dirty Bitumen Upgrading)
Overall Maturity: Basic/applied
Comments:
The current mining based upgraders (coking and ebullated bed processes) require essentially
water and solids free bitumen for the primary upgrading step. Other processes might be adapted
to less clean bitumen, and reduce overall upgrading costs. Could simplify mining based extraction
and minimize tailings ponds
GHG Impact: Lower GHG emissions
Effect of operating Basic Reduce extraction costs by upgrading dirty bitumen (capital
variables on product & operating)
quality, yields and Improve product quality
limitations Reduce tailings
(e.g. solids, water)
Location of Work:
NCUT

Solids settling / Applied Ability to handle high solids concentrations in slurry reactors
separation Assess catalytic activity
Pilot testing to Effectively remove solids from pitch
demonstrate Assess environmental safety of separated solids
processing of high
solids feeds Location of Work:
NCUT
Estimated Effort: (included in above)

Demonstration of Devel Too early to assess timing and costs
concept at pilot stage
Technology: Upgrading with Oxygen and/or Water
Overall Maturity: Basic – Applied
Comments:
Partial oxidation in the presence of steam (water) may produce hydrogen for immediate pick up,
and result in integrated recovery and upgrading. Eliminates hydrogen plant; could have field
application to eliminate diluent. Example processes: SUPOX
GHG Impact: Produces CO2 rich stream for easy capture
Partial Oxidation in Basic Eliminate H2 plant; reduce cap & operating costs
combination with & Reduce hydrogen addition in secondary upgrading
partial upgrading Applied Eliminate diluent for field locations
Issues include:
- low temperature gasification versus oxidation
- attempts to date to get selective oxidation using
supercritical water have not worked
- materials
Location of work:
NCUT
Technology: Selective Separations (i.e. by Chemical type)
Overall Maturity: Basic & Applied Research
Comments:
Physical and chemical separations into fractions that might lead to segregated and more targeted
process steps, including more efficiently targeted hydrogen addition. There may be some overlap
here with demetallization.
GHG Impact: Unknown / may have beneficial impact on targeted H2 addition
Upgrading scheme based on SelSep could reduce overall GHG emission,
since it could eliminate vacuum distillation and coking.
Physical/Chemical Basic Some overlap with DEMETALLIZATION
separations and the Separation of bitumen into constituents to enhance
characteristics of effective upgrading
separated fractions Targeted hydrogen management/addition
Better information on bitumen chemistry
Implications for further processing
Location of work:
U of A 1
NCUT 1
Application of Applied Subject to advances from basic research

knowledge to new Targeted hydrogen management/addition
approaches to Reducing GHG emissions
targeted upgrading Implications for further processing
and petrochemical Testing of fractions in other downstream processes (e.g.
processes hydrotreating, hydrocracking, FCC
Location of work:
NCUT
Estimated Effort: Dependent on developments at Basic

research stage
Technology: Thin Film Coking
Overall Maturity: Applied Research & Demonstration
Comments:
The coking processes use ‘bulk’ thermal conversion , where the residence time for reaction can
be very broad, resulting in uncontrolled reactions and overcracking. Thin film coking is to some
extent a feature of some processes today, such as fluid coking and the Ensyn process. Thin film
coking may offer better cracking reaction control. May radically alter future coking process and
simulate pseudo-plug flow reactors. Fluid coking may also benefit
GHG Impact: Likely Neutral
Intrinsic kinetics and Basic Predict kinetics for thermal cracking and product quality
modeling
Location of work:
U of A 1
Building on U of A Applied Understanding heat and mass transfer
research into thin film & Solid/liquid interactions
coking, and approach Demo Solid circulation
to plug flow reactors Erosion & fouling
(‘Envision’)
Location of Work:
Universities (U of A, UBC, UWO)
Estimated Effort : 5 dpy
Oher industry work : Ensyn, Syncrude, Envision, Coanda
Demonstration Units Devel Prove processes at semi-commercial or demo scale
&
Demo Location of work:
Industry (sole promoters or JVs)
Estimated cost: $ 25-50 million per demo unit
Technology: New Thermal Processes
Overall Maturity: Applied Research - Development
Comments
A number of new processes offer different configurations for thermal upgrading. Many are “black
boxes”, wherein the expertise and knowledge is deliberately kept confidential. Knowledge of the
potential use of these processes is often hampered by lack of engineering expertise by the
developers.
GHG Impact: Unknown / likely neutral
Thermal/Hydrogen Basic Stability of products
donor combination
Location of Work:
chemistry
AERI
Estimated Effort: monitor /small

Thermal processing of Applied Evaluate processes such as WRITE, Ensyn, VCI,
asphaltenes for cracking of asphaltenes and production of petrochemical
feedstocks
Location of Work:
NCUT/contract
Thermal Cracking of NCUT/effort in above
Gas Oils
Technology: Slurry Reactors
Overall Maturity: Development & Demonstration stage
Comments:
There are a number of process claims for systems including fine catalyst particles carried by the
oil and hydrogen in a suitably designed high pressure reactor. Examples are CANMET /Veba
(low activity-high severity), HTI/Headwaters (HC3), Toyo, Snamprogetti.
GHG Impact: Unknown / likely neutral
Foam stabilization Basic This is a cross-process issue (EB, delayed cokers, HCUs)
Issues such as foaming, Gas voidage reduction, product stability;
unit and reactor fouling and development of new and efficient
catalysts are all open to basic and applied research.
Predict and control foam
Location of work:
U of A
Catalyst and reactor Basic Improved slurry catalysts

studies & Homogeneous catalysts
Applied
Location of work:
U of C 2
UBC 0 (but history)
International …e.g. ENI, Toyo
US DOE in nano-particulates
NCUT 1
Estimated Effort: 3 dpy (in Canada, non-industry)
Process Demonstration Devel. Snamprogetti technology close to demonstration scale

& CANMET process demonstrated.
Demo.
Location of work:
Selected Licensors
Technology: Visbreaking / other Bulk Thermal
(see also “ New Thermal Processes”)
Overall Maturity: Applied Research - Development
Comments:
Visbreaking and variants, and the recently demonstrated ORMAT process are example of bulk
thermal processes that convert residues without progressing all the way to solid coke, These
processes have significant potential integrated with deasphalting to produce residues of varying
yields on bitumen to meet future alternative energy and hydrogen production needs.
GHG Impact: Reduction possible versus Coking
Thermal processing of Basic Phase behaviour of “coke precursors”
asphaltene
Location of work:
U of A
International
Estimated Effort: 1 dpy (in Canada)
Deep visbreaking to Applied Phase behaviour of “coke precursors”

minimize residue The depth of conversion to semi-stable “fluid” residues”
(gasifier ready)
Location of work:
Selected Licensors
Hydrovisbreaking Applied Main objective is normally viscosity reduction

(with & without catalyst Newer interesting residue reduction
Including Higher conversions/yields than visbreaking
Aquaconversion)
Location of work:
NCUT small/monitor
U of C 1
H-Donor processes Applied Benefits small or unclear.
Location of work:
NCUT
Estimated Effort: small, but monitor
ORMAT Devel ORMAT process has been demonstrated by Nexen-OPTI on

