...........

[MountainTi]

Originally Posted by Reel Time Rut Outdoors

Actually rules for marine transport diesel are changing, getting more strict with less sulfur content required. These new rules come into effect around 2020 I think. One of the big ideas behind the refinery was to make diesel to this standard in anticipation of this. Obviously other refineries will have to change to meet these standards. Carbon capture also cost a lot to implement. And most of the fabrication happened in China, not India. Not that it makes much of a difference.

Goodbye bunker fuel, hello MGO. Yes, 2020. I can't see diesel ever being cheaper than gas again after this takes effect.

[Scott h]

Originally Posted by Reel Time Rut Outdoors

Actually rules for marine transport diesel are changing, getting more strict with less sulfur content required. These new rules come into effect around 2020 I think. One of the big ideas behind the refinery was to make diesel to this standard in anticipation of this. Obviously other refineries will have to change to meet these standards. Carbon capture also cost a lot to implement. And most of the fabrication happened in China, not India. Not that it makes much of a difference.

I listened to the Ian Macgregor interview about the economics of the refinery and he mentioned the marine fuel change over in 2020. His opinion is that refinery space is going to get pretty tight due to the increased demand for low sulfur diesel. I bet when that occurs every barrel they can produce will be in gobbled up for shipping.
The best part of the whole scenario is that all the work (mining, refining, shipping) will be done by Albertans in Alberta and as such not effected by outside influences. Those jobs will always be there as opposed to shipping oil south to make jobs in Louisiana. The moment they can get cheaper Venezuelan crude, the Alberta product will be displaced or de-valued.

[ESOXangler]

Originally Posted by AndrewM

If it’s true about the fabrication being done in India, I doubt that added many jobs in Alberta. Government subsidies are all right as long as the tax payers get a decent return on their capital to offset the interest and they don’t take all the risk. Otherwise it’s just another form of equalization and a waste of our money.

Not much was made in India at all. The gasifier unit had a bunch of it made in china though. But that wasnt NWR's decision. The outfit that licenses them the technology insisted they have their mods built in china. And they're paying for it now. Otherwise everything else was constructed in Alberta by local workers.

[AndrewM]

Originally Posted by ESOXangler

Not much was made in India at all. The gasifier unit had a bunch of it made in china though. But that wasnt NWR's decision. The outfit that licenses them the technology insisted they have their mods built in china. And they're paying for it now. Otherwise everything else was constructed in Alberta by local workers.

That makes more sense. Was surprised to read India and didn’t feel like reasearching so I put if it’s true to cover myself. Haha

[Big Grey Wolf]

Guys, most marine fuel is bunker C or gas oil heavy cut of a barrel of crude or bitumen. The sulphur level will need to be reduced to meet new environmental requirements in 2020. They will not use the expensive diesel/kero cut normally used to manufacture jet fuel or road diesel.

[Scott h]

https://www.avenuecalgary.com/city-l...ian-macgregor/
Very interesting guy and seems to be very far ahead of the curve. I particularly like the part where he points out;

"despite the drop in price of oil, Alberta producers who send their bitumen there stand to earn more than $20 extra on each barrel."

“We thought pipelines are going to be really difficult to get approved, so you should use the pipelines we’ve got for the most economically dense material you can ship,”

“Diesel is about three-and-a-half times as economically dense as dilbit, so if you use the same pipe for diesel, you can ship three-and-a-half-times as much money out,” he says.

[ESOXangler]

Originally Posted by Scott h

https://www.avenuecalgary.com/city-l...ian-macgregor/
Very interesting guy and seems to be very far ahead of the curve. I particularly like the part where he points out;

"despite the drop in price of oil, Alberta producers who send their bitumen there stand to earn more than $20 extra on each barrel."

“We thought pipelines are going to be really difficult to get approved, so you should use the pipelines we’ve got for the most economically dense material you can ship,”

“Diesel is about three-and-a-half times as economically dense as dilbit, so if you use the same pipe for diesel, you can ship three-and-a-half-times as much money out,” he says.

The man's right. It's just all the major money is tied up in gulf coast refining. So the companies down there pay shills up here to spread misinformation. The refinery right now is running right now with only half its units and is still managing to break even. Once the other units come up it's going to really make a profit for both the company and Alberta.

