Mombasa to Nairobi- The Political Road

In another three years, a Kenyan travelling from Mombasa to Nairobi will have at least four major options Kenya has chosen to build a brand new road between Mombasa and Nairobi instead of expanding the existing highway in what will leave consumers spoilt for choice Transport CS James Macharia said the deal had not been signed and that several other companies could be allowed to bid Kenya has chosen to build a brand new road between Mombasa and Nairobi instead of expanding the existing highway in what will leave consumers spoilt for choice.

The Sunday Standard has established that instead of turning the current road into an expressway, the government decided to construct a completely new road to run side by side with the existing one. ALSO READ: Kenya Railways threatens top managers of RVR This means that in another three years, a Kenyan travelling from Mombasa to Nairobi will have at least four major options. One may choose the Standard Gauge Railway (SGR) passenger train that takes about five hours or take a flight and land in the coastal town in an hour. If he wants to travel by road, he will have two roads to pick from. If in a hurry, and would like to drive at speeds of 120 kilometers per hour, he will take the expressway whose contract was handed to an American firm, Bechtel, three days to the General Election in a deal described as a ‘thank you gift’ to the Americans.

This will not just be the most comfortable drive given how smooth the road would be, it will just take him three and-a-half hours. But this will not be without a cost. He will have to part with some unspecified amount of money in toll fees to enjoy the road. If he does not want to pay or is not in a hurry, he will still have the current road at his disposal, which will be available but only for smaller vehicles. The current road will also have been downgraded to stop trucks and big buses from using it. Shelved proposal It will also mean that the government will buy land afresh, in a similar fashion as it did before it build the SGR, in what could provide land cartels with another round of minting millions from government projects. The initial proposal, which was shelved in favour of the current deal, involved expansion of the existing highway to four lanes between the Machakos Turnoff to Mariakani.  ALSO READ: Kenya Railways threatens top managers of RVR It has also emerged that the contractor building the controversial expressway will be allowed to ‘sell’ it to another private contractor, who will charge users toll fees to recoup the billions sunk in the project.

“Under the Exim Bank financing model, the government has the opportunity to privatise or securitise the individual sections of the expressway that could reduce the total borrowing requirements,” Engineer Peter Mundinia, the director general of the Kenya National Highways Authority (Kenha) said in a statement. The authority, however, refused to comment on the cost of the project. A source familiar with the project says the government will pass the road to private investors, who have the experience to monetise the road. “Private investors will buy the road and charge toll fees in line with the initial Public Private Partnership (PPP) model after it is constructed.

This must not wait until it is fully built but it can start with the sections as they get completed,” a source said in an interview. This will make the multi-billion road the first ‘private road’ in the region. Kenha has contradicted the Ministry of Transport which had denied claims that the contract had been signed. In a press release this week, Kenha said the commercial contract for the project was signed on August 5. Reacting to an earlier story by the Standard, Transport CS James Macharia said the deal had not been signed and that several other companies could be allowed to bid. ALSO READ: Kenya’s Sh300b ‘thank you gift’ road project to US sparks tender wars But Kenha, which handed the project to the American firm without a competitive process, says the development is under its mandate. Available estimates show that the project will cost about Sh300 billion, before the cost of buying the land is factored in.

Kenha says its economic projections show that there is an infrastructural symbiotic relationship between the SGR and the new road as it offers connectivity for people, business and communities along the road. “Once completed, the expressway will play a critical role in improving Kenya’s transportation logistics and trade competitiveness while supporting the spatial and industrial development along the corridor,” Mundinia said. Kenha has defended the decision to opt for the construction of a new road on grounds that it is distinct from the PPP alternative given that it offers a new alignment designed as a high speed six-lane expressway of higher capacity and safety standards.

“The expressway project will include highway capacity through construction of the greater Nairobi-Southern Bypass which has been planned for several years, thereby contributing to decongestion of the fast-growing Nairobi Metropolitan Area,” Mundinia said. But as details of the deal become available, it is emerging that the mega project has stark similarities to the SGR contract handed to a Chinese company in the run-up to the 2013 General Election. Both the contracts of the SGR and the expressway project were signed shortly before the elections. The firms constructing them are the ones tasked with determining the costs of the projects. Worse, both have been single-sourced and were entered in the cover of government-to-government contracts, in deals that reduce the level of public disclosure and scrutiny that open tenders go through. The biggest concern for sources familiar with government financing is that both of these projects are now going to be financed largely from borrowing at a time when the government is exhausting its headroom to stock up any additional debt.

Kenya Railways set to operate old line It has emerged that top officials of the PPP directorate were caught unawares after the government made an about turn on the project and decided to build a new road instead. A working paper from insiders at the Treasury and the Ministry of Transport seen by this paper raised sharp questions on why the project had to be announced in a rush, three days before the elections, and why it was not competitively done. The deal has also brought back the American government on the front row seat of firms that have bagged big infrastructure projects after being elbowed out by Chinese companies.

A brief by the State Department of Infrastructure as it sought concurrence to proceed with the project says Kenya will borrow funds from American lenders (US Exim Bank and OPIC) and then sign an Engineering, Procurement and Construction (EPC) contract to build the road on a single source basis. The brief queries why a previous model financed by the World Bank was abandoned and how it was determined that the single sourcing approach would offer taxpayers better value for money and would be faster than a PPP.  “Although the proposal is being referred to as ‘alternative project concept’ or ‘highway development concept,’ it is simply a non-competitive, single source procurement of an EPC contractor who is able to bring financing with it,” the brief notes. Engineer George Kiiru, the head of PPP at Kenha, told the Sunday Standard that the government changed its focus from a PPP to EPC because it will be delivered faster as compared to PPP. Shorter period


 “Achieving commercial and financial close for PPP contracts can take two to three years thereby delaying the start of construction and completion of the project,” Kiiru said. “A comparative analysis between a PPP model for a 20-30 year concession shows cumulative repayments under the PPP approach would be higher compared to the alternative approach with ECA (US Exim/OPIC) support,” Kiiru said. The brief from the State Department of Infrastructure, however, intimates that there is no reason to suggest that the construction will take longer under the PPP arrangement. “Indeed, there are strong arguments that overall construction period may be shorter under the PPP project as it splits construction between three different EPC contractors. In any event, the constraining factor is always likely to be land acquisition, so it would be a mistake to assume that the Betchel proposal can deliver construction completion more quickly,” the brief notes.   Kenha says the government is yet to determine the exact cost of the project and is waiting for a complete detailed design, which is yet to be undertaken, before it can determine the actual cost. Kenha also refused to give a cost range that the project is expected to fall in on grounds that it did not want to speculate despite the fact that costs are the first considerations in deciding if a project is viable or not. Costs per kilometre “This project is a government to government initiative. The US Government nominated Betchel International to work with the implementing Agencies in Kenya to develop the project,” Kiiru said. In 2015, Kenha says, the governments of Kenya and the US signed a memorandum of understanding for development of priority infrastructure projects supporting Kenya’s Vision 2030. Kenya later held discussions with the US government for development of the highway. The US, through the US Exim Bank, has provided a letter of support to Betchel for the Nairobi–Mombasa Expressway under a proposed government to government agreement.