& Deasphalted oil, to concentrate metals in gasifier feed
Demo
Technology: Ebullated Bed Hydroconversion
Overall Maturity: Commercial
Comments:
This is now a well established process offered by two Licensors, and used in varying degrees in
three of the four major bitumen-based upgraders. Does not fully convert residue, and needs an
outlet for unconverted residue
GHG Impact: Likely lower than coking/HT operations.
Foaming Basic This is a cross-process issue (EB, delayed cokers, HCUs)
Location / Effort included in “SLURRY REACTORS” above
Issues such as foaming, Gas voidage reduction, product stability;

unit and reactor fouling and development of new and efficient
catalysts are all open to basic and applied research.
Predict and control foam
Location of work:
U of A
Pilot testing of various Applied Deasphalting of ebullating pitch, Pitch recycle

feeds from selective Testing of various process configurations
separation (and others), One stage versus multiple stages
improved catalysts, Impact of feed preparation on process performance, e.g.
additives effect of New Froth Recovery or Deasphalting technology:
Better quality product
Reduced H2 use
Better catalysts
Location of Work:
NCUT 0.5
Development work with Devel. Commercialization of new concepts

licensors &
Demo. Location of work:
Selected Licensors & Catalyst Suppliers
Technology: Deasphalting
Overall Maturity: Commercial / Development
Comments:
A very mature process, using light solvents to selectively remove high molecular weigh
aspaltenes, and the associated high metals. A process that may have an increasing role in
primary upgrading, possibly in conjunction with milder thermal processes, where residues are
needed for alternative energy and hydrogen production. Potentially key future process for
viscosity reduction in the field.
GHG Impact: Likely reduction, and needs to be assessed
Thermodynamic and Basic Separation of bitumen into constituents that enhance
phase behaviour of effective upgrading
bitumen and solvents, Targeted hydrogen management/addition
and possible additives Better information on bitumen chemistry
for more selective Implications for further processing
separation
Location of Work:
U of A 1
Other universities (International)
NCUT 1
Understanding the Applied Targeted hydrogen management/addition

combinations of Reducing GHG emissions
deasphalting and Implications for further processing
other processes Testing of fractions in other downstream processes (e.g.
hydrotreating, hydrocracking, FCC)
Reducing dependence on natural gas
Location of work:
NCUT
Universities in China

Dependent on developments at Basic research stage
Process engineering Devel. Commercialization of new concepts

development work with &
licensors Demo Location of work:
Selected Licensors
Technology: Fixed Bed Hydroconversion
Overall Maturity: Commercial / Development
Comments:
A process that is normally associated with conventional heavy crude residues, with less
concentration of metals and asphaltenes. With partially demetallized bitumens, could compete
with Ebullated Bed processes
GHG Impact: Needs to be assessed
Improved catalysts Basic Covered under “CATALYSTS” below
Pilot testing of feeds Applied Better quality product

from selective Reduced hydrogen consumption
separations (and Reduced GHG emissions
others)
Location of Work:
NCUT
Process engineering Devel. Commercialization of new concepts

development work &
Demo Location of work:
Selected Licensors
Technology: Delayed & Fluid Coking
Overall Maturity: Very Mature
Comments:
Very mature processes, but subject of ongoing development work by Licensors. There are some
special operating issues with oil sands feeds, such as foaming. The process used by most current
production. The high GHG emissions by some coke burning are not a great penalty given the
expected trend to residue use for energy and hydrogen
GHG Impact: Needs to be assessed
Foaming studies Basic See “SLURRY REACTORS” above
Understanding of Basic Back mixing, reactor configuration (delayed coking)

coker performance Reactor Modeling
using bitumens
modified in recovery Location of Work:
NCUT 2
U of A (included in Thin Film Coking)
Ongoing process Devel. Licensors & Operators

developments and &
improvements Demo
Technology: Catalysis
Overall Maturity: Variable
Comments:
Development of catalyst resistant to fouling and providing more targeted hydrogen addition.
GHG Impact: More selective processing with less light ends will reduce H2 consumption
and GHG emissions accordingly.
Issue with residue processes is the high catalyst consumption and disposal
“Big molecule” Basic Better quality product
processing in semi- Improved yields
thermal regimes Reduced hydrogen consumption
Reduced GHG emissions
Improve catalytic activity
Reduce deactivation
Location of Work:
U of A 0
NCUT 0
Phase behaviour and Basic Reduce catalyst fouling

adsorption
Location of Work:
U of A 1
Novel catalyst Basic Better catalysts (improved activity and yields, targeted hydrogen
formulations & consumption, reduced deactivation, lower costs)
Applied
Location of Work:
NCUT 0
UCDN 0
Microparticulate Basic See ‘SLURRY REACTORS”

catalysts for slurry &
reactors Applied
Ongoing development of Devel. Licensor/Industry ongoing Joint Venture developments

conventional alumina &
catalysts Demo
A2.4 Secondary Upgrading
SECONDARY UPGRADING
K-O basic M-O basic Applied

Research Research Research
Selective Physical/ Hydroprocessing

Technology Maturity
Chemical separations & Hydrocracking
Deep FCCU &Fixed Bed Cracking

(see also Refining/Petrochemicals)
Membrane Rx
Potentially linked to
Catalysts targetted H addition
Ring opening
Development &
Demonstration
Time or effort
Technology: Membrane Reactors

Comments:
The integration of membranes within reactors may reduce overcracking and contribute to
selective hydrogen addition.
GHG Impacts: Potential reduction through lower / more selective hydrogen addition
Catalytic membranes Basic Benefit of use of membranes to separate desired n-alkane
for hydrogenation and products from mixture during hydrocracking
ring opening
Location of Work:
U of A

Fabrication of ceramic Basic Fabrication of catalytic membranes with required properties
membranes for reactor use.
Location of Work:
U of A
ARC 0.5
Technology: Selective Physical/Chemical Separations (see also Primary Upgrading)
Comments:
Physical separations into fractions that might lead to segregated and more efficiently targeted
hydrogen addition.
GHG Impact: Potential reduction through lower/selective hydrogen addition
Hydrocarbon Basic Synthesis of membrane materials for selective separation of
separations via bitumen materials, with opportunities ranging from
Membranes asphaltenes removal to olefins from coker off-gases.
Location of Work:
Several universities

Separation of Basic Selective separation methods based on adsorption, affinity
components from & separation, extraction.
distillate streams (e.g. Applied Potential to integrate chemical and physical separations
naphthenic acids,
nitrogen compounds) Location of Work:
U of A 0
…chemical reactions NCUT 1 (ongoing work on naphthenic acids)
ARC 2
to precede physical
U of Waterloo 2
separations
Separation of Applied Clean (ppm level) concentrations of fines (clay and coke
Ultrafines from particles) from distillates to protect downstream reactors
secondary conversion
feedstocks Location of Work:
NCUT 1
Selected Operators
Estimated Effort: 1 dpy to investigate each new approach
Commercialization Devel. Licensors

&
Demo
Technology: Hydroprocessing and Hydrocracking
Overall Maturity: Commercial
Comments:
There is a continuum between hydrogen addition processes, from relatively mild conditions
designed for heteroatom removal (“hydrotreating”) to more severe operations involving a high
degree of conversion as well. The processes are considered relatively mature, but there are new
approaches that might enhance the efficiency of operations. There is a unique concern with ultra-
fines from mining-extraction recovery
GHG Impact: Can be very large with combined means to target H2 addition and enabling
preferred FCC processing of synthetic HGO
Mechanism of Basic Explore ways to extend catalyst life cycle to enable
ultrafine plugging in application of highly functional catalysts
hydrotreaters
Location of Work:
Laval University 2
NCUT 2
CFD hydrodynamics Basic Enable three-phase applications of monoliths for

and initial liquid trickle bed operations
distribution in Location of Work:
monolith Laval University
catalyst structures NCUT
Monoliths as remedy Applied Experimental proof-of-concept for plugging resistance

for hydrotreater Optimization of monolith channel size and wall thickness
plugging
Location of Work:
NCUT (UCDN) 2
Laval University
Commercial partners
Process Modeling Applied Optimization of hydroprocessing and catalyst development

(Molecular Approach) support
Location of Work:
NCUT 3
Estimated effort: 3 dpy
Technology: Catalysis for Hydrogen Addition Processes
Comments:
Catalysis research for secondary upgrading covers a wide spectrum of opportunities, from the
search for new forms of catalysts, perhaps relying on new nanotechnology developments, to the
tailoring of catalysts for specific roes, such as ring opening. Publicly funded R&D also needs to
pursue links with catalysts suppliers to encourage testing and adoption of new ideas.
Developments of current & new catalysts might improve selectivity to C5+yield and/or target
hydrogen addition to selected cuts. Ring opening will reduce the need for hydrogenation
(measured hydrogen addition).
Ring opening will remove limitations for the content of synthetic HGO in FCC feed diet and hence
open the U.S. refining markets to approximately 5 times the current SCO rate. It will also reduce
the need for hydrogenation (measured hydrogen addition) to achieve the desired HGO and LGO
quality.
GHG Impact: More selective processing with less light ends will reduce H2 consumption
and GHG emissions accordingly.
Large through shifting HGO conversion from hydrocracking to GHG-friendly
FCC. More selective processing with less light ends will reduce H2
consumption and GHG emissions accordingly.

