Canadian Gold Rush

By Janet Kreiling

A gold rush is taking place in northern Alberta, Canada, but the gold is black. The tarry sands of this cold and inclement region contain oil reserves estimated in excess of 300 billion barrels—more than the proven reserves in Saudi Arabia.

In fact, Canada’s oil sands hold more than one-fifth of the world’s hydrocarbon reserves. For decades, the high cost of mining and extracting bitumen (crude oil) from sand scared away investors. That has changed in recent years, however, thanks to new extraction and refining technologies along with exploding worldwide demand for energy.

Today the area around Fort McMurray, 800 kilometers northeast of Calgary, are crowded with over 20 companies shouldering each other in a race for human and material resources.

One company that has had notable success in marshalling those resources—and winning contracts—is Bantrel, a Canadian engineering and construction firm and a subsidiary of Bechtel. Bantrel and its subsidiary, Bantrel Constructors, have more than 3,000 employees. With offices in Calgary, Edmonton, and Toronto, Bantrel has participated in most of the major Canadian oil sands projects since 1983.

The vast majority of today’s production still uses the traditional method of strip-mining the oil sand and separating the bitumen with a hot water process. However, because only 20 percent of oil sand lies near the surface, the traditional method will eventually give way to techniques resembling conventional drilling, such as steam-assisted gravity drainage. This process uses two parallel wells. Steam is injected down one well to soften the sand mixture enough for the bitumen to be separated from the sand and to flow into the other, lower well to be pumped to the surface.

Once separated from the sand, the bitumen must then be upgraded to a lighter grade of oil, called synthetic crude, before it can go to a conventional refinery. There are currently three bitumen upgraders operating in Alberta with a number of others in various stages of design and construction. Blair Dunlop, vice president and manager of projects at Bantrel, explains that the company’s major focus in Alberta is the design and construction of bitumen upgraders. Three current projects are typical; for Suncor, Bantrel is designing a major expansion of an upgrading plant near Fort McMurray; for Petro-Canada, it is modifying a refinery in Edmonton to process bitumen; for Shell, it is in the early stages of expanding an upgrader near Edmonton.

Bechtel helped Suncor develop its first oil sands operations back in 1967, designing and building both the extraction and upgrading facilities, which produced 35,000 barrels per day. In the late 1990s Suncor began work on its “Millennium Upgrader,” which expanded upgrading capacity to 230,000 barrels per day. Bantrel, together with other companies, designed the new upgrader, and Bechtel helped build it. Bantrel is now working on a second large expansion for Suncor, called Voyageur, which will start production in 2009 and eventually allow the company’s crude oil output to reach 570,000 barrels per day.

Dunlop says that finding sufficient engineering and construction talent was a challenge five years ago when the Millennium Upgrader was being built, and that the challenge continues. World demand for oil is increasing, and conventional oil supplies have not kept pace. Alberta’s oil sands are now seen as a major, long-term, and stable source of oil. The greatest challenge in developing the oil sands will be finding people to design and construct the huge projects. “This is where our large staff, in three offices, is valuable,” says Dunlop. “Having offices in three major cities in Canada allows Bantrel to draw on the resources available across the country.”

Another major challenge facing projects in northern Alberta is getting construction materials to the sites. A single two-lane highway connects Edmonton and Fort McMurray. This 500-kilometer stretch of road must accommodate most of the construction equipment and materials for huge plants. It is not uncommon to see modules over seven meters wide and high and 45 meters long going down the highway.

Bantrel is nearing completion of Petro-Canada’s Edmonton diesel desulfurization project at its refinery in that city. Bantrel has also begun designing Petro-Canada’s first bitumen upgrader, which will be integrated with the Edmonton refinery, modifying it to accept a bitumen blend feedstock. The bitumen will be mixed with a diluent and piped from Petro-Canada oil sands leases in northern Alberta to the Edmonton refinery.

“The completion of one Petro-Canada project and the start of another allows us to maintain a strong construction team on the site,” Dunlop says. “The construction team from the desulfurization project will move right over to the upgrader project.”

Dunlop emphasizes Bantrel’s focus on safety. On the Petro-Canada project, for example, Bantrel has logged more than 4 million job hours without a lost-time accident. Its construction-site safety record is second to none, and its safety policies are recognized as best practices.

Bantrel and Bechtel also are involved in the first stage of an expansion of Shell’s oil sands operations that eventually will raise production to 500,000 barrels per day. This project will be going into the detailed engineering phase this year. Both companies were involved the design and construction of Shell’s first upgrader a few years ago.

The challenge in oil sands upgrading, Dunlop adds, is “generally not technology but execution. We have the experience with the technology, coking, and hydrotreating, and so has Bechtel.”

With Bechtel’s global reach and Bantrel’s ability to bring impressive engineering and construction resources to every project, it looks as if the black gold rush will continue for years to come. 

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