“The US Exim Bank has shown interest to finance the project together with other US Export Credit Agencies such as the Overseas Private Investment Corporation (OPIC),” Kenha said in its response. The brief says Betchel’s construction costs per kilometer are higher than estimates presented to the ministry by PricewaterhouseCoopers (PwC) on construction costs for the PPP approach of Sh600 million per kilometre versus Sh500 million per kilometre ($6 million Vs $5 million). “The per kilometre costs under the PPP proposal includes all taxes and duties while Betchel’s proposal assumes complete tax exemption for the project (corporate tax, income tax and import duties) which could reasonably be assumed to cost the government an additional Sh100 million per kilometre,” the brief notes. It goes on to argue that as part of the American firm’s proposal, an advance payment of Sh30 billion and also a payment of Sh10 billion as ‘establishment fee’ will be required. “So Betchel will be Sh40 billion in funds and highly cash positive before the start of the project whereby the government will be paying interest on this sum from day one as this will be drawn immediately by Betchel at contract signing,” the brief notes. There is also a further Sh6 billion of design management fees. The proposal from the American firm excluded all relevant taxes.

Read more at: https://www.standardmedia.co.ke/article/2001255435/billion-shilling-u-turn-that-will-cruise-you-to-coast-in-three-hours

India to help Build Nepal Road

Tasked to improve road connectivity in remote parts of India's Northeast, the National Highways and Infrastructure Development Corporation Ltd (NHIDCL) is now venturing into Nepal where it has been assigned to guide the construction of over 600 km of postal roads in the Terai region bordering India.

A postal road is a road designated for the transportation of postal mail.

According to an MoU inked between India and Nepal, the decision was taken after a similar attempt by the Nepal Government failed to make progress due to negligence of the contractors in 2010.

"The Postal Road in the Terai region of Nepal will boost the country's much awaited road network. Under this current project the NHIDCL will be tasked to guide the construction of 19 postal roads of an outlay of 600 km," one of the top officials at NHIDCL told IANS declining to be identified.

He said the construction of 19 postal roads are under six packages for different parts of the Terai region.

"Basically we will be playing the role of consultants in the entire project. The biddings and all the tendering work of the road construction will be done by Nepal. Our work will basically be to see that the work does not witness failure like earlier," the official said.

According to the official, the decision for handing over the guidance work was decided during the recent visit of Nepal's Prime Minister K.P. Oli to India.

Abhay Thakur, Joint Secretary at the Ministry of External Affairs (MEA), told IANS: "Yes, It has been proposed to the Nepal Government for appointing NHIDCL as the consultant for the postal road projects. Though the precise MoU between the NHIDCL and Nepal Government is likely to be inked next week... all things are decided."

He said contractors from both Nepal and India can do the bidding for the postal roads projects.

The NHIDCL authority, who did not wished to be named, said the postal road has been prioritised for the development of Terai/Madhes region by expanding the road network. The 600 km work is only for the first phase. Both the countries will decide the agenda for the remaining works also."

Stating that the project was being financed by India, he said that the money will be given to Nepal for the execution of different stages of work, which will be over looked by the NHIDCL.

According to sources, the cost of the first phase of road construction in the Terai is estimated to increase to Rs 9 billion from the earlier Rs 7 billion. The total project cost will also rise from the previous estimate of Rs 29 billion. Around 130 bridges have to built along the 600 km highway.

Asked if NHIDCL has been given any other foreign projects, the authority said: "The creation of NHIDCL was for creation of difficult roads. The Government has full confidence on us and we are ready to undertake any project in any part of the world under any circumstance. However, there are no immediate foreign projects as of now."

NHIDCL, created in 2014, has recently been given the task of constructing over 4,000 km of roads in the Northeast and Jammu and Kashmir. The organisation was established after Border Roads Organisation (BRO) and Public Works Department of the states failed to carry out road construction in many remote parts in hilly terrain.
Source - Indian Express

Highway Project Model

Introduced last year by the Union ministry of road transport and highways, acceptance of the hybrid annuity model or HAM for tendering of road projects by the National Highways Authority of India (NHAI) was initially weak. It continues to remain so.

For instance, the first bid under the HAM model, for four-laning of the Solan-Kaithalighat section in Himachal Pradesh, had no takers. The bid terms had to be revised.

Till date, five projects totalling 279 km (Rs 6,700 crore in value) have been awarded. The FY16 target for HAM was set at 1,400 km. Experts, however, say with more than half of NHAI’s project pipeline lined up under HAM and the government having addressed the sector's key concerns, this is likely to pick up.

After the first bid failed, the government addressed some of the key impediments, particularly on forest clearance and land acquisition. Further, HAM, often referred to as a mix of the Build, Operate, Transfer (BOT) and Engineering, Procurement, Construction (EPC) models, addresses the concerns on both.

Under the latter model, a winning contractor builds the road project and hands it over to the government after completing the construction. Under BOT, he builds the project and operates (collects toll, maintains the road) it, handing it over on completion of the concession period.

Primary concerns such as land acquisition, traffic risk and inflation in BOT projects have been adequately addressed in HAM. Further, with NHAI pitching in 40 per cent of the capital, the project equity risk is likely to be lowered to 18 per cent (as against 30 per cent for BOT) of the project cost, resulting in a superior return profile to that under BOT.

HAM scores over EPC for the government as well. From 100 per cent cost of capital to be borne by NHAI under EPC, the exposure is reduced to 40 per cent under HAM.

The question is whether companies would opt for HAM in its new avatar. Virendra Mhaiskar, chairman, IRB Infrastructure, terming HAM a deferred EPC payment structure, feels it might not offer good operating margins or a return creation opportunity vis-a-vis the current BOT model that his company prefers. “Just to wet our feet and find out how really the process happens, we (IRB) might participate in a few bids under HAM but for now, we are not looking at it in a big way,” he said.

Experts say the approach on HAM will depend on a company's stance and current needs. It would have little to do with any concern over the project or model.