New materials, Basic New catalysts with controlled nanostructure of metal phase
nanotechnology, by templating techniques.
composite materials,
micro-engineered Location of work:
catalysts NRC (NINT) 0
U of A (NINT) 2
NCUT (UCDN) 3
Stacked-bed catalysts Applied Design and test combinations of catalysts for enhanced
conversion.
Location of work:
U of Saskatchewan 1
NCUT 0
Syncrude
Continued….
Sulphur-resistant Applied Enhance aromatics hydrogenation rates
Hydrogenation and Optimize hydrogen addition and open cycloparaffinic rings
ring-opening catalysts
for mild hydrocracking Location of Work:
of HGO NCUT - included above
U of A 1
UBC 1
U of C 2
UNB 1
UO 1
Enhanced Applied Improve HDS through HDN enhancement

hydrodenitrogenation
catalysts Location of Work:
NCUT – included above
UNB - 1
U of Saskatchewan 1
Monitor / influence Devel Influence catalyst supplier developments/engage in joint

Catalyst supplier & ventures
developments / engage Demo
in joint ventures Location of Work:
NCUT – included Above
Estimated Effort: 0 dpy:
A2.5 Integration Technologies
“Integration” technologies are defined for this study as those affected by upgrading process
selection (e.g. residue gasification); or potentially assist upgrading “value added” (e.g. light
ends management, syngas conversion); or provide other services key to upgrading (e.g.
hydrogen production).
In two cases – “Materials Technology” and Energy / Power Integration”, we considered to be
more pervasive for all Oil Sands value adding steps, and not directly influencing, or
influenced by, upgrading. They are discussed further in Section 9 of the report.
INTEGRATION TECHNOLOGIES

Steam Methane
Reforming Energy/Power
Materials integration
technology
Technology Maturity
Novel Hydrogen
Generation Combustion/FGD
Gasification
Light ends management
Synthesis
Gas Conversion
Advanced ‘flow Development &

sheet’ analysis Demonstration
Time or effort
In some of the programs identified in this section, total DPY covers the needs for other
areas. To reflect the impact on oil sands upgrading objectives, the DPY rates for these
program areas were factored by an arbitrary 30% in the Section 7 summaries.
Technology: Novel Hydrogen Production & SMR Developments
Overall Maturity: Basic – Applied – Development
Comments:
The high cost of hydrogen requires the industry to seek new ways to recover ‘non-productive’
hydrogen from by-product streams, as well as pursue improvements in the steam methane
reforming process. Also see “gasification” below.
GHG Impact: Potential to reduce GHG emissions substantially
H2 from H2S Basic catalytic decomposition
effect of operating variables on conversion
pilot testing alternative catalysts
Location of Work:
AST
ARC
NCUT
H2 from Basic Reduced GHG emissions
Light Hydrocarbons demonstration of concept
catalytic decomposition
effect operating variables on conversion
effect carbon types
pilot testing alternative catalysts
Location of Work:
ARC
U of Regina 1
SRI (US)
Estimated Effort: monitor 1 dpy
‘Molten Iron Bath’ Applied Licensor developments
concept for asphaltene
breakdown for H2
production / cogen
Electro-chemical Basic Effect of reaction media (acidic or base)
conversion of & Effect of mediating ions
hydrocarbons (e.g. coal) Applied Evaluation of electrode materials (platinum electrodes, other
or water metals or low-cost electrodes such as graphite, alloys and/or
coated electrodes)
Effect of operating temperature, pressure
Development of pilot scale hydrogen production unit
Location of Work:
ARC 1
NCUT/Canmet 1

Steam methane Devel Licensor developments
Reforming (SMR) &
Demo
Technology: Advanced Flow Sheet Analysis and Process Modeling
Comments:
Integration of processes is sometime an empirical art, and will benefit from advanced modelling
techniques. Prediction of a number of processes will also benefit from advanced modeling that
could in time result in better process control.
This is an area of research where the benefits will be felt in other industries. DPY rates were
factored by 30% for Section 7 discussion on DPY and costs for Upgrading R&D.
GHG Impact: Global analysis of integrated operations for minimization of GHG emissions
requires new methods for analysis.
Methods to analyze Basic Provide tools for design and analysis of alternatives to
alternative flowsheets & Optimize energy, water, raw materials usage.
to optimize material Applied
and energy use and Location of Work:
CETC-Varennes 2
generation (like Pinch
U of A 0
analysis for material ARC 4
and energy flows for U of C 3
an entire plant)
Development of Basic High level process models (fed with predictive models of
predictive kinetics & individual processes or experiments) to support optimization
models of key Applied of well-to-wheel processing schemes for bitumen.
separation, primary Develop the capability to optimize fuels production from
upgrading, secondary bitumen based on molecular transformations and provide
upgrading, and info for the high-level “process integration” model
refining processes Integrate high level models of fuel production from bitumen
(including CAPEX, catalyst consumption, yields, energy
& consumption, GHG emissions, product quality) to search for
Development of high- optimum processing schemes
level (simpler) models
as connectable Location of Work:
modules – “Process U of A 1
Integration Model” U of C 1
NCUT 1
ARC 1
Operating Companies

Economics & Applied Understand and evaluate the cost and financial
Cost Analysis consequencies of technology and process impacts
i.e. develop the business case for commercialization of new
or improved technology
Location:
ARC 2
Technology: Synthesis Gas Conversion
Overall Maturity: Development / Commercial
Comments:
Synthesis gas conversion to high quality hydrocarbons is a natural progression in thinking when
considering gasification for hydrogen and energy. Synthesis gas products as fuels or
petrochemical intermediates have high value.
GHG Impact: CO2 is also generated in more sequesterable form.
New catalysts for Basic Improve thermal and yield efficiencies of existing processes,
simplified conversion reducing capital costs.
of syngas to
Hydrocarbons/ Location of Work:
petrochemicals Universities…Unspecified
CETC – Ottawa 2
ARC monitor
International (e.g Sasol)
Estimated Effort: 3 dpy ongoing program

partly to train researchers
Continued Licensor/ Devel Licenser developments in Shift and FT

Catalyst Vendor & But may be weak re. Chemicals opportunities .
Developments in shift, Demo
FT, etc. operations
Technology: Light Ends Management
Overall Maturity: Development
Comments:
Reduction in yields (discussed in “Secondary Upgrading”), efficient recovery techniques and use
are all integral to improving overall oil sands value chain economics. Shortage of C2 in Alberta to
support one of the world’s largest ethylene industries, and now turning to C3 to make up. C2, C3,
C4 olefins can have good markets here. iC4 can be used in isooctane and refinery alkylation.
Current upgraders lose much of this to fuel
GHG Impact: Moderately positive
New approaches for Basic Low-energy separations of light ends components
selective separation of (hydrogen, C2s etc)
light ends Reduce capital and operating costs of H2, C2, C3, C4
(e.g. membranes, recovery.
adsorption)
Location of work:
U of A 1
U of W (included in other projects)
ARC (included in other projects)
U of C 1
Recombination / Devel. Review existing solutions to new problems.