[Scott h]

Originally Posted by ESOXangler

The man's right. It's just all the major money is tied up in gulf coast refining. So the companies down there pay shills up here to spread misinformation. The refinery right now is running right now with only half its units and is still managing to break even. Once the other units come up it's going to really make a profit for both the company and Alberta.

Well the oil companies are in it to make money for their own company; that's not the same thing as making money for Alberta and it's people. The US companies make more shipping product to the gulf coast to where their current infrastructure is and the new Alberta refinery is their direct competition. The province has spent money on a lot worse projects that is for sure. As there will never be a shortage of bitumen this will keep lots of great paying jobs in the province forever. You can whine and bitch about life being unfair, or you can pull yourself up and get to work.

[Deer Hunter]

The project that keeps on taking.


https://calgaryherald.com/business/e...rgeon-refinery

As millions of dollars keep flowing out of the Alberta treasury due to the Sturgeon refinery project, there’s one word both the premier and energy minister are now uttering: concern.

The Alberta government’s latest annual report shows capital costs have again risen on the new $9.9-billion development, located 45 kilometres northeast of Edmonton.

The refinery, which is still moving towards full commercial operations, has a virtuous goal: turn bitumen into low-sulphur diesel and other products, adding value to Alberta’s natural resources.

But the new report shows the government’s financial exposure to the project continues to climb, as part of its agreement to supply 37,500 barrels of bitumen per day to the refinery.

The Alberta government is facing the prospect of paying almost $700 million more in bitumen processing tolls over the next three decades, largely due to higher capital costs to build the refinery, as well as interest and property taxes, according to the government.

And taxpayers are now paying about $27 million a month for debt-servicing costs related to financing the facility as part of an agreement the former Progressive Conservative government made several years ago, even though the refinery isn’t yet processing the government’s bitumen.

Premier Jason Kenney said Thursday the original agreement was signed almost a decade ago and the UCP government “cannot extricate” itself from the commitment.

“I am concerned about the cost overruns and the now-significant delays,” he said.

“I certainly hope that the management team gets the upgrader fully commissioned, producing, meeting their commitment to Alberta taxpayers.”

Construction on the first new refinery built in Alberta in more than 30 years began after the former Stelmach government agreed in 2011 to supply it with oil that the province receives from producers in lieu of royalty payments.

Calgary-based North West Refining owns 50 per cent of the North West Redwater Partnership, while Canadian Natural Resources owns the rest of the partnership, which is developing the project.

Back in 2012, the refinery was expected to cost $5.7 billion, but the price tag keeps going up.

According to the government’s annual report, the capital costs have risen another $200 million from the previous budget year and now sit at $9.9 billion.

While the refinery has been producing low-sulphur diesel from synthetic crude since late 2017, no bitumen is being processed at the moment due to problems with the facility’s gasifier unit, says a statement from Alberta Energy.
​
“The (cost) increase relates to the problems incurred with the start-up of operations,” according to the department.

North West Redwater Partnership issued a project update Thursday, saying repair work is being done on the gasifier, and bitumen processing is “expected by the end of 2019, with ramp up to full operations at capacity in 2020.”

So why do higher capital costs matter to taxpayers?

A provincial Crown corporation, the Alberta Petroleum Marketing Commission (APMC), is responsible for supplying 75 per cent of the bitumen feedstock to the refinery.

When capital costs rise, so do the processing tolls for the government.

The total estimated tolls (paid over 30 years) increased by $690 million in the past budget year to $26.7 billion, the annual report states.

By way of comparison, the government pegged the processing tolls at $19.3 billion in its 2013-14 annual report.

But that’s not the only issue facing the province.

The government has an obligation to pay 75 per cent of the debt-servicing costs related to the financing of the facility.

Long-awaited Sturgeon Refinery plagued by piping stress cracks in critical unit
Alberta’s potential new refinery to reduce oil glut may only end up giving it a gasoline glut instead
Delays at Sturgeon Refinery add to Alberta heavy oil price discount woes

The processing agreement the province signed required APMC to start paying these costs in June 2018 — even if the facility isn’t processing the province’s bitumen.