Santosh Yellapu of Angel Broking says, “How companies want to build their order books would determine if they want to bid for HAM projects.” According to him, larger companies such as IRB Infra, Ashoka Buildcon and IL&FS Transportation Networks might not participate in the current round of HAM bids, as their current order book is comfortable. Smaller companies such as MBL Infrastructures, MEP Infrastructure Developers and Welspun Corporation, whose order book is in the process of being strengthened, might have more appetite.

A report by ratings agency ICRA adds that features of the HAM model are expected to elicit a favourable response, especially from large EPC players and some BOT ones. Even so, despite a large part of the concerns being addressed, there are other issues influencing companies. Analysts at Emkay Financial Services point to the large difference between L1 (lowest bid price) and L2 (second lowest price) as signifying that no developer wants to bid aggressively.

Some are more optimistic. Kunal Seth of Prabhudas Lilladher feels the larger entities might be warming up to the idea. Also, with BOT projects unlikely to see any meaningful return for older entities such as Gammon, GMR Infra and HCC, given the strain on their finances, some experts feel the trend of declining bids under the BOT model could go on. As more bids open under the HAM model, it might compel the larger ones to change their operating strategy.

For example, the pipeline for EPC projects, though higher than BOT, is less than half that for HAM. “Instead of bidding for three-four small road projects, a large HAM project might be more rewarding for the bigger players as well,” says Seth.

Source- Business Standard

Fine for Bitumen Scam

Patna: A CBI court on Wednesday awarded five years imprisonment to three persons, including two engineers of Road Construction Department, in a Bitumen scam case in Bihar.

CBI judge Bashist Narayan Singh sentenced two engineers of Road Construction Department posted at Motihari and a contractor to five years imprisonment for siphoning off Rs 70 lakh in the name of purchasing bitumen during 1994-95.

They were also imposed a fine of Rs 20,000 each.

Bitumen worth Rs 70 lakh was shown on paper being  transported to Motihari from Haldia in West Bengal, but it never reached the said destination, according to the prosecution.

At the direction of Patna High Court, CBI took up the investigation of Bitumen scam cases in 1997. It is probing 18 cases of the Bitumen scam. 

Source- PTI

Bitumen the black plague for walkers

 

Pothole: Rain damaged roads. Photo: Anita Jones

I like walking. Not the rugged, outdoors ''wind in what little is left of my hair'' variety. I favour the tamer urban challenges of Sydney.

I tramp the central business district and inner suburbs. I trek the beachside coastal regions. Alas, many of the surfaces on which I tread have become sadly disfigured.

I acknowledge the need for underground repair work requiring the pavement to be removed for access to those mysterious subterranean workings that we all take for granted. It's the aftermath that bugs me.

Sometimes it doesn't really matter. A bitumen footpath surface that has been sawn, lifted, excavated, repaired, filled, compacted and finally finished with bitumen is fine. Dig up bitumen, patch with bitumen.

Bitumen isn't the only material with which to seal the tops of filled trenches, yet you could easily be convinced that the trench/construction industry believes it is.

A newly paved pedestrian crossing not far from where I live had been in existence for barely a month before the public utility moles trenched their way along the road, neatly replacing one of the white stripes with black bitumen.

A beautiful natural flagstone paving stretch of Elizabeth Street has the black disfigurement. Lift the flagstones and replace them? Nah! Just put the saw through 'em and apply the black dearth of imagination - bitumen.
Brick paved path? A jigsaw puzzle with pieces all the same shape and colour? Too challenging. The black plague strikes once more.

Even when pebble-dashed concrete is removed and replaced with new concrete, it's never the same finish. How hard is it to organise a bucketful of pebbles? How much time would it take? Why does a short-term financial bottom line always trump a job well executed?

Don't get me started on the interminable road repair life cycle - crack in road surface; small pothole; large ragged pothole; large pothole surrounded by yellow-painted highlighting; large rectangular pothole filled with brown road base; large brown rectangular depression; black raised bitumen patch and, inevitably, a black rectangular depression.

Surely invisible mending is not a totally lost art.

Graham Link

Read more: http://www.theage.com.au/comment/bitumen-the-black-plague-for-walkers-20130408-2hh8e.html#ixzz2Q1krzPs6

Road Rehabilitation in Zambia

THE Chingola Municipal Council has procured bitumen worth KR60,000 (K60 million) for road rehabilitation in the district.

Chingola town clerk George Mulenga said during an extraordinary council meeting in Chingola during the week that out of the 31 by 210 litre drums procured and delivered last month, 10 have been used to mend potholes in the area.

“We are likely to continue patching up the roads after the rains subside. So far, only 10 drums of bitumen have been used by theengineering and buildings department,” Mr Mulenga said. He was responding to questions from councillors who expressed concern over the dilapidated road infrastructure in Chingola.

Mr Mulenga attributed the poor workmanship on the roads to lack of equipment but that the municipality is soliciting for funds to procure machinery for pothole mending. And Mr Mulenga informed the civic leaders that KR700, 000 (K700 million) released for street lighting is already in the bank.

“This is so because we have just identified some contractors to work on the street lighting project,” Mr Mulenga said. He said one of the contractors quoted KR500,000 (K500 million) to install street lights on one road while the other two contractors quoted below KR500, 000.

Kwacha ward councillor Kennedy Sinkamba expressed concern that there are still potholes on Nchanga roundabout despite the fact that the road was recently worked on. “The poor workmanship has affected the roundabout. why should the council continue to waste resources on the same works?” he wondered.
Mr Sinkamba also said the Kitwe road, which leads to Nchanga North General Hospital, is in bad shape.
But Chingola mayor Cuthbert Kalebaila assured the councillors that the municipality will work on the roads as a matter of urgency.

And Nchanga member of Parliament Wilbur Simuusa said the Patriotic Front government inherited a poor road network from the MMD which has not been worked on for the last 15 to 20 years.

Source - Zambia Mail -  NKWETO MFULA in Chingola

Self Healing Roads

Self-healing roads may one day become a reality, after a university engineering professor invented an asphalt that can last twice as long as the traditional porous variety.

 

Delft University of Technology professor Erik Schlangen said the key is to add steel wool fibers to close the cracks that may form in porous asphalt.

 

"We add a very small amount of steel wool fibers, less than one percent of the volume, and then apply an induction plate to heat up the steel wool. When the wool heats up it melts the bitumen around it and closes the micro cracks,” he said, according to a report on HumansInvent.

 

HumansInvent noted a porous asphalt road will last about eight years before the top layer will replacement.

 

Schlangen said that while porous asphalt has very good properties, it has "durability problems."