Dimerization technology & (e.g. Cyclar to convert C3 & C4 to aromatics and Hydrogen)
with hydrogen release Demo
(e.g Cyclar) Location of Work:
Licensors
Technology: Gasification
Overall Maturity: Development & Demonstration
Comments:
Gasification of residues (or perhaps coal and coke) is increasingly viewed as the future direction
for hydrogen production without Natural Gas. Gasification also can be viewed as the first step in
direct upgrading, via shift and synthesis technology, to synthetic hydrocarbons. Some consider
this a mature technology, where the potential “size of the prize” is sufficient for Licensors to do
their own development work on the unique characteristics of oil sands bitumen residues. This
needs review in terms of any government funding.
GHG Impact: Neutral versus future Base Cases. Most CO2 in concentrated form
Gasifier applications Applied Objectives for improved operability:
in Oil Sands & Sulphur
operations Devel. Metals
Feedstock preparation and handling
Materials
Slag/ash handling
Integration for retrofit
Cost of oxygen
Location:
Field location
Potential back up research

Universities
ARC 3
Canmet - Ottawa 3
Effort: 6 dpy
(Estimated cost of major demonstration and experimental

facility could be as high as $ 10-20 million annually, and
involve significant up front capex )
Technology: Residue Combustion & Flue Gas Desulphurization
Overall Maturity: Development & Demonstration
Comments:
Where hydrogen is not a factor, residue combustion is likely more cost effective than gasification,
so the producers have a vested interest in ensuring developments in residue combustion and flue
gas desulphurization are incorporated into joint production and remote upgrading projects.
GHG Impact: Neutral versus future Base Cases in terms of CO2 emissions, but in more
dilute form, and less easily sequestered.
Small-scale Devel Licensor developments
burner/boiler systems &
with integrated sulfur Demo
capture.
Monitor developments Devel Licensor developments
on integrated sulphur &
capture Demo
A2.6 Enabling Technologies
Enabling (pervasive) technologies, typically at the emerging end of the development scale,
and not necessarily solely related to oil sands industry. Their development will enhance our
knowledge, and provide new leads to advance upgrading technology.
ENABLING TECHNOLOGIES

Sensor
technology
& modelling
Technology Maturity
Bitumen
Characterization & Computational
Thermodynamics Fluid Dynamics
By-product use
Compatibility Stability
Development &
Bio-Upgrading Demonstration
Time or effort
In some of the programs identified in this section, total DPY covers the needs for other
areas. To reflect the impact on oil sands upgrading objectives, the DPY rates for these
program areas were factored by an arbitrary 30% in the Section 7 summaries.
Technology: Bio-Upgrading
Comments:
Bio-Upgrading is placed in this section, as its development could impact many steps in the
upgrading chain, from simple viscosity reduction for production or shipping, to direct conversion or
removal of the more difficult hydrocarbon species, to heteroatom removal in partially upgraded
streams. In these kinds of applications, Biotechnology has yet to live up to the ‘hype’ but requires
continued effort.
GHG Impact: Lower energy intensity expected with concomitant lower GHG emissions
Biocatalysts for Basic Demonstrate proof of concept for biological conversion of
upgrading of bitumen bitumen and bitumen-derived components.
components (viscosity
reduction, metals, Location of Work:
naphthenic acids, U of A 3
sulfur, nitrogen) NCUT 2
Pilot testing and Applied Develop processes based on biological conversion

Demonstration & processes.
Demo Demonstrate promising bio-processes for upgrading at
larger scale of operation
Location of Work:
NCUT 0
U of A 0
Industry partners 0
Estimated Effort: 1 dpy at bench scale until concepts proven

Estimated Effort: 5-10 dpy for promising ones
Field pilots typically 10-20 million annually
Technology: Characterization of Bitumen and Bitumen Derived Distillates
Comments:
The character of bitumen and derivates is still only understood at the macro level. More
fundamental research, including new analytical techniques, are largely the domain of university
research, or integrated into government lab programs.
GHG Impact: Indirect, through improved production and processing technology
Asphaltene Basic Model the aggregation behavior of asphaltenes to provide
composition, predictive models for physical properties, viscosity and
aggregation and precipitation behavior; link to models for reactions during
emulsion stabilization upgrading to predict changes in stability during upgrading.
Location of Work:
U of A 2
U of C 1
CETC (AST) (included in above)
NCUT 1
New approaches to Basic Analysis of residue fractions to relate chemical structure to

analytical chemistry properties, aggregation and reactivity.
Location of Work:
U of A 1
NCUT 3
Technology: Compatibility/Stability (includes Fouling mitigation)
Comments:
Fouling, largely from asphaltenes, had been a continuing problem in the production, transport and
upgrading of oil sands and heavy crudes. Study of the molecular forces at work and ways to
mitigate the problems need research.
GHG Impact: Probably small
Study of asphaltenes Basic Define the basic mechanisms of fouling in oil sands
(causes most fouling), & upgrading, and predict fouling in different operating regimes.
agglomeration, phase Applied Increase yields; reduce fouling, coke formation; reduce
separation costs
Additives to Interrupt mechanisms of fouling to provide
longer-term operation and increase energy efficiency of
upgrading operations.
Location of Work:
UBC 2
NCUT 4
International work
Technology: Co-Product use

Comments:
The production of sulphur and coke and how to handle these, is a growing industry challenge.
The search for, and potential development of new end uses is desirable.
GHG Impact: Variable
Sulfur utilization Devel Find break even or better uses for co-products
Coke utilization & Sulphur Asphalt and Concrete are potential developments
Spent catalysts Demo Agricultural uses for sulphur
Vanadium
Location:
U of A 2
ARC 1
Effort: 6 dpy
Technology: Computational fluid dynamics for Multi-Phase Flow Regimes
Comments:
Accurate prediction of multiphase fluids at microscale will assist in modelling production
processes, and possibly in upgrading process models. The objective is a better basis for design
of processes and equipment. Engineering tool for design of production and processing systems
GHG Impact: Indirect through OPTImal design of processes and production schemes
Gas/liquid/solid flows Basic Accurate prediction of multiphase fluid flows at microscale
in processes and for in-situ operations and in primary upgrading processes.
reservoirs
Accurate prediction of fluid properties and flow in systems
where composition changes viscosity, interfacial properties
and formation of precipitates.
Location of Work:
U of A 2
U of C 3
UWO 2
ARC 4
SRC/U of R 2
Technology: Sensor technology and modeling
Comments:
Accurate, on line measurement of processes and key variables in the same multi-phase systems
will lead to better real time control.
GHG Impact: Improved operation of processes
Applied physics and Basic Proof of concept on sensor signal and stability for oil sands
chemistry of new streams
sensor concepts
Location of Work:
U of A 1
AST 1
ARC 8
Incorporation into Applied Development of sensor prototypes for application in plant

process control and field locations.
devices via
Supplier JVs Location of Work:
ARC 7
NCUT 1
Partner companies
Site Testing of new Devel Field/plant trials of sensor prototypes to demonstrate

devices via & reliability
Industry & Supplier Demo
JVs Location of Work:
ARC 3
Vendors / Partner companies
A2.7 Downstream Refining and Petrochemicals
The Major downstream refining drivers that need to be assessed in terms of their impact on the future
Upgrading/Refining integration or on market crude quality demands are identified here.
DOWNSTREAM REFINING DRIVERS
- ultra low sulphur fuels

- higher diesel cetane
- aromatics on jet fuel
- future G/D ratios lower ?
- vacuum gas oil quality
and more LCO recycle
- reformer feed quality
- C4/C5 content in SCO
- future fuel cell products ?
DOWNSTREAM CHEMICAL DRIVERS
- reformer feed qualities (aromatics)

- ethylene feedstock enhancement/cost
reduction
- added Propylene production/cost reduction
- need for mono-ring aromatics
- opportunities for many special chemical
industry derivatives
DOWNSTREAM REFINING & PETROCHEMICALS

CRU performance
with SCO Naphthas
Technology Maturity
Ultra-low S fuel
Deep FCCU
& Fixed Bed
FCC performance
with SCO Gas Oils
Development &
Demonstration
Time or effort
Technology: FCCU Catalysis & Unit Performance

