DCN ARCHIVES

April 5, 2007

Oil & Gas

Shell eyes Sarnia for new refinery

Massive project would be a boon to industry

SARNIA

Establishing construction worker camps is one of the possibilities that will be considered for handling a massive project proposed for the Sarnia area.

But during a recent open house, Shell Canada Limited officials emphasized nothing’s written in stone on how they might handle the huge population of workers that will be required to build a heavy oil refinery.

MARY BAXTER

Amrik Ahluwalia holds a sample of crude oil and sand obtained from Shell Canada's Alberta oil sands operations. Ahluwalia is heading up a team of 40 Shell Canada employees studying the feasibility of establishing a refinery for the oil, known as heavy crude, near Sarnia.

Nor is it 100 per cent confirmed whether the company will go ahead with plans to establish a heavy oil refinery to process oil piped in from oil sands in Alberta.

Officially, Shell won’t make that decision until 2009.

But a $50 million commitment this year to conduct a raft of environmental assessment studies for the project is a good indication of how serious the company is about the proposal, said Heather Cooper, member of a team from the company assigned to explore the project’s feasibility.

“That really tells you something,” she said.

During the March 29 open house, several team members were on hand to discuss the project that, if confirmed, will be located south of its existing refinery near Sarnia on a 7,000 to 8,000 acre parcel in St. Clair Township.

The parcel is intentionally large to provide a buffer between the company’s operations and neighbouring residents, said Keith Blinston, a company representative involved in land acquisition for the project.

Amrik Ahluwalia, who heads up the team, said the refinery is needed to process heavy crude oil drawn from the company’s Alberta oil sands operations. Shell already operates a refinery in the area, but it is not equipped to handle heavy oil, which requires added processing.

The project not only includes erecting facilities for refining the oil, but also a dock, steam and electric generating facilities and support facilities such as a tank farm for storage of the oil in its various stages.

Road and rail improvements are also a part of the plan as are establishing pipeline connections between the new and existing plants and to connect to the pipeline network that conveys crude oil to Sarnia.

Integrating the new and existing facilities is another feature of the project.

“We will be running as one unit,” he said, adding the footprint of the existing plant will be slightly reduced.

Once up and running, the new, integrated facility will have the capacity to produce 150,000 to 250,000 barrels a day. That’s more than twice the existing refinery’s capacity of 65,000 barrels a day.

At present, the company has “no concept of how much the project will cost,” Ahluwalia said.

However, there’s no doubt it’s going to be expensive.

Ahluwalia pointed out that just one of the processing units used is worth about “half a billion-plus dollars.”

For Doug Henry, the owner of NASCO, a Sarnia-based mechanical contracting business, the potential of the project was “extremely positive” news and would mean growth for the area.

Henry was one of about 350 people who turned up to view the details of the proposed project at the Sarnia open house. The open houses are part of a public consultation process required by the province.

The company plans to complete its environmental assessment studies for the province by January 2008.

Environmental consultants Jacques Whitford and AXYS Environmental Consulting Ltd. are conducting the assessments for Shell.

Assessments will address biological, ecological, environmental, noise, light, air, physical environment, social, economic and human health issues.

Once these are completed, the next step will be finalizing the design and costs, Ahluwalia said.

Construction would begin after the final decision to go-ahead is reached in 2009, he said, and the anticipated completion date is 2013

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