 

With many pores, he said oxidation is faster than with usual asphalt, and the bitumen becomes very brittle due to this oxidation and cracks easily.

 

"You get these small micro cracks in the bitumen and so, when a car drives over the road, the stones at the surface come off," he said.

 

Such small cracks may grow until they become large potholes that can damage vehicles and eventually cause accidents, HumansInvent said.

 

Schlangen said they have tested the steel-infused asphalt on a 400-meter section of road in the Netherlands, and the initial results appear encouraging.

 

“We’ve tested a 400 meter section of road in the southern Netherlands that we laid down two years ago. There we applied induction heat and it works perfectly. We took a lot of samples from the road and aged them in the lab by putting them in the oven and spraying them with water etc and then applied induction heat and the tests have proved that we can double the surface life of asphalt, maybe even more,” he said.

 

Induction heating

 

Under Schlangen's solution, when cracks start to appear every couple of years, induction heat can be applied to the roads and they would heal themselves.

 

“You have to do that before they turn into potholes. You go on the road with an induction machine, it can be on a truck say and you drive over it, it heats up the wool and melts the bitumen and then the stones are fixed again,” Schlangen said.

 

High cost

 

HumansInvent said that while the steel-infused asphalt costs more, it may bring savings in the long run.

 

“The cost of material is increased somewhat because you have to add steel fibres but that’s not more than a 25-percent increase of the cost of the material and then there is the induction machine – you need some investment to build that and you have to drive over the roads with it. However, if you have double the surface life of your road, and no maintenance in between except driving over it with an induction machine, that saves a lot of money – the government will be able to make new savings this way,” Schlangen said.

 

Source - TJD, GMA News

GE Motors for Bitumen Refinery

US-based multinational conglomerate General Electric (GE) has been selected by North West Redwater Partnership to supply large electric motors, to power the reciprocating compressors of its bitumen refinery in Canada.

Under the $14m contract, GE will supply its Series 9000-RCM large electric motors and other related services for the 150,000 barrels-per-day bitumen refinery, to produce clean diesel fuel.

The company has started construction work on the refinery, located near Edmonton in Alberta.
The refinery has been specifically designed to reduce the environmental impacts during the conversion of the tarry bitumen crude into diesel.

North West Redwater Partnership's bitumen refinery will be the first to incorporate an integrated CO2 management system, claimed GE.

GE supplied Series 9000-RCM electric motors will power the reciprocating compressors to process the crude bitumen or heavy crude oil extracted from Canadian oil sands at high compression ratios.

The motors can drive the compressors with ratings of up to 13.8kV and up to 16,000kW.

In addition, the motors are easy to maintain and offer fast installation and start up, thereby, reducing delays and increasing capital resources.

General Electric Power Conversion Rotating Machines sales leader Alberto Peluzzo said the Series 9000-RCM motors provide reliable and proven performance and are being opted by many across the Canada's oil sands region.

"Along with GE's expert technical services, they will help enable the North West Redwater Partnership to achieve world-class operational performance and efficiencies at this landmark refinery," Peluzzo added.

Source- EBR

Moving Bitumen in Piplelines with less dilutent- Pilot Study

MEG Energy is setting up a $103-million pilot project in Bruderheim that would see bitumen transported more efficiently through pipelines.

It’s a problem that has lasted as long as bitumen has needed to be shipped. How do you move heavy bitumen in a cost effective way through pipes without having to dilute it to a point where it is able to flow freely?

It’s a question that hasn’t had an answer. Until now, heavy bitumen required dilution from an expensive product called diluent to allow it to flow freely through pipelines.

The problem with this process , apart from the cost of adding and stripping this diluent from the raw bitumen — is that it lowers the amount of bitumen that can be transported through a pipeline at any given time.

And one company is setting up shop in hopes to put an end to this practise. MEG Energy is starting a pilot project in Brudurheim that they hope will make this process a thing of the past.

“This is a pilot project for a technology that we’ve developed at a very small scale so far to improve the quality of diluted bitumen blends,” explained Brad Bellows, a spokesperson with MEG.

The benefits of the project, if indeed the project proves successful, would be two-pronged, Bellows said.
“This isn’t as energy intensive or capital intensive as coking techniques. Because of that and the air impacts, it should have some benefits to the environment,” he said.

“In terms of moving Alberta’s product, it has benefits because it allows us to ship the product without moving diluent.” Currently, diluent is added by volume to take up one-third of the pipeline.

If that is able to be removed, it would effectively increase the amount of raw bitumen that could be moved by 50 per cent, Bellows said.

And while MEG is looking forward to what a technological breakthrough like this could mean for the industry, those involved are being careful not to get too far ahead of themselves.

“There’s a lot of potential upside, but the key right now is that it is a learning process. “We are trying to fine tune the processes,” Bellows said.

 “If we can prove the tech on a commercial basis, it would effectively free up pipeline capacity to move Alberta product to markets, and be moving a value-added product to markets.”

Shold the project prove to be commercially viable, it would also lower water usage, Bellows said.

The project is currently valued at just over $103 million.

Source-aaron.taylor@sunmedia.ca /  twitter.com/Aaaron_Taylor

Turning Bitumen into Diesel

Strathcona County watched in dismay as the plans for half-a- dozen upgraders disappeared with the 2008-09 global meltdown, recalls Mayor Linda Osinchuk.

But these days, there’s some optimism that at least two of the projects are possible — reviving the mothballed Heartland, also called the B.A. upgrader, already partially built by Calgary-based Value Creation Inc.; and the North West upgrader near Redwater that will turn bitumen into diesel.

The B.A. upgrader, owned by Value Creation Inc., could be ready in 18 months to turn 85,000 barrels of bitumen into synthetic crude that any refinery in Canada could handle, Osinchuk noted.

The North West upgrader, barely started, is just five years away.

That short time frame is very attractive to oilsands producers currently facing a lack of pipeline capacity to ship the stickier bitumen that can go to only a handful of U.S. refineries on the Gulf coast.

“The fastest, soonest solution is the B.A. upgrader,” said Osinchuk. “We support pipelines, of course, but you don’t want to put all your eggs in one basket. The fastest, soonest solution is the B.A. upgrader.”

Osinchuk is “both frustrated and optimistic” these days. The upgrader’s future is in limbo because of a battle over expanded urban boundaries for the city of Fort McMurray, but there must be a way to find a solution, she says.

Columba Yeung, VCI founder and CEO, says the company needs access to its bitumen reserves as collateral to raise the capital to finish the upgrader. Consultations with the province are underway.

Yeung says that, having closed down the project once due to financial problems, he needs the collateral to convince investors to come back. “We don’t want to go through that again,” he says.