Overall Maturity: variable
Comments:
The aromatic nature of SCO and virgin gas oils creates problems for Fluid cat cracker operators.
Relative to conventional ags oils, the operator must plan to burn more coke or accept reduced
conversion to valuable gasoline or gasoline precursors. The treatment of gas oils in the
production of SCO needs more research. Synergy with DFCC applied research. Important in
marketing SCO
GHG Impact: Neutral
Process OPTImization Applied Process arrangements (e.g. recycle of various fractions)
& development of Catalysts tailored for cracking bulky molecules will help
catalysts both tailored increase the content of synthetic HGO in FCC feed diet
for synthetic HGOs Experimental feedback to the HT & “ring-opening” research
SCO marketing support for upgraders
Location of Work:
NCUT (MAT and BP riser PP studies) 3
UWO 1
Industry partners: S&W, Akzo,
Ongoing Licensor Devel. Optimization of hardware and catalysts

developments &
Demo.
Technology: Catalytic Reformer Performance
Overall Maturity: Applied – Development
Comments:
At the other end of the molecular scale, synthetic naphthas can have high concentrations of
molecular species that give problems to some catalytic reformer designs. High C5-ring naphthene
content (e.g. Coker naphthas) create yield and reaction rate deficiencies. Also, reduced H2 make
and unusual aromatics precursors.
GHG Impact: None
CRU Performance with Applied Confirm CRU performance with higher SCO naphtha
synthetic naphthas content
Location of Work:
Licensor R&D
Technology: Deep Fluid Cat Cracking & Deep Fixed Bed Cracking
Overall Maturity: Close to Commercial
Comments:
Deep conversion of synthetic gas oils may be the key to future security of supply for
petrochemicals industry, where declining natural gas and co-products are expected to reduce the
industry’s traditional supply base for ethylene crackers. By-products from conversion of gas oils
will also provide platforms to expand the petrochemicals industry in Alberta.
Processes linked to petrochemical production / niche, higher value added opportunity.
DFCC can produce C3/C4 olefins, benzene and aromatics
DFBC can produce C4 in addition
Equipment and expertise synergy with FCC, HT and “ring-opening” on FCC feed stocks
GHG Impact: Neutral
Impact of feed Design catalysts for selective cracking of large molecules
pretreatment on from residue
cracking severity, Improve feed quality to optimum over cycle yields and
with/without selective economics.
recycles. Catalyst
additives etc. Location:
FCC - UWO 1
NCUT - Adsorption, HT, etc. piloting 0
NCUT (ongoing work with S&W and Akzo) 1

Cracking Improve understanding of severe catalytic cracking of gas in
Thermodynamics & fluid bed and fixed bed, especially with newer catalysts.
Modelling
Location of Work:
Catalyst developments FCC – UWO 1
FB - universities 0
NCUT - Piloting and Catalysts 0
NCUT (ongoing work)
Estimated Effort: (included in above)

Ongoing Operator LG, NOVA Chemicals and others on DFBC
Development
Estimated Effort: monitor
Ongoing Licensor Synergistic with research on heteroatom removal.
Developments Field trials and demo units /e.g UOP, KBR, S&W,LG-Lurgi
Ongoing Catalyst R&D to test batches for field trials.
Vendor Developments
Technology: Ultra-Low Sulphur Fuels
Overall Maturity: Applied – Development
Comments:
Distillate fuels sulphur is being legislated to levels that will stretch current refinery processes, and
in many cases, refineries are planning now to upgrade facilities. There is a need to ensure future
SCO quality at increasing volumes in refinery diets, is compatible with the conventional
hydrotreating in the receiving refineries
GHG Impact: Neutral
Processability of Applied Knowledge of the process conditions necessary to treat
synthetic distillate residual distillate sulphur species to sub-10 ppm products
sulphur species
Location of Work:
NCUT 3
ARC 1
Appendix 3
CANADIAN R&D PROVIDERS WITH POTENTIAL ROLE IN GOVERNMENT-

INDUSTRY JOINTLY FUNDED UPGRADING RESEARCH PROGRAMS
A large number of agencies, institutions, companies, and groups are involved in Canadian
hydrocarbon energy research in the capacity of execution, facilitation, funding, and
advocacy. The major groups are listed below and include:
• Provincial & Federal government research organisations
• Canadian universities
• Selected industry associations
The key role played by the Alberta government through AERI, and more recently, within the
EnergyINet initiative, is not repeated here, as these organizations and their current, and
potential, future role is fully discussed in Section 12 and Appendix 4 of this report.
The summary of capabilities listed in this appendix are devoted to oil sands related R&D
only, and is not intended as a complete summary of all areas of research expertise. The
nature of research in universities, in particular, can change within a mobile academic
community. The individual organizations are listed roughly in the order of their current
contributions to oil sands research and development, and then secondly by alphabetical
order where the current contribution is more modest. The Author thanks Dr. Ian Potter of
ARC for assisting in this summary, through extensive background information compiled in
the preparation of the recent report on Cleaner Hydrocarbons 4. In addition, Dr Murray Gray
and Dr. Zbigniew Ring, and Dr. Catherine Laureshen provided information on relevant
university research outside of Alberta.
It is noted that all the organizations maintain websites if the reader is interested in more
detailed information.
A3-1 GOVERNMENT RESEARCH ORGANIZATIONS
Alberta Research Council (ARC)

ARC is a wholly owned subsidiary of the Alberta Science and Research Authority (ASRA),
and operates from five centres in Alberta; Millwoods (Head office), Vegreville, Devon,
Calgary and CFER Technologies (Edmonton). ARC’s focus in the energy sector is on coal,
carbon management, oil sands and heavy oil, light oil and natural gas (conventional and
unconventional), integrated energy systems, biomass, distributed generation, fuel cells, and
alternative energy. Major capabilities include reservoir recovery, drilling and completions,
production technologies, transportation and distribution, pipeline reliability and safety, fuel
and lubricant testing, energy conversion, sensors and controls, intelligent systems and
environmental management. ARC has significant pilot design and operating experience.
In heavy oil and oil sands, projects include the AERI/ARC Core Industry research program
(AACI), which develops viable in-situ recovery technologies. ARC work with producers and
service companies to transfer new technologies developed in AACI and other consortia
programs, as well as in individual contracts and other technology partnerships. Contract
work covers various in-situ technologies, such as the use of co-solvents in recovery.
A recent addition to ARC’s mandate is Mineable Oil Sands, the newly-formed unit to
research, develop and demonstrate technologies and processes for surface mining
operations. Through CFER Technologies and the Sensor Engineering group, ARC also
maintains an active R&D and commercialization presence in flow sensor technology.
CETC – Devon
CANMET Energy Technology Branch (CETB) is one of the main research and development
arms of NRCan. CANMET’s Western Research Centre (CETC-Devon) is located in the
Devon Research Centre, Alberta, and is the federal government's primary research group for
the development of hydrocarbon supply technologies and related environmental
technologies, with an emphasis on oil sands and heavy oil. CETC-Devon has wide-ranging
pilot plants and associated supporting analytical services. CETC-Devon houses two major
science and technology groups.
Advanced Separation Technologies (AST) group has two major research thrusts related
to oil sands. Firstly, the evaluation of new technologies for bitumen/heavy oil extraction from
oil sands and heavy oil production to optimize energy efficiency, reduce GHG emissions,
and extend the life cycle of operating systems. This includes the development of the next
generation of processing technologies that produce clean, dry bitumen and heavy oil, and
incremental improvements to optimize existing extraction and processing plants.
Secondly, developing sustainable reclamation options for oil sands tailings, including
knowledge gaps in the links between tailings characteristics and upstream processing.
Developing technologies to consume and consolidate existing and future accumulations of
mature fine tailings and integrate them back into reclamation plants, generating released
water for recycle, is also a priority.
The National Centre for Upgrading Technology (NCUT) is also located in the Devon facility,
but is separately funded.
National Centre for Upgrading Technology (NCUT)

