Five Canadian and American firms have teamed up to export a new brand of concentrated oilsands bitumen on trains from Alberta to the Gulf Coast.
A target of mid-2021 has been set to start the shipments by Gibson Energy Inc., ConocoPhillips Canada and Canadian Pacific (CP) in Calgary, US Development Group (USD) in Houston and Kansas City Southern Railway Co. (KCS) in Missouri.
The team trademarks its oilsands concentrate as DRUbit, short for diluent recovery unit bitumen. The DRU part of the name refers to a plant that Gibson and USD intend to build at Hardisty, a central Alberta counterpart to the Cushing oil hub in Oklahoma.
ConocoPhillips has committed 50,000 b/d to the project from its Surmont oilsands partnership with French-owned Total E&P Canada. The DRUbit team is canvassing the Alberta industry for supplies to support a 100,000 b/d Hardisty plant.
Long-term agreements have been made for CP and KCS to rail DRUbit to a new terminal that USD announced plans to build in Port Arthur, east of Houston. The site would have a pipeline link to the nearby Phillips 66 Beaumont Terminal for Gulf Coast refineries and marine services.
“From an innovation, sustainability and safety perspective, this is a game changer,” said CP CEO Keith Creel. “This process removes diluent from the crude-by-rail supply chain, and as a result we end up moving a non-hazardous commodity.”
The new Hardisty plant would extract condensate added to northern Alberta oilsands production as thinner, currently for all rail as well as pipeline deliveries. The gasoline-like natural gas byproduct makes up about 30% of bitumen shipments.
The DRUbit team would sell the extracted condensate back to oilsands producers, which could re-use the thinner for shipments from northern bitumen production sites to the new Hardisty plant or export pipeline flows.
Gibson CEO Steve Spaulding added that DRUbit could add a safer rail delivery dimension to the North American oil market, even if Canadian pipeline projects overcome regulatory and political obstacles that have delayed construction.
Railway delivery of hazardous diluted bitumen has become a frequent addition to the full Canadian oil export pipeline network into the United States. Shipments have topped 300,000 b/d since mid-summer, according to the Canada Energy Regulator.
With the scale of DRUbit network still in the planning stages, total costs of the team package haven’t been disclosed. Gibson estimates the price tag on its 50% share in the Hardisty plant partnership with USD at between C$200-250 million ($150-188 million).