Osinchuk recently visited High River south of Calgary to tour VCI’s new technology project and was excited by what she saw.

Yeung, a research scientist and the engineer who built the Shell Scotford upgrader and refinery, says he has developed new technology that will partially upgrade the bitumen as it comes out of the ground under the steam-assisted gravity drainage techniques.

By removing a component called asphaltenes in the bitumen, the product comes out as a medium crude oil and can be handled by a much wider range of refineries, including those in Eastern Canada, he says.

“If we make it into medium crude, it is also a perfect replacement for Alaskan crude in California,” said Yeung, looking at new potential markets.

The bitumen bubble is caused partly by the fact only a handful of refineries on the U.S. Gulf Coast can handle the bitumen, Yeung says.

It is also costly and inefficient to ship it to the Gulf coast as one-third of pipeline product is diluent, he adds.

Osinchuk says the province needs to look at all options to keep the energy industry healthy. “It’s time to move in a bit of a different directions.”

Read it on Global News: Global Edmonton | Strathcona County optimistic mothballed bitumen upgrader projects will resume

Shortage of Bitumen impacts Road Works

Another bitumen shortage is looming in South Africa in the first half of this year because of planned maintenance shutdowns by three oil refineries, potentially disrupting road construction and rehabilitation activities in the country. 

Also known as asphalt or tar, bitumen is a by-product of oil refining and a crucial element in the building and rehabilitation of roads. 

Philip Hechter, the chairman of the SA Bitumen Association and the chief executive of Murray & Roberts subsidiary Much Asphalt, said on Friday that a shortage of about 20 percent of the country’s bitumen requirement was expected because of the shutdowns. 

He said Sapref, Engen and Caltex refineries were expected to have shutdowns between next month and the end of May and at least one or more refinery would be out of production during this period.

“This will put pressure on the system and I guess demand will outstrip supply,” he said. 

But Hechter said imports would satisfy between 10 percent and 15 percent of demand. This meant there might still be a shortage of between 5 percent and 7 percent of demand, he said.

Despite the shortage, he said it would not the have same impact as the shortage in October 2011 when “we were caught with our pants down”. 

Much Asphalt would be importing bitumen in bulk, with the first shipment scheduled to arrive next month and another shipment planned for about a month later, if not sooner.In addition, many businesses that used bitumen had obtained containers in which to store bitumen and had built up strategic stock, Hechter said. 

“There will still be pressure on the system but it [the shortage] will be better managed.”

Still, bitumen imports had significant cost implications because they involved a R1 500 a ton premium compared with the local price, he said. 

Hechter was aware of plans to secure some bulk storage facilities for bitumen in Cape Town, Richards Bay and Mozambique. “In five to seven years, this problem will be a thing of the past,” he added.

Road construction and rehabilitation company Raubex confirmed in November that it was investing about R20 million in storage facilities to cushion it from the impact of bitumen shortages. 

Financial and commercial director Francois Diedrechsen said then there appeared to be a 30 percent supply shortage of bitumen in the market and the storage facilities it was building meant it could import bitumen at volumes that made it more cost effective. 

A shortage of bitumen in the local market lasting for several months from October 2011 caused chaos in the road construction and rehabilitation industry. It led to a grinding halt for many jobs done by smaller enterprises in the sector that used asphalt for driveways, parking lots and small contracting work. Some of these firms are believed to have since gone out of business because of cash flow problems caused by the bitumen shortage. 

By -  Roy Cokayne

Bitumen Shortage in Bangladesh

Bitumen crisis has hit road and highway construction and maintenance across the country, mainly the Dhaka-Chittagong and Dhaka-Mymensigh highways' four-lane construction work, making timely completion of both projects uncertain.

Officials said the crisis of bitumen, which is an essential ingredient for road construction, had led to holding an emergency meeting at the Prime Minister's Office (PMO) last month with the principal secretary in the chair. They said all stakeholders including the Roads and Highways Department (RHD) and the Local Government Engineering Department (LGED) also sat with the Bangladesh Petroleum Corporation (BPC) and the Eastern Refinery Corporation last week to find out a solution to meeting the growing demand the bitumen.

Bitumen is a byproduct produced refining of oil, and the Eastern Refinery is the major local source of the ingredient.

RHD officials said the demand for bitumen had increased in the current fiscal year as both Dhaka-Mymensingh and Dhaka-Chittagong highways need a huge quantity of this ingredient to carpet several hundred kilometres of roads with the beginning of the dry season, the peak construction season.

"As this year has been crucial for the Dhaka-Chittagong four-lane project as well as for the Dhaka-Mymensingh highway project for starting carpeting, the demand has risen," said a Communications Ministry official who attended both the meetings.

He said the local bitumen production and the imported bitumen also could not meet the demand.

According to RHD and BPC, the bitumen demand - supply gap this year has peaked to 80,000 tonnes as 70,000 tonnes are produced locally and another 50,000 tonnes are imported on an average.

Officials said RHD's yearly requirement had been assessed at about 150,000 tonnes followed by 26,000 tonnes of the LGED. Besides, all city corporations need a handsome amount of bitumen. The Aviation also requires a portion of the bitumen.

But against the total demand, 60,000 tonnes are needed only for carrying countrywide maintenance work this year while the Dhaka-Chittagong four-lane highway project will need around 70,000 tonnes of bitumen by the end of 2013.

As Communications Minister Obaidul Quader has set the monthly target of carpeting the 193-kilometre Dhaka-Chittagong highway, project officials said over 18,000 tonnes would be required by April for the four-lane road project.

When asked, the minister told the FE that efforts were made to overcome the crisis.

However, contractor sources said the crisis would turn more acute in the coming days due to the lack of efforts by the government.

They said the capacity of Eastern Refinery had been limited to 70,000 tonnes of bitumen since inception.

A contractor, who has been engaged in constructing both national highways and regional roads since the 90s, said due to corruption in distribution of bitumen by different agents of the Eastern Refinery, the crisis got worse forcing them to buy it at an exorbitant rate.

"Bitumen crisis is always there in the country due to a gap between the demand and supply, but it has become acute due to the lack of control over distribution process since 2004," he told the FE adding that the condition was likely to get worse in absence of efforts to increase the Eastern Refinery's production capacity.

An RHD official of Khulna zonal office said, due to the crisis getting bitumen on time is nowadays not possible forcing the contractors to manage it from importers at higher prices.

At present, bitumen is being sold at around Tk 70,000 per tonne. In the 90s, the price varied between Tk 5000 and Tk 6000, which increased to Tk 10,000 to Tk 12,000 due to the Iraq war.