The National Centre for Upgrading Technology (NCUT) is a Canada-Alberta heavy oil
upgrading research alliance, and is base-funded by both levels of government. Formed in
1995, NCUT provides independent upgrading research and technical services in
development of the heavy oil industry. Its work is industry-driven, focusing on the energy
industry’s needs to reduce the capital, operating, and environmental costs of upgrading
bitumen and heavy oil, to improve transportation to markets and to improve the quality of
transportation fuels produced from synthetic crude oil. The programs are divided between
two main research areas:
a) Primary Upgrading: to develop new and improved upgrading technologies that are
less energy intensive and produce higher quality products at lower costs. The high
cost structure, energy intensity and product quality are some of the specific
concerns being addressed. In addition, the dependence on natural gas as a fuel
source is of increasing concern. Activities include:
- Improve energy efficiency, product yields and quality at existing upgrading and
refining facilities.
- Discover, adapt and develop less energy intensive new upgrading
technologies that produce higher quality products.
- Create a better understanding of pitch and its behaviour when reacting.
- Develop virtual upgrading capabilities.
b) Secondary Upgrading: to remove current market limitations for the growth of the
Canadian oil sands industry by developing secondary upgrading and refining
technologies that will improve the quality of the synthetic crude to facilitate its
processing in the existing or future U.S. refining infrastructure, or assist in their
capability to process more synthetic crude of today’s quality. Activities include:
- Develop new secondary upgrading and refining technologies.
- Build a virtual BDC refinery at NCUT.
- Understand better the process, environmental and economic aspects of
processing BDC.
- Understand the properties of BDC and BDC-derived products.
NCUT also leads the Upgrading Catalyst Development Network (“UCDN” - section A3-2).
Saskatchewan Research Council (SRC)

SRC develops innovative technologies, specializing in enhanced oil recovery (EOR)
techniques and production operations, heavy oil upgrading and treatment, and pipe flow
technology. Some of SRC’s key strengths and niche expertise includes slurry and emulsion
flow (including the world-class pipe flow centre), horizontal well reservoir and production
technologies, thermal heavy oil recovery, miscible and immiscible enhanced oil recovery
technologies, 2 and 3D physical reservoir modelling, and waterflooding.
Environment SRC offers a range of environmental capabilities and analytical services to
advance environmentally sustainable development. SRC has developed cost-effective
technologies for monitoring or remediating the industrial impact on the environment. This
includes fieldwork related to monitoring air quality, stack emissions, groundwater availability
and quality, and the health of forest, grassland, or aquatic ecosystems. In a major effort,
SRC is studying the effect of climate change on the environment, and developing adaptation
and resource management strategies for various sectors.
Petroleum Technology Research Centre (PTRC)

Located in Regina, the Petroleum Technology Research Centre is a joint venture between
the Saskatchewan Research Council, the University of Regina, Saskatchewan Industry and
Resources, and Natural Resources Canada. The work is in the form of joint industry
research projects. PTRC priority areas are: heavy oil cold flow, foamy oil flow and related
processes, enhanced flooding, near wellbore conformance control, and miscible or
immiscible solvent injection for Enhanced Oil Recovery.
CETC-Ottawa
The CANMET Energy Technology Centre located in Ottawa, is one of Canada's premier
organizations in the field of energy, science and technology. CETC works to develop and
deploy leading-edge energy products and processes for virtually all sectors of the Canadian
economy. CETC has world-class laboratory facilities and employs some 180 people.
Areas of research that link to oil sands include advanced combustion technology (including
air emissions reduction), coal technologies, gasification and alternative fuels expertise. The
lab also houses a strong analytical capability to develop standard tests.
CETC-Varennes
The CANMET Energy Technology Centre located in Varennes has responsibility for
unconventional energy. Their area of work that is currently of most interest to oil sands is in
modelling of process integration and energy use and conservation.
Institute of Chemical Processes and Environmental Technology (ICPET),

National Research Council, Ottawa
The Institute for Chemical Process and Environmental Technology (ICPET) is part of
Canada's National Research Council (NRC). ICPET develops chemical process
technologies and value-added materials to help Canadian industries improve the commercial
viability of their products, reduce costs, manage environmental performance and increase
the efficiency of process operations. Oil sands related work is currently largely in the area of
bitumen characterization, and the skill base could make further contributions to the industry
in future. In particular, the following sub-groups under the “Process Technologies” group
have skills relevant to the wider circle of technology areas related to upgrading covered in
this report:
- Interfacial technology
- Separation technology
- Combustion research
- Modelling and design
A3-2 UNIVERSITIES
University of Alberta
University of Alberta in Edmonton has grown to be one of Canada’s largest research-
intensive universities, with external research funding in 1999/2000 of more than $213 million.
University of Alberta is the largest research institution in the province. U of A undertakes a
research in a number of areas of importance to the oil sands industry, including Analytical
Chemistry, Catalytic Reaction Engineering, Environmental and Water Resources,
Engineering and Soil Remediation, Fluid Dynamics and Transport Phenomena and
Geotechnical and Geo-environmental Engineering.
Specific to oil sands bitumen upgrading, more than 35 DPY of research was identified in the
detailed program assessment in Appendix 2. U of A houses a Chair in Advanced Upgrading.
The list of areas of research in U of A that are of potential benefit to upgrading are wide
ranging, and include:
- bitumen thermodynamics; interfacial properties; coking
- bitumen extraction, advanced upgrading, and refining
- catalysis
- biotechnology
- recovery of byproducts from tails, heavy metal extraction, tailings
- on-line sensors and intelligent systems; real time optimization of continuous
production
- water-oil mixing and separation, molecular modeling
- bitumen-solvent chemistry
- new SAGD technologies
- greenhouse gas monitoring, reduction, air assessment
- geological sequestration of CO2
In addition to its established research, U of A campus is the home of the new National
Institute of Nano-Technology (NINT) which is establishing programs to apply new
nanotechnologies to the oil sands.
University of Calgary
The University of Calgary is another comprehensive research university in Alberta. There
was approximately 18 DPY of research related to upgrading research identified in the
detailed program assessment in Appendix 2. That does not include a recently announced 8-
10 DPY that is currently scheduled to do research into the role of dispersed catalysts in
visbreaking, VGO processing and in-situ recovery.
U of C has a greater research presence in recovery than in direct upgrading. The list of
currently established areas of research in U of C that are of potential benefit to upgrading
include:
- the newly established research into upgrading through dispersed catalysis
- multi-phase fluid flow
- asphaltene composition; emulsion stability
- process integration and modelling
- ring opening catalysts
- oil/solvent phase behaviour
- catalyst-assisted in-situ combustion
- thermal solvent recovery processes
- VAPEX recovery process
- chemistry of sulphur; processes for recovery; end uses
- geological sequestration of CO2
University of British Columbia

One UBC scientist is considering advanced catalyst work and there is interest in work
related to synthetic distillates. There are also studies on the hydrodynamics of reactors for
upgrading residues. In addition, there has been significant long-term basic research into
asphaltene agglomeration and separation.
Universite Laval
Cooperative research with NCUT scientists on the mitigation of ultrafines plugging in fixed
catalyst beds. Also discussing cooperative work in modelling physical effects in multi-phase
reactors.
University of New Brunswick

Historically has had an interest in ring-opening catalysis, but the main researcher has moved
to University of Ottawa, where the work continues.
University of Ottawa
A strong interest in work related to synthetic distillates, and ring-opening catalysts. In this
work, the University of Ottawa is a potential partner with NCUT.
University of Regina
Currently established areas of research in U of R that are of potential benefit to upgrading
are:
- CO2 capture
- Ionic liquids as a means for selective separations
Adjacent to the campus, Regina Research Park houses The Petroleum Technology
Research Centre (see above under Federal and Provincial government labs). Current under
construction on the campus is a new Greenhouse Gas Technology Centre.
University of Saskatchewan
An interest in hydroprocessing catalyst research, and other process aspects of upgrading.
University of Waterloo
Research into aqueous reactions of hydrogen and carbon monoxide, with suplhur
components in distillates and vacuum residues, using dispersed metal catalysts.
University of Western Ontario

Well established research in studies of hydrodynamics, mixing and liquid distribution in
model reactors relevant to fluid cat cracking, and fluid bed conversion of residues. The work
also includes research on catalysts for fluid cat cracking and other hydrocarbon conversions.
There is an interest in pursuing this angle of synthetic feedstock performance further.
Upgrading Catalysts Development Network (UCDN)

