July 27, 2016- Housley Carr, RBN Energy- Sarnia, ON is one of Canada’s leading refinery and petrochemical centers, and for good reason. From the start –– 158 years ago, with what Canadians claim to be the world’s first oil well in the Western Hemisphere –– the Sarnia area has had geology and geography on its side, and it doesn’t hurt that it’s within 500 miles of more than half the people in North America. But the interconnecting infrastructure that drives Sarnia’s Chemical Valley isn’t nearly as well known or understood as the pipelines, railroads, storage and refineries along the U.S. Gulf Coast. Also, it should be noted, Sarnia has become one of the biggest beneficiaries of Marcellus/Utica production of ethane and other natural gas liquids, the mother’s milk of the petchem sector. That alone makes it worth discussing. Today, we begin a series on a lynchpin of Canada’s hydrocarbon production and processing sector.
If Canadians are to be believed –– aren’t they too nice not to be? –– the first commercial oil well was dug (not drilled) by James Miller Williams at what came to be known as Oil Springs, ON (just south of Sarnia, in southwestern Ontario) in the summer of 1858. That was a full year before Edwin Drake drilled his first well at Titusville, PA. Decades and even centuries before Williams dug that initial 50-foot well (some say he was drilling for water –– not oil –– and got lucky, Jed Clampett-style), the Oil Springs area had been known for its sticky, crude oil-based “gum beds,” small parts of which were excavated and refined into asphalt, paints and resins by native people and noted by early French explorers. After he struck oil, Williams, went right to work, building a simple refinery nearby and establishing Canada’s first oil company (J.M. Williams Co., which was soon renamed the Canadian Oil Co. to reflect his ambitions). Within a few years, more than 100 oil wells had been drilled in the Sarnia/Oil Springs/Petrolia area by wildcatters, and the region’s oil business was off to a rousing start –– until it wasn’t. The boom led to a bust (too much oil production flooded the market and prices collapsed –– sound familiar?), but a rebound followed, and by 1900 not only had Imperial Oil been formed (it had refineries in Petrolia and in nearby London, ON), it had been gobbled up by John D. Rockefeller’s Standard Oil. (Exxon Mobil still owns nearly 70% of Imperial.) Oil production in Ontario fizzled out decades ago, but by World War II Sarnia had cemented its place as one of eastern Canada’s refining and petrochemical hubs, criss-crossed by railroads and pipelines, and chock full of skilled refinery and petchem workers.
Our intent in this series is to describe Sarnia’s existing refinery and petrochemical infrastructure, including the railroads, rail yards, pipelines, storage facilities (underground and aboveground), and other elements that help to keep the place humming –– and, in many cases, thriving. Then, we’ll get to ongoing and planned changes that will affect (for better and for worse) some of Chemical Valley’s major players. First, we should remind non-Canadians that Sarnia is located near the southern tip of Lake Huron, where the second-largest of the Great Lakes flows into the St. Clair River. The St. Clair forms part of the boundary between Ontario and southeastern Michigan; the river flows into Lake St. Clair, which flows into the Detroit River (which flows into Lake Erie). There are currently three refineries in Sarnia with a combined capacity of about 277 Mb/d: Imperial (121 Mb/d; pink rectangle in Figure 1), Suncor (85 Mb/d; brown rectangle), and Shell (71 Mb/d; red rectangle).
