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CN Rail moves ahead with bitumen pellet project amid pipeline shortage

Canadian National Railway Co. is pushing ahead with a project to solidify and ship bitumen in soap-bar-shaped chunks in a bid to open overseas markets for the oil sands product.

Montreal-based CN said the pellets of heavy oil, mixed and encased with polymer or plastic and shaped as a bar of soap, will be robust enough to be handled like coal – loaded into rail cars, piled onto conveyor belts and dumped into a ship's hold.

CN says the product it calls CanaPux is aimed at oil patch producers and shippers that do not have access to pipelines, or want to reach buyers in Asia or other continents.

A lack of pipeline space for oil-patch producers has resulted in a steep discount on Canadian oil this month. The pipeline shortage has pushed sharply higher volumes of crude onto railways for export to the United States, according to data from Canada's National Energy Board.

"We're looking at finding a new way to reach new markets … in a safe and environmentally friendly way," said James Auld, a senior manager in CN's corporate development office in Calgary.

One hurdle CN faces is the ban on oil tankers along British Columbia's northern coast, including the port of Prince Rupert. CN said it is confident shipping the bitumen chunks will be permitted because they are designed to float and withstand impact, reducing environmental risks and simplifying cleanup in a spill.

Delphine Denis, a spokeswoman for federal Transport Minister Marc Garneau, said the government is awaiting results of testing in water before deciding if the product is exempt from the shipping ban intended to protect the environment from a spill.

Since announcing the bitumen packaging project earlier this year, CN has overseen the creation of a laboratory prototype of the package and put it through the rigours of the supply chain. Mr. Auld said CN experimented with various mould shapes and settled for now on a square shape with rounded edges and a domed top because it stacks well and does not roll. An earlier version resembled a thick hockey puck.

"That's taken us to the point where we really know that this is doable from a chemistry and from a process point of view. But there is still some risk involved in handling large quantities of this," Mr. Auld said.

CN has picked Calgary's Toyo Engineering Canada Ltd. to build and operate a demonstration plant near Edmonton to produce the pellets. The plant, which Mr. Auld said he hopes will be running by mid-2018, will have the capacity to turn 1,000 barrels of oil into a pile of pellets. The products will be put through a closed-loop supply chain – formed, transferred to a rail car and off-loaded. Then the chunks will be shredded and heated to separate the bitumen and polymer.

"A lot of the potential shippers and interested parties we've talked to, refiners and producers and transloaders, all want to know how this works. And to do that we really have to build a commercial pilot. We would like to show the industry this will work," Mr. Auld said.

A barrel of bitumen makes 500 pellets. An open-top rail car, known as a gondola, holds about 500 barrels worth of heavy crude, once the polymer is extracted. This is greater and more cost effective than the 350 barrels of heavy crude held by a tank car, not including the diluent, Mr. Auld said.

bits of bitumen

CN’s bitumen packets are moving to the pilot-project phase. Here’s how CN says the pellets would fit into the supply chain:

Extraction

 

1. Bitumen is extracted.

Processing

 

2. It is shipped to a processing plant.

Processing plant

Finishing

 

3. The bitumen is then mixed with a special polymer and moulded into pellets that are about the size of a bar of soap.

Bitumen pellets

Shipping

 

4. The finished pellets are then placed via conveyor belts into rail cars. Then, they are brought to port where they are loaded onto freighters.

Conveyor

Gondola cars

Refining and separation

 

5. Once the pellets arrive at the final destination, they are shredded and heated to separate the polymer so the bitumen can be refined.

Separation process

Recycling and reuse

 

6. Finally, the polymer is recycled or shipped to the processing plant to be reused.

Used polymer

JOHN SOPINSKI and eric atkins/THE GLOBE AND MAIL SOURCE: canadian national railway

bits of bitumen

CN’s bitumen packets are moving to the pilot-project phase. Here’s how CN says the pellets would fit into the supply chain:

Extraction

 

1. Bitumen is extracted.

Processing

 

2. It is shipped to a processing plant.

Finishing

 

3. The bitumen is then mixed with a special polymer and moulded into pellets that are about the size of a bar of soap.

Shipping

 

4. The finished pellets are then placed via conveyor belts into rail cars. Then, they are brought to port where they are loaded onto freighters.

Conveyor

Gondola cars

Bitumen pellets

Refining and separation

 

5. Once the pellets arrive at the final destination, they are shredded and heated to separate the polymer so the bitumen can be refined.

Recycling and reuse

 

6. Finally, the polymer is recycled or shipped to the processing plant to be reused.

Used polymer

Refined bitumen

Separation process

JOHN SOPINSKI and eric atkins/THE GLOBE AND MAIL SOURCE: canadian national railway

bits of bitumen

CN’s bitumen packets are moving to the pilot-project phase. Here’s how CN says the pellets would fit into the supply chain:

Extraction

 

1. Bitumen is extracted.

Processing

 

2. It is shipped to a processing plant.

Finishing

 

3. The bitumen is then mixed with a special polymer and moulded into pellets that are about the size of a bar of soap.

Bitumen pellets

Refining and separation

 

5. Once the pellets arrive at the final destination, they are shredded and heated to separate the polymer so the bitumen can be refined.

Shipping

 

4. The finished pellets are then placed via conveyor belts into rail cars. Then, they are brought to port where they are loaded onto freighters.

Recycling and reuse

 

6. Finally, the polymer is recycled or shipped to the processing plant to be reused.

Conveyor

Gondola cars

Used polymer

Refined bitumen

Separation process

JOHN SOPINSKI and eric atkins/THE GLOBE AND MAIL, SOURCE: canadian national railway

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