By the end of last March, these payments had totalled $261 million and the meter is still ticking.

“It’s not a positive story, but none of it is surprising,” said Brian Livingston, an executive fellow at the University of Calgary’s School of Public Policy, who has studied the project.

“The money has been flowing all one way — it’s all going in and to date, there’s been nothing coming out.”

A former Imperial Oil vice-president, Livingston points out the debt tolls will have to be recovered from revenue the province gets from upgrading its bitumen over the coming decades.

“You hope over the next 30 years you will make at least a $261-million profit to pay up for the fact you had to pay $261 million up front,” he said.

Officials with North West Redwater Partnership declined to comment.

The project update by North West states the refinery has produced 2.4 billion litres of diesel from synthetic crude oil since late 2017. Repair work on the gasifier is “on track,” it stated.

However, the ongoing delays highlight the risks associated with starting up such large industrial projects.

The facility was initially expected to be completed in mid-2016, then September 2017.

And time, as they say, is money.

“I have watched the impact on our books, on the government books, and … of course, we are concerned,” Energy Minister Sonya Savage said in an interview.
​
“I, myself, am very much a fan of the market conditions deciding what projects go ahead. I get that there’s a need for government to encourage investment, but when we do so, I think there has to be proper scrutiny.”

So will a project that’s over-budget and behind schedule represent good value for taxpayers?

Many factors will determine its future in the years ahead, including the spread between bitumen and diesel prices, as well as operating and capital costs.

As part of its regular analysis, APMC has determined the agreement “has a positive net present value of future cash flows,” the government’s annual report states.

“The project is expected to turn a profit,” the Energy Department added.

But none of those figures are being disclosed.

A report issued last year by Alberta’s auditor general pointed out that in 2011, the estimated net present value of the agreement was in the range of $200 million to $700 million, and that had fallen to under $200 million as of early 2017.

“Since the original agreement was signed, the risk exposure has increased without a commensurate change in benefits,” the AG report stated.

And the capital costs have only gone up since that time.

There are some tough lessons to be learned on this journey toward energy diversification.

“
–Ken Hughes​

The goal may be laudable, but the province needs to understand and manage all of the risks with such government intervention, be transparent about it, and fully plan for problems, said Livingston.

“Always ask yourself the first question: if these things are such a good idea, why aren’t other people already doing it?” he added.

Despite the setbacks, two former energy ministers — Ken Hughes of the former PC party and Marg McCuaig-Boyd of the NDP — remain hopeful the refinery will eventually pay dividends for Albertans.

Hughes, energy minister in the Redford government when the project’s capital costs ballooned by nearly 50 per cent to $8.5 billion in late 2013, believes the development can “still look like a smart move for the people of Alberta.”

“No attempt to try and push the needle a bit on more upgrading … is going to be easy,” he said. “That’s the long and short of it. It’s expensive.”

McCuaig-Boyd points out the refinery will make low-sulphur diesel and the product is expected to be in strong demand in the future.

But she’s not certain whether the agreement will provide a great financial deal for Albertans over the long run.

“We inherited it and you make the best of it,” she said.

“I think long term it’s going to work out, but it’s probably longer than anybody thought at the time.”

Chris Varcoe is a Calgary Herald columnist.

cvarcoe@postmedia.com

​

[WhiteTailAB]

Well... all those stainless steel butt welds without roots in the gassifier.....

[AndrewM]

Am I reading this correct. 9.9 billion to get an NPV0 of 200 million?

[Deer Hunter]

Originally Posted by AndrewM

Am I reading this correct. 9.9 billion to get an NPV0 of 200 million?

It was under $200 million as of 2017.

[HalfBreed]

I don't know what most of this means but it sounds like nothing for money to me.

[MooseRiverTrapper]

Was that a utilities unit that they commissioned and every weld cracked?

[bloopbloob]

Originally Posted by WhiteTailAB

Well... all those stainless steel butt welds without roots in the gassifier.....

A little off topic. Maybe I missed it. Do I need to open a link or something to see what you're talking about?