UCDN is an NCUT-led scientific network involving federal and academic scientists. The goal
of this network is to develop novel catalytic processes to upgrade highly aromatic light or
heavy distillates derived from oil sands bitumen. Along with NCUT, seven universities are
currently involved: UBC, Alberta, Calgary, Saskatchewan, Ottawa, New Brunswick, and
Laval. There are currently six projects totalling $ 4 million in support from industry and the
Federal and Alberta governments. The projects focus on novel catalytic materials, mitigation
of reactor fouling and plugging, and catalytic aromatic ring opening.
A3-3 INDUSTRY ASSOCIATIONS ASSISTING TECHNOLOGY DEVELOPMENT
Industry associations noted here are not exclusively directed to upgrading technology
development, and not all are directed to oil sands alone. They do collectively provide support
and encouragement to jointly funded new technology developments.
Canadian Oil Sands Network for Research and Development (CONRAD)

The Canadian Oil Sands Network for Research and Development (CONRAD) is a network of
companies, universities and government agencies that was organized to facilitate
collaborative research in science and technology for Alberta Oil Sands. CONRAD’s scope is
to initiate research into new ideas that will permit new developments and improve
performance of existing operations in the oil sands industry, in all facets, including
upgrading. This scope includes research in the areas of the environment, and in-situ
recovery, under the ARC/AERI AACI program. CONRAD’s key goals are to improve the
performance of the oil sands industry through new technology, improve the effectiveness
and quality of oil sands research and to develop technologies that will further improve the
industry’s environmental performance.
Petroleum Technology Alliance Canada

The Petroleum Technology Alliance of Canada is a not-for-profit association representing
171 members in the oil and gas industry. PTAC facilitates innovation, technology transfer
and research and development in the upstream oil and gas industry. The purpose of PTAC
is to provide a mechanism that facilitates collaboration on R&D to the benefit of those
involved. PTAC acts as a matchmaker between those that have problems or opportunities
and those that have potential R&D solutions. PTAC helps to launch specific projects to
address these problems or opportunities. PTAC promotes industry participation in the
resulting R&D and assists with securing funding from a variety of sources. PTAC also
facilitates the transfer of commercial technologies from other industrial sectors for application
in the upstream oil and gas industry.
Alberta Sulphur Research Ltd

Alberta Sulphur Research Ltd. fosters research in the areas of the chemistry and technology
of sulphur and its compounds with particular emphasis on recovery of sour natural gas,
Claus plant operations, handling and transportation of elemental sulphur, and environmental
aspects of the gas and sulphur industries. ASRL is based at the University of Calgary, and
serves as a contact point between industry and academia, and provides an expert level of
technological support for both producers and users of sulphur.
Canadian Heavy Oil Association

The Canadian Heavy Oil Association provides an appropriate technical, educational and
social forum for those employed in, or associated with, the heavy oil and oil sands industries.
The Association also provides technical liaison with related engineering and technical
associations and maintains a library of technical papers presented at Association sponsored
functions.
Canadian Crude Quality Technical Association
The Canadian Crude Quality Technical Association membership consists of companies from
multiple segments of the Canadian oil industry. The Association is established with the
following educational and scientific objectives:
• To facilitate the resolution of common crude oil quality issues by establishing direct
lines of communications among crude oil stakeholders.
• To provide a forum for the presentation and consideration of proposals for industry
projects related to any aspect of crude oil quality.
• To improve industry knowledge and awareness of crude oil quality through the
cooperative exchange of technical information among industry sectors.
The CCQTA concentrates on technical issues. The CCQTA does not itself fund projects but
rather acts as a facilitating forum in which members who have an interest in a common issue
can sponsor research or developmental work in this area. By pooling resources and
involving multiple sectors of the oil industry, a solution can be sought which is more
productive than work in isolation.
Canadian Institute for Mining, Metallurgy, and Petroleum

The Canadian Institute of Mining, Metallurgy and Petroleum (CIM), the leading technical
society of professionals associated with the Canadian minerals and materials industry, has
11,000 members from industry, government and academia who are dedicated to the
discovery, production, utilization and economics of minerals, metals and petroleum.
Thousands more are also involved as CIM Branch members all across Canada. CIM
periodicals also reach 2,000 other subscribers across the world in various universities and
libraries.
The mission of CIM is to provide leadership, quality services, and value to CIM members
through a variety of initiatives including technical forums, publications, professional and
social networking opportunities, continuing education, and recognition of excellence
programs.
CIM also comprises technical Societies, Divisions and Committees that arrange
conferences, meetings and courses, liaise with government departments, commission
special volumes and reports, and publish technical papers.
Appendix 4
BACKGROUND ON ENERGYINET
Led by AERI, the EnergyINet initiative is still in an evolving process, but has already
obtained significant support from industry, governments and the R&D community.
EnergyINet has the potential to provide the overall leadership in administering, and
reviewing ongoing jointly funded R&D on behalf of all aspects of future Oil Sands
development. These notes, edited for content by the Author of this report, provide
background to EnergyINet.
EnergyINet… What and Why?

Energy is critical to Canadians. It’s now clear that without some significant technological
breakthroughs, we will soon find we no longer have sufficient energy to meet all our needs.
Recognizing the urgency of this situation, the Alberta Energy Research Institute (AERI) has
brought together interested public and private sector partners from across Canada to
collaborate in creating and implementing energy innovation programs.
The creators of EnergyINet are convinced there is an urgent need for new approaches to
energy innovation, and believe EnergyINet is an appropriate response.
Urgent Need for Energy Innovation

To meet the energy needs of the future, we must make wise use of all the major sources of
energy – including hydrocarbons, wind, solar, hydroelectric and nuclear – and find ways of
improving energy efficiency. The creators of EnergyINet endorse and support the need to
invest in innovation on all these fronts. EnergyINet’s focus will be on taking an integrated
approach to innovation in six key areas:
1. Oil sands upgrading: To ensure synthetic crude produced from the oil sands
meets quality specifications of North American refineries. Also to increase the
efficiency of upgrading operations, thereby decreasing energy intensity and
reducing greenhouse gas emissions.
2. Clean carbon technology: To demonstrate that it is feasible to
• burn coal with minimal environmental impact to produce energy, and
• produce steam, hydrogen, synthetic natural gas and chemicals from coal and
other feedstocks (oil sand, forestry and agriculture waste).
The emphasis will be on adapting existing technologies to Canadian resources
and exploring integration opportunities with oil sands and petrochemical
industries.
3. CO2 management: To reduce greenhouse gas and other emissions by
developing technology to capture, transport, and use carbon dioxide to
• increase oil and gas recovery, and
• inject into coal beds to release methane.
4. Recovery: To get more of our conventional oil and unconventional oil and gas
resources (such as bitumen and coal bed methane), out of the ground in an
environmentally responsible way.
5. Water management: To manage water use in the energy industry, and to
implement cost-effective water reuse and recycle systems.
6. Alternate energy: To provide renewable energy Options, developing new
technology in areas such as hydrogen, fuel cells and bio-energy.
For the foreseeable future the world will continue to rely on energy from hydrocarbons such
as oil, gas, and coal. Canada has one of the largest supplies of hydrocarbon reserves in the
world, and is demonstrating leadership in the development of oil from bitumen in the Alberta
oil sands. One of the challenges is to find cost-competitive, environmentally and socially
responsible ways to produce more and higher value energy products from Canada’s
hydrocarbon resources. Strong initial focus is recognizing that the long-term goal is to
substantially increase the use of renewable energy sources. This is a practical strategy,
given current projections of energy demand and supply.
Conventional light oil production in the Western Canadian Sedimentary Basin peaked in
1973 and by 2001 had declined by some 60%. The shortfall has been filled by increased
production of heavy crude using new extraction techniques (16% of total oil production in
2001, up from 4% in 1973) and the extraction of bitumen from the oil sands (43% of total
production in 2001, up from 4% in 1973). The Alberta Energy and Utilities Board projects
that by 2010, 75% of total oil production will be from the oil sands.
The Need for Breakthrough Innovation

