Keystone pipeline and Marcellus/Utica

I'm confused. How does the Keystone Pipeline affect us here in the Marcellus/Utica region? Will it interfere with the drilling here?

Thanks!

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Permalink Reply by James on November 12, 2015 at 9:11am

No

Permalink Reply by jett on November 12, 2015 at 9:19am

I'm sorry but I'm still confused. Did they need some of our products for it? Was some of our oil/gas going to be shipped thru it? After I read some of the comments about it (keystone pipeline) I thought we were supposed to be worried about it.

Permalink Reply by James on November 12, 2015 at 9:47am

No, it was only to take Canadian Tar sands to the Gulf. 

Permalink Reply by Joseph-Ohio on November 12, 2015 at 10:24am

As I understand it, their (Canada's) 'Tar Sands' first have to be diluted / thinned to pump it through the proposed Keystone XL pipe.

That takes 'Diluent'.

As I understand it further 'Diluent' is derived from NGLs which are produced in the USA and sent to Canada.

As I understand it further, the Diluted Tar Sands were supposed to be sent to our Refineries in TX and LA as those Refineries use the heavier oils to produce Gasoline.

Also (I think) the refineries would then also recover the NGLs / Diluent.

To me it's seemingly all connected.

I deduce further that could / would also translate to more Exploration and Production / Drilling.

I've been trying to look (wholistically) at the bigger picture, without the blinders on / not taking only one feature of the process out of the context of the whole can of worms.  

That's how I've been interpretting  it anyway; but, these are only my perspectives / best guesses on it.

Where does that chain of logic fail ? ?

JMHOs here.

Permalink Reply by Jon on November 12, 2015 at 10:51am

It reduces the cost of canadian oil

Permalink Reply by Joseph-Ohio on November 12, 2015 at 3:45pm

Yeah I guess that would happen too.

It would also provide a market for an important ally / neighbor / friendly country.

Jobs for our people too - pipe fabricators, construction workers, refinery workers, exploration & production companies and crews, freight providers /shipping (landside and marine), insurance companies, banks, housing, motels,  restaurants,  retail services, etc. Things that contribute to / make up a domestic economy.

Permalink Reply by Joseph-Ohio on November 12, 2015 at 12:39pm
'I deduce further that could / would also translate to more Exploration and Production / Drilling.'

Once the market becomes somehow re-developed and / or corrects itself / recovers / gets over the 'oil glut' price lows.

Also, thinking about (wondering) who besides Canada (interest : NGLs) and we the USA (interest : gasoline sales to domestic consumers) would benefit from the Canadian Tar Sands / Keystone XL investment ? I think once Russia and China suck up the oil from the M E (including S A and Iran) the greatest benefit to be gained is a guaranteed fuel supply for us and our allies / business partners (hopefully westernized Europe would be on our side in this).
Permalink Reply by Thomas Malcolm Pendergast on November 22, 2015 at 10:48am

From Wikipedea:

A dilbit is a bitumen diluted with one or more lighter petroleum products, typically natural-gas condensates such as naphtha. Diluting bitumen makes it much easier to transport, for example in pipelines. Per the Alberta Oil Sands Bitumen Valuation Methodology, "Dilbit Blends" means "Blends made from heavy crudes and/or bitumens and adiluent, usually natural-gas condensate, for the purpose of meeting pipeline viscosity and density specifications, where the density of the diluent included in the blend is less than 800 kg/m3."[1] If the diluent density is greater than or equal to 800 kg/m3, the diluent is typically synthetic crude and accordingly the blend is called synbit.[2]

Reasons for dilution[edit]

Bitumen and heavy oils are often produced from remote deposits such as the Athabasca oil sands in Alberta, Canada and the Orinoco tar sands in Venezuela. Before 1980, most produced bitumen was transported by truck, but trucking is seasonally restricted and relatively inefficient and expensive compared to pipeline transport. However, bitumen in its undiluted state is too viscous and dense to be transported by pipeline. To create a fluid capable of transportation by pipeline, bitumen must be mixed with a fluid that has much lower viscosity and will keep bitumen from precipitating out of the mixture. By 1985 and demonstrating the effectiveness of dilbit, Alberta Energy Company was operating dual pipelines to transport diluent from Edmonton to Cold Lake and dilbit from Cold Lake to Edmonton.[3] Dilbit is now also transported by rail.[4]

Methods of dilution[edit]

The most common diluent used to dilute bitumen is natural gas condensate (NGC), especially the naphtha component.[5] Due to insufficient quantity of natural gas condensate in Alberta, bitumen shippers also use refined naptha and synthetic crude oil (SCO) as diluent, and import a considerable amount from the U.S.[6] Although SCO requires a higher volume percentage to achieve the same viscosity, at least one study found that SCO provides better blend stability than NGC.[7] Shippers dilute bitumen before shipment in order to meet viscosity and density requirements found in common carrier pipeline tariff rules. A National Energy Board study assumed a standard dilbit containing 33% condensate (resulting in product with "21.5 °API and sulphur content of 3.3 percent") and synbit containing 50% SCO.[8][9][10][11] By selecting different diluent types and blend ratios, bitumen shippers attempt to lower component costs, increase blend value, and maintain pipeline transportability. The blend ratio may consist of 25 to 55% diluent by volume, depending on characteristics of the bitumen and diluent, pipeline specifications, operating conditions, and refinery requirements.[3]

Froth treatment which removes heavy constituents rather than adding lighter ones is another method.[12]