My work does a lot of fairly large (18' diameter) stainless steel cans. Liquid fertilizer containment. Always backgouged and welded both sides. Low pressure containment. Dye-pen and still pressure tested. How would something like that be possible happening for a refinery? Quite curious. I'm quite involved in welding. Kind of blows my mind.

[lmtada]

Wife is Gassifier specialist. Lives Edmonton. Finishing up Gassifier at Enerkem Biofuels.

[I_forget]

Originally Posted by bloopbloob

A little off topic. Maybe I missed it. Do I need to open a link or something to see what you're talking about?

My work does a lot of fairly large (18' diameter) stainless steel cans. Liquid fertilizer containment. Always backgouged and welded both sides. Low pressure containment. Dye-pen and still pressure tested. How would something like that be possible happening for a refinery? Quite curious. I'm quite involved in welding. Kind of blows my mind.

Yes look up what he’s saying. Definitely not the proper procedure. Everything was built in Malaysia. I was at NWR with Fluor and there already many problems with the piping before start up. Dissimilar metals welded together etc. This would be funnier if it was just a private company cheaping out and getting things built in Malaysia. Unfortunately the taxpayers suffer for this one.

[Deer Hunter]

Taxpayers are paying $27 million per month in finance charges and have no bitumen being refined. And taxpayers/the province have no ownership in the facility.

Compare that with the $5 million per month the province has received in cannabis taxation since it was legalized.

The province has its priorities all mixed up.

[Reel Time Rut Outdoors]

Not all parts of the plant were built in the same place. (China, Malaysia, Italy, France, locally) And this was determined by the licensor. Not NWR itself. When you license their technology, they get the say where majority of stuff is built.

Originally Posted by I_forget

Yes look up what he’s saying. Definitely not the proper procedure. Everything was built in Malaysia. I was at NWR with Fluor and there already many problems with the piping before start up. Dissimilar metals welded together etc. This would be funnier if it was just a private company cheaping out and getting things built in Malaysia. Unfortunately the taxpayers suffer for this one.

[bloopbloob]

Originally Posted by I_forget

Yes look up what he’s saying. Definitely not the proper procedure. Everything was built in Malaysia. I was at NWR with Fluor and there already many problems with the piping before start up. Dissimilar metals welded together etc. This would be funnier if it was just a private company cheaping out and getting things built in Malaysia. Unfortunately the taxpayers suffer for this one.

I can't find anything saying partial penetration welds were found. My question is, if that is the case, how did it get to this point? I'll also add, I'm very experienced in welding 6061 aluminum to 316 stainless, dissimilar but they are friends. Kinda share a few numbers and stuff...

[marky_mark]

Originally Posted by Deer Hunter

Taxpayers are paying $27 million per month in finance charges and have no bitumen being refined. And taxpayers/the province have no ownership in the facility.

Compare that with the $5 million per month the province has received in cannabis taxation since it was legalized.

The province has its priorities all mixed up.

Do you think $5m bucks goes very far

Makes sense. You like the grass. Not allowed to work at the NWR. Now your mad.

[Deer Hunter]

Originally Posted by marky_mark

Do you think $5m bucks goes very far

Makes sense. You like the grass. Not allowed to work at the NWR. Now your mad.

Exactly. 5mm goes nowhere when you losing 27mm per month. But that's the day we live in.

[WhiteTailAB]

Yanda (china) fabbed the piping for PCL, unit 40 was one of PCLs units.

[petew]

Originally Posted by bloopbloob

I can't find anything saying partial penetration welds were found. My question is, if that is the case, how did it get to this point? I'll also add, I'm very experienced in welding 6061 aluminum to 316 stainless, dissimilar but they are friends. Kinda share a few numbers and stuff...

What procedure do you use to weld aluminum to stainless?? What Rod ?

like this vid ? https://www.bing.com/videos/search?q...2&&FORM=VRDGAR

[bloopbloob]

Originally Posted by petew

What procedure do you use to weld aluminum to stainless?? What Rod ?

like this vid ? https://www.bing.com/videos/search?q...2&&FORM=VRDGAR

No rod. I TIG it autogenously, but the trick is to use hydrogen gas instead of argon.