The Imperial refinery goes way back; when it was commissioned in 1897, it was the largest refinery in Canada, with a capacity of 900 b/d –– enough to fill one modern 30,000-gallon rail tank car every 19 hours. Now, at 121 Mb/d, it ranks sixth or seventh in capacity –– the largest in Ontario, but far smaller than Irving Oil’s 300-Mb/d refinery in Saint John, NB; Valero Energy’s Jean Gaulin 235Mb/d refinery in St. Romuald, QB; and Imperial’s own 187-Mb/d refinery in Edmonton, AB. All three of the Sarnia refineries produce a combination of gasoline, diesel and kerosene/jet fuel, as well as smaller volume of aromatics and other products. As we’ll get to later (when we describe in detail the crude oil, NGL and refined petroleum products pipelines that serve southwestern Ontario), the Sarnia refineries primarily receive their oil via the Enbridge pipeline system, which has the ability to ship Western Canadian, Bakken and other U.S. Midcontinent crudes. The Imperial refinery’s 2015 crude slate was a roughly two-thirds/one-third mix of Western Canadian Sweet (WCS) and Western Canadian Heavy Sour (it stopped processing Eastern Canadian Sweet and imported sweet in 2014), while about 75% of Suncor’s feedstock came from the Alberta oil sands, and Shell’s crude slate was all WCS.
We’ll get back to the Sarnia refineries in an upcoming episode. To continue our introduction to the area’s refinery and petrochemical infrastructure, let’s next look at the Plains All America/Pembina fractionator (beige diamond to upper right of Figure 1) and –– perhaps the most interesting of all –– NOVA Chemicals’ Corunna petrochemical complex (lime green rectangle). Plains holds an 82% ownership interest in the 100-Mb/d fractionator and Pembina owns the remaining 18% stake. Fractionators separate mixed NGL streams (sometimes known as “y-grade”) into so-called “purity” products –– ethane (C2), propane (C3), butanes (C4), and natural gasoline or plant condensate (C5+) –– that are used in a wide variety of petrochemical, heating, gasoline blending and other markets (see Talkin’ ‘Bout My F-f-f-ractionation). Canadians can’t help but be different (just kidding), so instead of receiving (and fractionating) y-grade, the Plains/Pembina fractionator in Sarnia receives a propane/butane (or C3/C4) mix that is piped in from Alberta in batches via the Enbridge system. At the Sarnia fractionator, the mix is separated (no surprise here) into propane, normal butane and isobutane. (The ethane/C2 and natural gasoline/plant condensate/C5+ are stripped from the y-grade in Alberta.) The output of the Plains/Pembina fractionator makes its way to the NOVA complex (as we’ll explain in detail later), where the propane and butanes provide a portion of the feedstock consumed by NOVA’s 1.8-billion-pound/year (Bp/y) ethylene plant (also known as a steam cracker).
An important point here that we will get back to: Until 2006, the steam cracker’s feedstock had been 100% naphtha (produced from topping a crude/condensate stream). That year, to reduce feedstock costs, a few of the ethylene plant’s furnaces were converted to consume propane and butanes (the others continued to use naphtha). Then, in the fall of 2014, the naphtha-consuming furnaces were reconfigured to use ethane that is piped in from the heart of the Marcellus/Utica region on Sunoco Logistics Partners’ Mariner West ethane pipeline. Further changes at the NOVA cracker are in the works. (Again, more on this later.)
The last pieces of the Sarnia infrastructure puzzle that we’ll consider this time are three key storage facilities, two of which are actually located across the international border in Michigan –– and all of which provide another example of how the Sarnia area’s geology (in this case the salt beds that underlie much of the region) has worked in its favor. First, in Sarnia, there’s Pembina’s Corunna NGL storage facility (beige box near NOVA’s Corunna petchem complex), whose existing underground salt domes can hold up to 5 MMbbl of ethane, propane and butanes. Next up is DCP Midstream Partners’ Marysville (MI) NGL storage site across the St. Clair River (blue square), whose nine salt domes can hold up to 8 MMbbl. And then there’s Plains All American’s St. Clair NGL storage location, which has seven salt caverns with a combined capacity of about 2 MMbbl for propane and butanes.
In this series opener, we described the “dots” in Sarnia’s refining/petrochemical landscape. In upcoming episodes we will look at the railroads, pipelines, and rail and truck facilities that “connect” these dots, and then consider what’s ahead for one of Canada’s most important hydrocarbon processing centers.
Posted in: Headlines