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Melius Energy launches bulk bitumen shipping in containers – CanaPux to commercialize heavy oil capsules in 2021?

By Alex Binkley

Melius Energy of Calgary has partnered with BitCrude to market a semi-solid bitumen that can be shipped in marine containers to refineries in North America and overseas for further processing. Melius was formed earlier this year in the belief that Canadian bitumen can be transported in a safe and economical way based on the technology designed by BitCrude creator Cal Broder during a decade of developing the system.

Yuri Butler, Melius’s Manager of Logistics & Supply Chain, said in an interview the three-step BitCrude process starts with extracting the diluent needed to ship the very thick bitumen from the mine to a processing facility in the Edmonton area. From there, the bitumen is converted into a semi-solid state and loaded into containers specially adapted for Melius. BitCrude is non-flammable and will float in fresh and saltwater without being toxic to marine life, making it safe to transport by road, rail and ship.

The third step is returning the shipment to a liquid state at the receiving refinery using a proprietary process developed by BitCrude. Once it’s emptied, the container is returned to Melius for reloading.

The first successful export was delivered this fall to an Asian refinery in a 20-foot Melius container. It was transported to the port of Prince Rupert from Edmonton by CN Rail, which is a partner in a different venture to transport Alberta and Saskatchewan bitumen in solid clumps known as Canapux.

Melius Energy President Nicole Zhang said the BitCrude process “utilizes existing infrastructure to move bitumen, similar to how we move other consumer goods. The commercialization of this technology makes both economic and environmental sense.”

Butler said Melius now is working at growing its overseas markets by establishing relationships with refineries in Asia and building up the capacity of its process for developing a long-term, stable supply of BitCrude, which can be made into asphalt and related products as well as low-sulphur diesel. The demand in Asia for the premium heavy oil product that comes from the bitumen is greater than the capacity of the region’s refineries, he said. “There are lots of refineries looking for heavy fuels and we’re starting to ramp up to fill that demand.” The hope is that the demand for BitCrude will be great enough to free the product from the long-standing link of Prairie crude selling at a discount to U.S. domestic oil prices. “With these new markets, we could get higher prices.” The key is to be able to safely manage the shipments and BitCrude provides that assurance, he said.

The process uses a state-of-the-art electrically powered diluent recovery unit (DRU), avoiding further fossil fuel combustion and requires no chemicals, additives or diluent, creating both a safer product and a facility with a reduced greenhouse gas footprint, Melius says. The DRUs are modular, stackable and scalable making for a quick increase in production.

Meanwhile, CN says it is continuing “to advance the CanaPux project through licensing the technology to multiple industry partners, each of whom are concentrating on different overseas markets. The licensees will determine commercial in-service dates, although CN still anticipates transporting CanaPux in 2021.” Three years in development, Canapux pellets can be shipped within North America in open freight cars such as gondolas and hoppers and in bulk freighters to overseas destinations. They can be loaded onto ships using coal terminals.

Earlier this year, CN announced it’s working with several companies on CanaPux development. Wapahki Energy Ltd., a company owned by the Heart Lake First Nation in northern Alberta, is planning on a $50 million facility to turn 10,000 barrels of bitumen per day into CanaPux. CN Rail and Wapahki said they would each invest $16.7 million into the pilot project that would take two years to build and are talking to potential partners in the project.

Attention is also being paid to potential domestic customers for the product, said James Auld, CN’s Senior Manager of product development.

Jeff Paquin, President and CEO of Wapahki Energy, says the CanaPux process could save oil producers US$15 per barrel and use up the waste plastic that now ends up in provincial landfills to produce the polymer that covers the pellets. Shipping in freight cars rather than tank cars would be cheaper because they can transport more product per load and cost less to lease, he said. As well, the CanaPux process avoids the use of diluent, which would be another money saver. Paquin said that smaller oil producers in northern Alberta were excited about the technology because they are among the most heavily impacted companies from volatile swings in the price of oil prices caused by a lack of new pipeline capacity.

CN is also collaborating with Advantage Heavy Oil Development Ltd. (AHOD) on the development of a 100,000 barrels per day CanaPux solidification facility in Alberta. This project could also include a diluent recovery unit and a rail loading facility for multiple commodities. This group is looking at supplying Chinese refiners.

CN is working with InnoTech Alberta on a full GHG Lifecycle Emission study and a Fate in the Environment study to support CanaPux commercialization. There are other potential partners that have not been made public, CN said.

CanaPux capsules are dust-free, not volatile, will not spontaneously combust or explode and do not pose a risk if involved in a derailment. As well, they will float in water, making them easy to recover and won’t leak into the environment.

