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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 announce third quarter results

It seems that Canada’s two national railways keep on producing never-ending record performances. Although both carriers expressed caution about the immediate future, both produced very respectable third quarter results.

During the quarter, CN’s revenues increased by 3.9 per cent to $3.8 billion. Operating expenses, as a percentage of revenues, decreased from 59.5 per cent to 57.9 per cent, as a result of which operating income rose by 8.1 per cent to $1.6 billion. Cash flow from operations increased to $1.69 billion from $1.56 billion, but “free” cash flow, the amount remaining from operating cash flow after subtracting net investments made during the quarter and dividends paid to investors, declined to $315 million from $508 million, because of unusually large capital expenditures. From Jan 1 to Sept 30, CN spent $1.26 billion repurchasing its own shares, a reduction from the $1.52 billion spent during the same period in 2018, and paid $1.16 billion in dividends, an increase of $159 million over 2018. (more…)

St. Lawrence Seaway cargo volumes slower in September due to late harvests

During the month of September, Seaway volumes were down 18 per cent from year-ago levels, to 3,991 million tonnes. From March 22 to September 30, cargo shipments totaled 24.8 million tonnes, down 6 per cent from 2018. All cargo categories showed lower volumes, except dry bulk, which was up by 7.3 per cent on a year-to-date basis. The figures reflect a combination of factors including the decrease in U.S. grain exports from earlier in the spring and current delays in the Canadian harvest due to the wet field conditions.

Slow harvest progress in Western Canada is delaying the movement of grain to prairie elevators and export terminals on the West Coast and at Thunder Bay. With harvests estimated to be 20 to 30 per cent behind where they would be normally, it is expected there will be more exports late this fall and into December. (more…)

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…)

Many Canadian communities depend on short line railways

Many Canadian communities depend on short line railways

By Keith Norbury

In its first year of operation, the Great Sandhills Railway in Saskatchewan had a budget of about $2 million. A decade later, its annual budget is around $7 million.

“Of that $7 million, probably 85 to 90 per cent goes right back within 100 miles of the rail line,” said Perry Pellerin, the railway’s CEO. That economic injection includes buying fuel locally from Co-op and ballast from the municipalities along the 198-kilometre line, which extends from Swift Current, Sask., to just across the Alberta border in McNeill.

“Really anything we can buy locally, we try to do that,” Mr. Pellerin said in a phone interview. “And that’s good for the communities also. It employs people.” (more…)

CN announces acquisition of Massena Line from CSX

CN has signed an agreement to acquire the Massena rail line from CSX, which represents more than 220 miles of track between Valleyfield (Quebec), in Canada, and Woodard (New York), in the U.S. The Massena line also serves many cities in the province of Quebec, including Beauharnois and Huntingdon, and in the state of New York, including Massena, Norwood, Potsdam, and Gouverneur. (more…)