Alberta looks to petroleum coke to build up chemical industry

15 February 2010 18:44  [Source: ICIS news]

TORONTO (ICIS news)--Petroleum coke-based feedstock could play a key role in building up oil sands-linked petrochemical capacities in Canada’s Alberta province, but costs and financing are a concern, analysts said on Monday.

Canada’s chemicals industry is closely following the build-out of Alberta’s oil sands sector, which is seen as an important source of feedstock for chemical plant expansions and new capacities.

A recent study by FdP Associates on chemical production opportunities in Alberta’s oil sands industry suggested that a large part of projected feedstock requirements could come from petroleum coke generated by the province's oil sands upgraders.

The coke could be converted via gasification into to synthesis gas, and then to methanol, petrochemicals and fertilizers, the study said.

Petroleum coke stockpiles in the oil sands sector kept growing at a rate of 6.0m-6.5m tonnes/year and could reach 500m tonnes by 2040 if it is not used, it said.

However, observers pointed to significant logistics investments that would be needed in order to make use of the petroleum coke as feedstock.

The petroleum coke was currently stored at several locations and would need to be transported to a central location, “which would be expensive,” said John Cummings, an independent Toronto-based petrochemicals analyst, in a research note.

The industry may find it hard to persuade the Alberta government to come up with the necessary financing, he said.

Alberta had gone from running a surplus to a deficit because of a steep decline in royalties from oil and gas, and would not be in a position to finance the infrastructure for petroleum-coke logistics for some time, he said.

But Cummings also noted that activity in Alberta’s oil sands sector appeared to be picking up again after projects were delayed last year amid the financial crisis.

He pointed in particular to recent project announcements by ExxonMobil’s Canadian affiliate, Imperial Oil, as well as announcements by ConocoPhillips, Total, Suncor, BP and Husky. Also, last week PetroChina agreed to buy a stake in oil sands project in Canada.

The oil sands industry continues to be under rising criticism because of its environmental footprint.

US grocery chain Whole Foods said last week it would reduce its consumption of oil derived from the oil sands, and some Shell shareholders have raised that company’s involvement in the oil sands as a concern.

In related news, UK media reported over the weekend that BP was poised to acquire Canadian firm Value Creations for some $1.2bn (€867m), which holds large oil sands leases in Alberta.

($1 = €0.73)

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By: Stefan Baumgarten
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