The ministry concerned and RHD officials said the overall crisis had been discussed in the PMO's meeting, and directives were given to prioritise RHD's work mainly for the two important four-lane highway projects.

"As RHD accounts for 66 per cent of the total demand, a decision was taken to give priority to RHD projects," said the RHD official adding that they had to verify the work order.

However, sources said with the start of using bitumen by big projects like the two four-lane highway projects, another crisis would hit the small projects hampering overall development of road network in the country.

The RHD itself is at present implementing 153 road and bridge development projects. 

By- M.Sultana

Hot Climate Melts the Bitumen

A south-west Queensland mayor says heatwave conditions in the remote region are making it tough for outdoor workers.Bulloo Mayor John Ferguson says crews working to patch roads near Thargomindah in south-west Queensland have recorded temperatures on the bitumen into the mid 50 degrees Celsius range this week.

Yesterday, it reached 43 degrees in the town and Councillor Ferguson says it has asked its crews to start work early and go home in the middle of the day to avoid heatstroke.
"They were bitumen patching and I think they measured 55 degrees on the bitumen, which is too hot," he said.

"We don't want people going down with heatstroke - it can cause a lot of problems - so we said, 'go home and start early in the morning, knock off at about 11 or so and work that way until the heatwave gets over us'."

He says the heat hit hard and quickly. "We are feeling it - it is tough, particularly for blokes doing bitumen patching or any manual labour," he said.

"You can go down quick - you probably don't realise - you think are going along okay and then all of a sudden you are dehydrated and you start to feel crook and down you go.

"Bushfires are still a big worry with all this heat around."The ground is so hot, you only have to have one dry storm and that's it - you're gone again and you'll have bushfires everywhere.

 Source -By Chrissy Arthur

Bitumen Spill in Newzeland

Five tonnes of 140C bitumen have spilled from a factory tank in Auckland this morning where authorities are working to clean the hot mess.

Firefighters discovered the spill at Thermakraft Industries on Turin Place in Otara after responding to an alarm about 9.50am.

The boiling bitumen covered an area about 15m by 25m inside the factory and leaked to an area about 10m by 10m outside, fire service communications shift manager Megan Ruru said.
"The fire service has attempted to contain the spill by covering it with dirt," she said.
"We weren't told of any persons inside the building at the time or whether any persons were hurt or injured.
"A check of the premises was done to confirm that the air inside the building was within the safe exposure limits, which it was, and then we've handed the scene over to the Department of Labour, the city council and the building owners."

It is not known what was inside the building or if any damage was caused by the boiling bitumen.

Some of the spilled bitumen leaked into waterways before its spread was stopped, Auckland City Council spokeswoman Lydia Blatch said.

A pollution response officer from the council is at the scene, where temporary containment barriers have been set up to prevent further pollution reaching waterways.

Ms Blatch said the bitumen, which solidifies "reasonably quickly'', was believed to have been contained.
Ms Blatch said the bitumen that had entered a nearby stream had solidified.

"We don't know exactly how much [reached the stream] but the bitumen is contained and is currently being removed from the stream,'' she said.

 By Kieran Campbell   - APNZ

Suncor Energy Achieves full bitumen production

Suncor Energy says bitumen production from the first three phases of its Firebag in situ project in Alberta reached design capacity of 120,000 b/d at the end of year’s third quarter, during which steaming began of wells in the project’s fourth phase (OGJ Online, July 28, 2011).

Third-quarter average production was 113,000 b/d at the Firebag complex, more than double the output during the comparable quarter of 2011.

Firebag, in the northern Athabasca oil sands region, produces via steam-assisted gravity drainage supplemented by infill wells to lower steam-oil ratios.

Suncor expects the fourth phase of production to begin by yearend. It expects total Firebag production to reach 180,000 b/d when the fourth phase reaches capacity.

 By OGJ editors

Albanian Bitumen for Bulgaria

 

Bulgarian PM Boyko Borisov (right) and Albanian PM Sali Berisha (left) in Tirana, Monday, Oct 22, 2012. Photo by EPA/BGNES 

 

Bulgarian Prime Miinister Boyko Borisov has declared during a visit in Tirana that Bulgaria would like to buy as much bitumen, or asphalt, as Albania can provide.

Borisov, whose major landmark policy as a prime minister has been the construction of highways in Bulgaria, was on a state visit in Albania on Monday, meeting with Albanian Prime Minister Sali Berisha.
The other highlight of the talks between Borisov and Berisha in Tirana was an understanding that Bulgaria and Albania will be working together to complete the railway section of the largely imaginary Pan-European Transport Corridor No. 8, which is supposed to become a major international trading route between Europe and East and Central Asia, running from Bulgaria's Black Sea coast to Albania's Adriatic coast.

Amidst the signing of a total of three inter-governmental agreement, including a trading and economic relations agreement, Albania's PM Berisha described the talks with the Bulgarian delegation as very friendly and fruitful, as cited by Darik Radio.

"We want bitumen; we will get as much as you have to offer," Bulgaria's PM told his Albanian counterpart.
"They can be exporting bitumen to Bulgaria. They have the best bitumen, it's natural. There are so many roads in Bulgaria built with Albanian bitumen that haven't had a scratch in 30 years. We need it, we will get as much as we can," Borisov stated, smiling.

He further noted that Bulgaria was one of the EU member states that support the liberalization of the EU visa regime for the citizens of Albania, Macedonia, Montenegro, and Serbia.

"I am personally very satisfied with when Prime Minister Berisha told me that in Kosovo the Christian monuments and monasteries are being protected and preserved, and I truly hope that together with Serbia and Macedonia we will be able to build our large infrastructure projects," the Bulgarian PM added.
Borisov's visit in Tirana did not go without a translation blunder as at the beginning of the Prime Ministers' joint news conference the interpreter presented Borisov as "Boyko Dimitrov".

Later on Monday, Borisov and Berisha opened an Albanian-Bulgarian business forum in Tirana.
On a different matter, namely, the use of the Bulgarian government plane, which in August was revealed to have been lent by Borisov to his amateur football team, the Bulgarian government raised eyebrows again as its delegation arrived in Tirana by two military transport planes Spartan of the Bulgarian Air Force, as the Bulgarian government plane had taken President Rosen Plevneliev to Israel earlier on Monday.

Source- Novinite.comhttp://www.novinite.com/view_news.php?id=144387 

Shell exiting Vietnam bitumen Market

A barrel of Shell bitumen is pictured in this illustrative photo.