There are some significant barriers to overcome, however, before the oil sands can produce
at this level. We rely heavily on natural gas to create steam to produce bitumen, as well as to
produce the hydrogen needed to upgrade the bitumen into something of greater value. As
natural gas resources decline and become more expensive, today’s practices will not be
sustainable. The current recovery processes also use a great deal of water, at a time of
growing public concern about water supply and quality. Emissions of greenhouse gases
from the process – particularly carbon dioxide (CO2) – are high. And the market for the
synthetic crude oil produced from bitumen is currently small, since most refineries aren’t built
to use synthetic crude.
We see that three things must come together to bridge the gap that often exists between
applied research and the innovative use of that research to produce commercially viable
products, processes or services:
1. Strategic research that is clearly directed towards an end goal

2. Patient R&D Investment as opposed to investment made in anticipation of quick
payoff
3. The practical know-how to turn research results into commercially viable solutions.
A Collaborative, Integrated Approach

The challenges we face will require an unprecedented level of collaboration among many
players: industry, universities and other research providers, not-for-profit organizations and
governments. In addition to focused research here in Canada, we need to learn from, and
adopt technology created elsewhere in the world. An integrated view is needed. The need
to reduce the oil sands industry’s dependency on natural gas, for example, may be partly
solved by coal or by waste from petroleum, forestry, and agriculture. The problem of dealing
with the resulting CO2 may be solved by using it to get more oil out of existing fields –
trapping the CO2 safely underground at the same time – or to produce methane (the main
component of natural gas) from coal beds to help offset the decline in natural gas.
EnergyINet: Vision and Mission
The Energy Innovation Network (EnergyINet) is an evolving vehicle for collaboration among
industry, federal and provincial governments, research providers and not-for-profit groups to
achieve this shared vision:
An abundant supply of environmentally responsible energy, creating economic

prosperity and social well-being for Canadians.
How we expect to do this:

• Promote an integrated approach to shaping our energy future, by
o Finding the opportunities that emerge when we start looking at the various
elements – such as oil, natural gas, coal, oil sands, petrochemicals, hydrogen
– as one interconnected system rather than separate sectors
o Engaging funders, providers and users of applied research in collectively
shaping a long-term innovation agenda, driven by industry
o Bridging the gap between concept and application, to solve real-world
problems and create beneficial opportunities
o Paying attention to the social, environmental and economic “bottom lines.”
• Collaborate with and learn from organizations and networks around the world, co-
creating and applying knowledge to deliver results.
• Serve as a catalyst to ensure that Canada has the critical mass of skilled people and
the infrastructure required to drive innovation, building capacity in targeted areas.
• Advocate for support and mobilize funding of innovation in the energy sector.
Next Steps
We are now seeking to expand the group of people who share this sense of urgency around
the need for energy innovation, and our belief in a collaborative, integrated approach. Our
priority now is to gain commitment from:
• provincial and federal research funders to sign on as EnergyINet supporters
• decision-makers in industry to help co-create a long-term innovation agenda focused
on priority energy issues, and actively participate in implementing the innovation
• other key players who have an important stake in this work.
Over time, we will continue to build a diverse constituency of people committed to:
• helping educate decision-makers and the public on the need for investment in energy
innovation
• participating in working groups
• contributing their thinking to the ongoing innovation agenda.
Specific Objectives on “Shared Funding” R&D
Specific to this study, some of the objectives already set include:
• Commit to funding mission oriented (fundamental, applied and demonstration)

projects or programs that are supported by business plans while respecting the
investment strategy of each government.
• Develop a common portfolio approach for jointly managing public sector investments
and working towards greater efficiency and effectiveness in intelligence gathering,
proposal evaluation, proposal approval mechanisms, and project or program
monitoring and knowledge disseminations.
Appendix 5
THE STUDY TEAM
The author wishes to thank the original team, and added members who all assisted in the
development of the information that is behind the large body of this report. They represented
industry, government-funded R&D labs and universities, and provided well balanced insight.
The team members were:
Dr. Ian Potter Alberta Research Council, Edmonton, Alberta

Cathal Tunney Alberta Research Council, Edmonton, Alberta
Dr. Catherine Laureshen Alberta Energy Research Institute, Calgary, Alberta
Dr. Hassan Hamza Applied Separations Technology, CETC, Devon, Alberta
Dr. Len Flint LENEF Consulting Limited, Calgary, Alberta (Project leader)
Dr. Bill Dawson National Centre for Upgrading Technology, Devon, Alberta
Dr. Zbigniew Ring National Centre for Upgrading Technology, Devon, Alberta
Dr. Theo de Bruijn National Centre for Upgrading Technology, Devon, Alberta
Dr. Carolyn Preston NRCan (& Study Funding Manager), CETC, Devon, Alberta
Sam Edgerton Nexen-OPTI, Calgary, Alberta
Phil Rettger OPTI-Long Lake Project
Mike Singleton Suncor Energy Inc., Calgary, Alberta
Bob Shaw Syncrude Canada Limited, Edmonton
Tom McCann T.J.McCann & Associates, Calgary, Alberta
Dr. Murray Gray University of Alberta
OTHER ACKNOWLEDGEMENTS
Throughout the work that resulted in this report, the author wishes to thank the helpful
comments and suggestions from the following individuals: Dr. Bruce Stewart (CETC); Brad
Anderson (Alberta Chamber of Resources); Carol Fairbrother and Kevin Cliffe (NRCan-
Ottawa); Dr. Eddy Isaacs (AERI); Thom McCracken (NRC/ICPET).

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BITUMEN & VERY HEAVY CRUDE

Len Flint Ph.D, P.Eng

March 31, 2004

LENEF Consulting (1994) Limited

This study was funded by NRCan, and through work-in-kind by Alberta

Glossary of Terms and Acronyms 71

added 1 million b/d

figures in billions of $ (2002)

• Mining-based extraction and the environmental footprint

INTRODUCTION: UPGRADING IN A DYNAMIC MARKET

Figure 2.1 Vision to 2030

million barrels per day

2000 2010 2020 2030

Courtesy Alberta Chamber of Resources

Figure 2.2 Challenges to Achieve the Vision

Pipelines VISION Sulphur

Courtesy Alberta Chamber of Resources

Figure 2.3 New Markets

2.2 Upgrading and Fuels of the Future

Figure 2.4 Comparison of Cuts from Conventional and Synthetic Crudes

Conventional Synthetic Sweet

Courtesy Alberta Chamber of Resources

2.3 Natural Gas Use

Figure 2.5 Current Oil Sands Natural Gas Demand

standard cubic feet / barrel

upgrader added future

250 Mining 250

Source: OSTRM / various .

2.4 Air Emissions

2.5 Sulphur and Coke Co-Products

OBJECTIVES AND APPROACH TO REVIEW

3.1 Overall Objective of the Study

• Mining-based extraction and the environmental footprint

• The work is intended to expand on technology development programs necessary in

Figure 3.1 Oil Sands Bitumen & Very Heavy crude

3.3 Study Methodology

CURRENT UPGRADING PRACTICES, LIMITATIONS

4.1 Upgrading Today

Figure 4.1 Oil Sands Bitumen & Heavy crude

ebullated bed hydrogen

Courtesy Alberta Chamber of Resources

4.2 Quality Limitations

4.3 Recent Developments in Recovery Technology and Impact on Upgrading

Figure 4.3 Main Froth Treatment Process Steps

from primary FROTH

4.5 The Upgrader of the Future

GREENHOUSE GAS EMISSIONS AND THE STUDY BASE CASES

5.1 Life Cycle Emissions

Figure 5.1 Comparison of Life Cycle CO2E

kg CO2E per cubic meter crude

Source: T.J.McCann & Associates

5.1 Oil Sands Industry Trends

Mega-tonne per year CO2E

oil sands ‘business as usual’

2000 2010 2020 2030

Courtesy Alberta Chamber of Resources

5.3 Project-Specific CO2E Emissions – The “Base Case”

Figure 5.4 Base case Emissions for SAGD - Upgrader Combination

TECHNOLOGY DEVELOPMENT NEEDS

6.2 Links to the Oil Sands Technology Roadmap

Figure 6.1 Continuous Improvement Opportunities

(b) Upgrading Technology Tomorrow