Alberta’s Value Added Chain

Alberta’s Value Added Chain is the industry (or group of industries) who use, produce or market the by-products, or recycle and reuse the off-gases or chemicals, as a result of the upgrading or refining bitumen.

The refining and processing of Alberta’s bitumen involve a number of different factors.  Unlike conventional oil that can be sold in almost any market, Alberta’s raw bitumen can only be processed by a handful of specialized refineries around the world.  This limits the size of the market for Alberta’s oil sands production and has created concerns about an open and competitive market to ensure we are achieving the maximum value and royalties from our resources.

The extent of the possibilities for value added petroleum products are endless.

The most common uses of processed petroleum are fuels. Fuels include:

• Ethane and other short-chain alkanes
• Diesel fuel (petrodiesel)
• Fuel oils
• Gasoline (Petrol)
• Jet fuel
• Kerosene
• Liquefied petroleum gas

Other derivatives

Certain types of resultant hydrocarbons may be mixed with other non-hydrocarbons, to create other end products:

• Alkenes (olefins) which can be manufactured into plastics or other compounds
• Lubricants (produces light machine oils, motor oils, and greases)
• Wax, used in the packaging of food
• Sulfur or Sulfuric acid -  useful industrial materials
• Bulk tar
• Asphalt
• Petroleum coke, used in specialty carbon products or as solid fuel
• Paraffin wax
• Aromatic petrochemicals to be used as precursors in other chemical production

Definitions

Raw Bitumen or Bitumen – this natural resource is a sticky, tar-like form of petroleum which is so thick and heavy that it must be heated or diluted before it will flow. At room temperature, it has a consistency much like cold molasses. Refined bitumen is the residual (bottom) part of crude oil.  It is the heaviest type of oil and becomes liquid at the highest boiling point at 525 °C.

By-Products – is a secondary or incidental product deriving from a manufacturing process, a chemical or biochemical reaction.  It is not the primary product or service being produced.  A by-product of upgrading bitumen are off-gases.

Chemical Clusters – the group of business and industries associated by the common thread that the business or industry efficiently uses the by-products, co-products, chemicals or gases as a result of refining or upgrading bitumen.

Co-Products – a petroleum by-product created with another petroleum producer.

Crude Oil – Unrefined petroleum

Dilutent- a chemical agent used to reduce the thickness or viscosity of raw bitumen.  Used in order to make raw bitumen flow through pipelines for export to be refined in other countries.

Feedstock- raw material used for an industrial process.  Raw bitumen is the feedstock for upgrading companies.

Oil Sands – naturally occurring mixtures of sand or clay, water and an extremely dense and viscous form of petroleum called bitumen.

Off-gases – are very rich building blocks for the petrochemical industry and are broken down into three main streams:  ethanes, propanes and butanes.

Petroleum – a dark viscous hydrocarbon oil found in the upper strata of the earth, refined into fuel and other by-products.

Petrochemical Industry – the group of businesses and industries that work with chemical products which are derived from petroleum.

Refining – processing to a purer form. Term is often used with natural resources where the refined product is used for more efficient uses than the raw material.

Upgrader – A facility that upgrades bitumen (extra heavy oil) into synthetic crude oil.  Upgrader plants are usually located close to oil sands production for example the Athabasca oil sand in Alberta or the Orinoco tar sands in Venesuela.

Upgrading – The replacement of a product with a newer, more efficient product.

Value Added Chain – A business management concept where products pass through an order of activities and with every activity the product gains some value. The chain of activities gives the products more added value than the sum of added values of all activities.

Value Added Petrochemical Industry – the concept where petrochemicals are refined and upgraded and with each upgrade, the products become more valuable than the product before.