After pulling its LPG (liquefied petroleum gas) business out of Vietnam last week, Dutch energy and petrochemical company Shell is considering selling its two bitumen manufacturing plants in the country as well.

Shell currently runs one bitumen plant at the Go Dau Industrial Park in the southern province of Dong Nai, and one at the Cua Lo park in the northern province of Nghe An.

The Dutch company is reevaluating its bitumen sector in Vietnam, which is also included in its business strategy of withdrawing from liquefied petroleum gas, said Le Duy Thanh, CEO of Shell Vietnam.


Shell is aiming to develop in fewer markets but at a larger scale, Shell Vietnam said in a statement sent to its dealers nationwide when announcing the withdrawal on October 10.

Shell has transferred its entire share in a joint-venture in Hai Phong, and a Ho Chi Minh City-based company, 100 percent of whose stake it held, to Thailand’s Siam Gas Co, officially becoming the third global LPG brand names to leave the country, after Mobile Unique Gas and Castrol BP Petco.

The company is eying doubling its growth in the lubricant oil sector by 2015, and wants to enter the fuel market, if permitted by Vietnamese laws.

At present, only state-run enterprises are allowed to operate as fuel wholesalers, which import and distribute petroleum and oil commodities in Vietnam.

Source -Tuoitre News

Cement as an Alternative to Bitumen- Cost Considerations

Tarmac has set up a new business unit specialising in the production and supply of cement-bound and recycled materials.

 

Tarmac Pavement Solutions, part of the company’s National Contracting division, aims to help customers beat the rising cost of bitumen on highways schemes.

With bitumen prices up 60% in the last two years, Tarmac Pavement Solutions has been set up to help cut the cost of new build road construction and resurfacing projects using cement-bound or recycled asphalt systems.

Cement-bound pavements are an alternative to bitumen-based materials. They consist of a hydraulic-bound mixture used as the base layer - predominantly a cement-bound granular material - that is then surfaced with conventional asphalt.

Cement-bound roads can be designed to give equivalent service life performance to both conventional asphalt and rigid concrete pavements, Tarmac said.

Tarmac Pavement Solutions division will be managed by Richard Vine, National Contracting regional firector. In addition to a range of cementitious solutions, it will also offer TarmacDry porous asphalt and the long-established FoamMaster system, a road surfacing process that uses road arisings in cold-mix production to create an energy-efficient alternative to traditional hot asphalt.

Mr Vine said: “With bitumen accounting for around a third of the cost of building a new road, its price volatility means that the sector must embrace cement-bound materials and reduce its reliance on bitumen. Driving greater uptake of recycled asphalt is also key to cutting costs and meeting environmental targets and our new service builds upon our extensive expertise in this area.

“We also believe that the durability of cement-bound material provides commercial opportunities in sectors such as ports and aviation.”

Source - Constuctionindex.co.uk

Oil Spill

The hidden, long-term effects of the 2010 pipeline accident that spilled more than a million gallons of heavy Canadian crude oil into Michigan’s Kalamazoo River became public last week when the EPA revealed that large amounts of oil are still accumulating in three areas of the river.The problem is so serious that the EPA is asking Enbridge Inc., the Canadian pipeline operator, to dredge approximately 100 acres of the river. During the original cleanup effort, dredging was limited to just 25 acres because the EPA wanted to avoid destroying the river’s natural ecology. The additional work could take up to a year and add tens of millions of dollars to a cleanup that has already cost Enbridge $809 million.

The EPA notified Enbridge of its proposed order on Oct. 3, saying the additional clean-up is “critical” and the work “should be conducted in an expeditious manner” to remove the oil before it recontaminates the river.

“The increased accumulation demonstrates that submerged oil is mobile and migrating, evidencing that submerged oil removal is warranted to prevent downstream migration … ,” Ralph Dollhopf, the EPA’s on-scene coordinator and Incident Commander, said in the letter notifying Enbridge of the agency’s findings.
In June an InsideClimate News investigation revealed that the cleanup of the Kalamazoo has been unusually difficult, because the pipeline that ruptured was carrying dilbit, a mixture of heavy Canadian bitumen that has been diluted with liquid chemicals, some of them toxic. Bitumen, also known as tar sands oil, has the consistency of peanut butter and is too heavy to flow through pipelines without being thinned with chemicals. When Pipeline 6B split open, the chemicals began evaporating and the reconstituted bitumen began sinking to the river’s bottom.

“More than two years after the spill of diluted bitumen, this proposed order demonstrates that EPA is still tackling the problem of how to remove the heavy oil from the Kalamazoo River,” said Sara Gosman, an adjunct professor of environmental law and policy at the University of Michigan Law School.

The EPA’s determination that more cleanup is needed was based on the findings of a year-long survey of nearly 6,000 locations along the 40 miles of river contaminated when pipeline 6B ruptured in July 2010. Enbridge has until next week to request a conference with the EPA to discuss the additional work and 30 days to submit written comments.

Steve Hamilton, a Michigan State University professor who was among the experts who worked on the study, said the recommendation for dredging was driven by concern that during flooding the pools of oil could break loose and recontaminate parts of the river that have already been cleaned—or flow downriver into areas that were never touched by the gooey oil.

Illustration of Line 6B rupture site. Photo: Catherine Mann.

“We will never get all of the oil out [of the river]. It’s impossible,” Hamilton said. “The challenge is to determine when do you get to a point of diminishing returns where the eradication is too environmentally destructive to warrant the removal.”

A spokesman for the EPA said the agency would not have any comment beyond the information contained in its proposed order and the letter it sent to Enbridge.

The EPA acknowledged in the proposed order that Enbridge had conducted substantial cleanup since the pipeline ruptured, but “despite these response actions, oil remains in the Kalamazoo River.”
Enbridge did not respond to requests for comment for this story. But in an Aug. 24 letter to the EPA, the company said it did not believe that more dredging—especially in the area near the Ceresco Dam—was necessary.

“Enbridge’s position is that we have reached a point of diminishing returns where further invasive activities would do more harm than good,” Richard Adams, Enbridge’s vice president of field operation in the United States, said in the letter.

“In fact, we strongly believe that such action solely for the purpose of aesthetics would both negatively impact the riverine environment and create a significant disturbance and inconvenience to local landowners and other river users.”

The company also disputed the EPA’s concern that oil is still pooling in the river, especially near the Ceresco Dam. “[T]he most significant evidence of submerged oil has been sheen which, when collected, has amounted to a volume of less than 1 gallon of product in total during 2012,” Adams wrote, referring to the area around the dam.

