Suncor coke solution? Ahoy, Port Alberta

Tag : Container Handling Material

The massive pyramids of coal on Prince Rupert's Ridley Island areanonymous, but one has a story to tell.
The coal pile in question belongs to oil sands giant Suncor Energy Inc. , which is already shipping a half-million tonnes a year throughPrince Rupert to Asian and Mexican ports. Suncor hasn't decided tobranch out into the coal mining business. The coal – to bemore precise, petroleum coke – comes from its upgradingoperations in Fort McMurray, Alta.
Although it looks and feels like coal, petroleum coke is literallythe dregs of the (oil) barrel, the leftovers after crude oil andother liquids have been extracted from gooey bitumen. Untilrecently, petroleum coke has been something only a step aboveindustrial waste: worth little, but a potentially big environmentalheadache for oil sands firms that are far from any sizable market.
Suncor alone stockpiles three million tonnes of the stuff in ayear; it burns a million tonnes to power its upgrading operations,but that amount is not likely to rise because of coke's heavycarbon footprint. So, every year, the stockpile in Fort McMurraygrows ever bigger, with just a trickle dribbling out to the WestCoast. Without an outlet, the best use of petroleum coke will be aslandfill – far from an ideal material, if the seeminglyeternal underground coal fires of West Virginia are any guide.
But a confluence of tectonic shifts in the energy market, and asomewhat obscure short-line railway, are radically altering theeconomics of petroleum coke. Oil sands production, propelled bysoaring prices, is on a rocket ride. That will drive up the volumeof petroleum coke, particularly at Suncor, which will be producingclose to nine million tonnes by 2012, making it one of the largestsources of coal in Canada.
Rising coal prices are key. Even though petroleum coke sells at adiscount to thermal coal, its price increased fivefold in themiddle part of this decade, and has continued to rise since. Whathad been a problem for the oil sands could now be transformed intoprofits – if it can be brought to market.
And that is where Prince Rupert, and a little heralded acquisitionby Canadian National Railway Co., come in. Last December, justbefore Christmas, CN issued a press release detailing its purchaseof the Athabasca Northern Railway line running from Fort McMurrayto Boyle, Alta., a dilapidated line bought for a bargain$25-million, plus a vow to spend more than five times that amounton upgrades. Long-term volume guarantees from Suncor, and two otheroil sands producers, OPTI Canada Inc. and Nexen Inc., were acornerstone of that acquisition, according to CN.
By the time Suncor is pumping out nine million tonnes of petroleumcoke in 2012, those upgrades will be long completed, opening thepath for the export of an enormous volume of petroleum coke fromFort McMurray, through the Rocky Mountains, to Prince Rupert andRidley Island – and on to Asia. At today's prices, thatamount of petroleum coke would top $1-billion a year – evenfor an oil sands company, that is serious money.
For Don Krusel, chief executive officer of the Prince Rupert PortAuthority, the prospect of handling mass volumes of petroleum coke,along with other Prairies commodities, is part of his vision ofturning the shipping route in northern B.C. waters into a transitcorridor snaking back into the middle of Canada. He's hoping thatthe upgrades to the port, including the new container shipfacility, will shift the mindset in landlocked provinces, openingtheir eyes to the possibility of Asian exports, and to thinking ofEdmonton, Lloydminster and Fort McMurray as part of one exportsystem that leads to the open waters of the Pacific. Mr. Krusel hasa phrase that sums up that shift in thinking: Port Alberta.
Petroleum coke is part of Port Alberta. Sulphur – anotherformerly unwanted byproduct of the oil sands – could be aswell, if Ridley Terminals is successful in finally getting itsspecialized facility up and running. Canpotex's recent announcementthat it will build a potash facility on Ridley Island is also partof the picture. Mr. Krusel sees a day, not too far away, whengrain, sulphur, even beef and poultry, are flowing from thePrairies through to Asia.
Ahoy, Port Alberta.