CN and CP quietly posted strong financial results and enhanced their networks even as economic storm clouds gathered

CN and CP quietly posted strong financial results and enhanced their networks even as economic storm clouds gathered

By Alex Binkley

Canada’s two major railways have quietly gone about their business in the past year turning in strong financial performances and building up their networks even as economic storm clouds gather. They overcame wicked winter weather to record a record grain haul for the crop year ending July 31. As of September, they were still enjoying overall traffic increases of about two percent compared to the same period last year while American railroads were suffering traffic drops.

CN’s and CP’s financial and operating results for the second quarter ended June 30 were both records. CN revenues increased by nine per cent to $3.96 billion while CP rose 13 per cent to $1.98 billion compared to last year. The growth in grain shipments came despite the restrictions on Canadian canola exports to China. CN moved more than 27 million tonnes, bettering its previous best of 26 million tonnes set in 2016-2017. CP hauled 26.8 million tonnes breaking its record set last year. (more…)

Government delays labour regulations that would have caused chaos for transport companies and shippers

Government delays labour regulations that would have caused chaos for transport companies and shippers

By Alex Binkley

A furious mid-summer protest by transport companies and shippers has won them a one-year exemption from several Canada Labour Code hours of work changes that could have created chaos in the federally-regulated air, marine, rail, and interprovincial trucking industries. They were scheduled to come into effect on September 1. The Labour Code changes were intended to provide better work-life balance and strengthen workplace standards in federally-regulated industries. They were buried in the 2018 Budget Implementation Bill passed last December. (more…)

Seaway examining new traffic growth ideas

By Alex Binkley

The St. Lawrence Seaway Management Corporation (SLSMC) and its shipper and shipping partners are looking at old and new possibilities for growing traffic. Transshipping Prairie crude oil to refineries in Quebec and Saint John as well as overseas customers, has been proposed before, and is still being looked at, says Bruce Hodgson, Director of Market Development for the Seaway Management Corp. “The dream isn’t going away.” Last fall, he told the Commons Transport Committee that shipping crude oil on the Seaway-Great Lakes is feasible. “We’ve worked very closely with the railways in developing the total supply chain.” Delivering crude in tank cars to Thunder Bay for loading on tankers means a much quicker turnaround of their cars for the railways rather than hauling the oil all the way to the St. Lawrence River. “The option we’ve been working on is Thunder Bay to Quebec City, and then transshipment into international markets,” Hodgson said. “We can be competitive.” A Seawaymax tanker can transport about 80,000 barrels of crude, which is about the equivalent of a unit train of crude. (more…)

Extending the Welland Canal season would generate more marine traffic, shippers say

Extending the Welland Canal season would generate more marine traffic, shippers say

By Alex Binkley

Keeping the Welland Canal open until mid-January would allow shipping lines to generate more business and ease highway congestion in southwestern Ontario, says Gregg Ruhl, the new President and CEO of Algoma Central. “If the Welland Canal were to remain open just a few more weeks, there would be hundreds and hundreds fewer trucks on the road,” he says. “The longer season should at least match the January 15 closing of the Soo Locks.”

Ruhl was Algoma’s COO when he proposed the longer shipping season to the Commons Transport Committee last fall as it held hearings across the country on a Canadian Transportation and Logistics Strategy. The committee released an interim report in late February that included a recommendation that Transport Canada work with The St. Lawrence Seaway Management Corp. (SLSMC) and its users “to explore ways to increase year-round use of the St. Lawrence Seaway to transport goods within central Canada.” The review “should consider such issues as icebreaking capabilities, piloting fees, handling fees at terminals and docking fees,” the MPs agreed. While the government has until mid-spring to respond to that recommendation, Bruce Hodgson, SLSMC’s Director of Marketing, said the issue is being discussed with domestic and international ship operators and shippers. “We’ve looked at the market and the indications are that a longer Welland season would generate additional business. We’ll work through the process of fully considering the idea.” One possibility would be keeping it open for a few more days in late December to see what happens, he said. (more…)

Pilotage costs and reforms remain sore points for Great Lakes transportation

By Alex Binkley

It doesn’t take long for an interview about shipping on the Great Lakes Seaway system to turn to the cost of marine pilotage. Few address the topic as bluntly as Bart Peters of Amsterdam-based Spliethoff Group. “Pilots in the U.S. basically have the freedom to make decisions about their own salary. They are running a government-sanctioned monopoly, there is no restriction on continuously increasing their costs, so there is no incentive whatsoever to ever bring costs down. Also, no one is ever responsible if things go wrong.” Unless the United States and Canada get serious about pilotage costs, “the Great Lakes trade will not develop any further,” he said. (more…)