Deb Miller, who lives near the dam in the community of Ceresco said she sees rainbow sheens of oil floating on the surface when she walks along the river near the carpet store she and her husband own. Recently she ran a garden rake along the river’s bottom and said that marble-sized globs of oil popped to the surface, accompanied by the sour whiff of petroleum.

“It’s insane how much oil is still here,” said Miller, who has testified before Congress about the spill’s impact on her life.

Dilbit: The Unknown Factor
The National Transportation Safety Board blasted Enbridge in July for a “complete breakdown of safety” in the 2010 disaster, which is considered the largest inland oil pipeline spill in U.S. history. The report criticized the company for failing to make repairs despite knowing of the defects five years before the rupture. The Department of Transportation also imposed a record $3.7 million civil penalty. Enbridge paid the fine last month.

Enbridge has proposed replacing the entire 210-mile length of 6B from Indiana to Ontario, Canada, at a cost of $1.3 billion. But the project has faced resistance from landowners who are fighting the company’s efforts to condemn their land and from lawsuits claiming Enbridge hasn’t complied with all state and local regulations and environmental laws.

The study of the contaminated 40-mile section of the Kalamazoo that resulted in the EPA’s directive began in 2011 and ended in August.The EPA enlisted 14 federal, state and local organizations—including the U.S. Fish and Wildlife Service, the U.S. Geological Survey, and the Michigan Department of Environmental Quality—to perform the study as part of a Net Environmental Benefit Analysis to ensure the ongoing cleanup was sufficient and further ecological damage from the spill would be minimized.

Hamilton, the Michigan State University professor of ecology and environment, joined the team as a representative of the Kalamazoo River Watershed Council. He has done extensive research on the river and its flood plain and spoke to InsideClimate News not as a representative of the EPA but as one of the individual scientists who worked on the investigation.

Hamilton said the study relied on a technique called poling, where a long pole is used to churn up the bottom of the river to see if oil or residue floats to the surface. He said the poling identified about two dozen sections of the river where enough oil remained to be of concern. With those areas in mind, the scientists used a model of the river to simulate floods equal to the high water marks of the last 100 years, five years and the highest flood mark since the spill.

They were particularly attentive to the hundred year flood levels despite the statistical improbability of such a flood occurring.

“With climate change it might be more possible than the record might indicate,” Hamilton said.
The recommendation for dredging was based on factors beyond aesthetics, Hamilton said. One of the scientists’ primary worries was that not much is known about dilbit.

“This kind of crude oil is a complex mix of hundreds of compounds—some known to be toxic—that has not been studied much,” he said. “We just don’t understand the consequences well enough.”
Congress has ordered a study, which is being conducted by the National Academy of Sciences, to determine whether dilbit is more likely than conventional oil to corrode pipelines. The study isn’t expected to be finished until the summer of 2013.

Three Areas at Risk
The investigators decided that “sheen management”—a technique that uses booms to contain oil floating to the surface—was appropriate for most of the sections where they found pools of oil. But they concluded that dredging was the only solution for three areas of the river between Marshall and Kalamazoo, Mich. The vulnerable areas are upstream of Ceresco Dam, upstream of the Battle Creek Dam in the Mill Ponds area, and in the delta upstream of Morrow Lake. Together, they cover about 100 acres, an area about the size of 75 football fields.

Near the Ceresco Dam, the investigators discovered the area of submerged oil had increased from 20 acres to 23.5 aces and that oil globules were floating to the surface, according to the EPA’s proposed order.
Because that area was subjected to what the EPA called “highly effective” dredging in 2010, the agency concluded that additional dredging would prove successful. The earlier dredging project lasted about three weeks and crews carted away 5,500 cubic yards of oil-soaked sediment from the river bottom, enough to fill 27 semi-trailers. An estimated 14 million gallons of water was decontaminated and returned to the river.
Mill Pond, the second section of the river cited for intense cleanup, presented more of a quandary for the EPA. Some sections shouldn’t be dredged, the agency decided, because the digging and scraping would do too much damage to the sensitive ecology and because the submerged oil wasn’t likely to move down river.
At the third proposed cleanup site, the Delta just upstream from Morrow Lake, the investigators discovered a “substantial expansion” of the submerged oil, with the plume now covering most of the two-mile length of the delta, an area of about 55.5 acres.

Hamilton said the scientists decided dredging was needed, because floods might dislodge the submerged oil and allow it to flow into a part of the Kalamazoo River unblemished by the spill.
“It would be wise to get at it now when it’s practical before it either becomes lodged in small backwater areas or migrates into areas where oil has not been previously discovered,” he said.

 By David Hasemyer, InsideClimate News

Canada's Bitumen for India

Although China gets most attention as an alternative buyer of heavy oil from Alberta, Canada’s top energy official has taken a trip that deserves notice.

The oil-craving Chinese government looks longingly at the vast oil sands resource of Alberta and has financed large investments by state-owned companies in Canadian bitumen producers and projects. CNOOC Ltd.’s July proposal to buy Nexen for $15 billion is a standout example.

Canada has reciprocated the interest since the US, its default market, turned balky about extending the Keystone pipeline system to serve high-conversion refineries on the Gulf Coast.
Canada’s China option, though, is no sure thing.

An increase in westbound exports depends on completion of Enbridge’s Northern Gateway Pipeline. The pipeline would carry 525,000 b/d of Albertan oil to Kitimat, BC, but faces environmental opposition.

Furthermore, the ability of Chinese refineries to process Canadian bitumen remains limited to “a few hundred thousand barrels per day,” according to a China National Petroleum Corp. vice-president who spoke at the Oil Sands & Heavy Oil Technologies Conference last July.

All of that makes a foray by Canadian Minister of Natural Resources Joe Oliver to India especially interesting.

“Canada is well-positioned to fulfill India’s rapidly increasing need for energy, minerals, metals, and wood products,” Oliver said, specifically mentioning his country’s potential as an exporter of LNG.
But India is a market for bitumen, too.

At least seven of India’s 21 refineries have coking capacity, including 305,000 b/d at Reliance Industries Ltd.’s 12.4 million-b/d Jamnagar refining complex and a new 150,000 b/d at Essar Oil Ltd.’s nearby 405,000-b/d Vadinar facility. The refineries are on the Gulf of Kutch in the western Indian state of Gujarat.
Bitumen sales might not be the main subject Oliver takes up with Indian Minister of Petroleum and Natural Gas Shri Jaipal Reddy. But they probably are on the agenda.

Canada knows the value of multiple markets. It learned the lesson from a traditional customer acting like it doesn’t want the oil.

 By Bob Tippee
OGJ Editor
(Online Oct. 12, 2012; author’s e-mail: bobt@ogjonline.com)