Refinement process[edit]

Diluent can be removed from dilbit by distillation and reused. Alternatively, the entire dilbit can be refined. Dilbit and synbit are typically processed by refineries as heavy or medium crudes, respectively.[8] As dilbit contains hydrocarbons at extreme ends of the viscosity range, the material can be more difficult to process than typical crude oil.[13]

Separation and oil spill risks[edit]

Unlike conventional crude, unstabilized dilbit floats briefly in water but heavier components sink as light components evaporate. The remaining bitumen can make cleaning up a dilbit spill more difficult than a conventional oil spill, particularly if dredging is considered too ecologically damaging.[14] During the Kalamazoo River oil spill, the heavier components sank to the bottom of the water column, making cleanup difficult.[15] Cleanup of the spill is still underway three years after the event, and officials at the Michigan Department of Natural Resources’ Fishery Division expect that it will "be many more years before the agency can measure the full impact on fish and other animals’ reproductive cycles."[16] However, studies show that dilbit does not increase the risk of corrosion occurring within a pipeline or otherwise increase the risk of a release occurring.[17][18][19][20]

In 2013, opening on the Keystone XL pipeline proposal, the EPA recommended to the State Department that pipelines that carry dilbit (such as the proposed Keystone XL) should no longer be treated just like pipelines that carry any other oil. "We have learned from the 2010 Enbridge spill of oil sands crude in Michigan that spills of diluted bitumen (dilbit) may require different response actions or equipment from response actions for conventional oil spills. These spills can also have different impacts than spills of conventional oil. […] We recommend that the Final EIS more clearly acknowledge that in the event of a spill to water, it is possible that large portions of dilbit will sink and that submerged oil significantly changes spill response and impacts. We also recommend that the Final EIS include means to address the additional risks of releases that may be greater for spills of dilbit than other crudes. For example, in the Enbridge spill, the local health department issued voluntary evacuation notices based on the level of benzenemeasured in the air."[21]

Alternatives to diluent[edit]

  • Heated pipelines
  • Constructing upgraders closer to production
Permalink Reply by Thomas Malcolm Pendergast on November 22, 2015 at 11:44am

Thus, please note the difference between "NGC" or natural gas condensate which contains naphtha and "NGL" or natural gas liquids (ethane, propane, butane, isobutane . . .).  NGLs aren't used for diluent.

Note also that dilbit is primarily used for pipeline transport, though occasionally also for rail transport.

Also note that Husky Energy, whose oil sands operations are in the Cold Lake area, avoids the need for dilbit by using an on-site upgrader and then transporting the upgraded heavy crude via the Enbridge Alberta Clipper pipeline from Hardisty through Duluth MN-Superior WI (where some of it is delivered to the Flint Hills [Koch Industries] refinery) on down to Patoka.  From Patoka, there are (non-Enbridge?) branch pipelines that deliver the crude to BP's Whiting refinery at 40,000 bbls/day, the BP-Husky Toledo refinery also at 40,000 bbls/day, and, beginning in March 2016, to Husky's Lima refinery, also at 40,000 bbls/day.  

These shipments have been taking place now for about five years,  Enbridge plans to increase the capacity of the Alberta Clipper from 400,000 bbls/day to 800,000 bbls/day (i.e. nearly the same as Keystone XL capacity), presumably in anticipation of higher demand, especially from BP and Husky.  There is a possibility that Marathon's Detroit, Canton and Catlettsburg refineries may also be customers, though I can't confirm that.

It would seem to me more practical/economic to utilize the diluent at these refineries rather than recycle it back to Canada.

Permalink Reply by Joseph-Ohio on November 22, 2015 at 12:44pm

TMP,

Thank you for the explanation of the difference between NGLs (Natural Gas Liquids) and NGC (Natural Gas Condensate).

I confess until your explanation I thought they were the same thing.

The reason it is important to me and mine is because our geographic area has been identified as a 'Rich Condensate' zone of the Utica (citing most recently in what appeared to me to be a rather extensive ITG study / presentation).

I read within your latest explanation that NGC contains the Naphtha and that NGC is used in 'diluent'.

What are your predictions on NGC from the wells developed in the USA (perhaps even from wells in my geography) being used to create the diluent for use to produce 'dilbit' for the Keystone XL and / or for any 'dilbit' production from Canada ? ?

More succinctly put :  Do you think Canada would be purchasing NGC from wells in Northeast Ohio to produce it's 'dilbit'  ? ?

Permalink Reply by Thomas Malcolm Pendergast on November 23, 2015 at 1:50am

You're welcome, Joseph Ohio!

Any diluent Canada imports from the US is most likely to come from North Dakota/Montana, not from our area.

Note that Husky (and probably BP) oil sands operations have upgraders so they don't need to use dilbit to meet pipeline specifications to transport their heavy crude.  Virtually all of that goes through the Alberta Clipper for delivery to Whiting, Toledo and beginning in March 2016 Lima refineries.

Due to lack of takeaway capacity in OH/WV/PA output from wet gas isn't favored by the market; eventually it will be - just waiting on processing plants and pipelines.  At the moment, the market favors dry gas.

Permalink Reply by Joseph-Ohio on November 23, 2015 at 2:28am
Thank you sir.

Been looking for more infrastructure / takeaway / development to occur since the onset.

Should you discover more kindly keep us in the loop.

We're not very far away from our neighbors to the north - shortest route across our Lake Erie.

I remain optimistic.

Good luck to all of us on this - both Canada and the U.S.A.

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