northern lights - alberta · the northern lights upgrader is the twin project to the mining and...

Oil Sands Upgrader Project

Public Disclosure Document

March 2006

Northern Lights

President’s Message . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Project Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Introduction

Location

Northern Lights’ Bitumen Resource Base

Project Concept . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Overview of Proposed Upgrading Process

Environmental Control Technologies

Gasifi cation

Related Utilities and Infrastructure

Project Timing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Project Milestones

Social and Environmental Responsibility . . . . . . . . . . . . . 9

The Northern Lights’ Commitment

Community and Stakeholder Engagement

Environmental Impact Assessment

Socio-Economic Impacts and Benefi ts

Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Contact Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Contents

NORTHERN LIGHTS – Oil Sands Upgrader Project 1

President’s Message

Alberta’s oil sands deposits represent one of the

world’s greatest concentrations of crude oil and a

secure source of energy to meet rising global

consumption. These oil sands contain an estimated

175 billion barrels of reserves deemed economically

recoverable with today’s technology, placing Canada

second only to Saudi Arabia in terms of proven

oil reserves.

The Northern Lights Upgrader proposed for

Sturgeon County, a short distance from Edmonton,

Alberta, will provide enhanced upgrading capacity

to bring Alberta’s oil sands production to market.

We are pleased to present this Public Disclosure

Document for our Upgrader. This document

provides governments, regulators, stakeholders

and the public with information about the

Project and our anticipated timelines for receiving

regulatory approvals, conducting the Environmental

Impact Assessment, presenting our Community

and Stakeholder Engagement Program and

its completion.

The Northern Lights Upgrader is the twin project

to the Mining and Extraction Project also being

developed by the Northern Lights Partnership, a

general partnership between Synenco Energy Inc.,

as the Managing Partner, and SinoCanada Petroleum

Corporation. The Northern Lights Mining and

Extraction Project will be developed under a

separate regulatory approval and when fully

operational (first oil is expected in 2010), is

anticipated to produce sufficient diluted bitumen to

support the production of 100,000 barrels per day of

light sweet synthetic crude oil at the Northern

Lights Upgrader for 30 years.

As the Managing Partner of the Northern Lights

Partnership, Synenco is pleased to be playing a role

in the development of Alberta’s oil sands, a resource

that offers unprecedented economic growth and

related benefits to Alberta and Canada for many

decades to come. The Northern Lights Partnership is

mindful that the rapid expansion of the oil sands

industry has created pressure points and we are

committed to working collaboratively with

governments, regulators, other industry players,

and the communities where we operate

K.Todd Newton

President and Chief Operating Officer

Synenco Energy Inc.

Managing Partner, Northern Lights Partnership

I N T R O D U C T I O N

Synenco Energy Inc. was incorporated in 1999 to acquire

and develop oil sands resources in the Athabasca Region of

northern Alberta. Between 1999 and the spring of 2005 it

acquired the oil sands development rights to 186 square

kilometres of land located approximately 100 kilometres

northeast of Fort McMurray, Alberta for the purpose of

building and operating a mining, extraction and upgrading

facility called the Northern Lights Project. It also acquired

coal development rights to overlapping and adjacent lands

covering approximately 559 square kilometres.

In May 2005, Synenco created the Northern Lights

Partnership with SinoCanada Petroleum Corporation, the

Canadian subsidiary of China-based Sinopec International

Petroleum Exploration and Production Corporation, one of

the world’s largest integrated oil and gas companies with

global operations. Synenco holds a 60 per cent ownership

interest and is the Managing Partner of the Northern Lights

Partnership, with SinoCanada Petroleum Corporation

holding the remaining 40 per cent interest.

In October 2005, the Northern Lights Partnership

published an Updated Public Disclosure Document

describing the status of the Project’s Environmental Impact

Assessment and application for regulatory approval.

This Update indicated that the application was scheduled

for fi ling in mid-2006 and that consideration was also being

given to an alternative location for the Project’s upgrading

facility. On December 21, 2005, the Northern Lights

Partnership announced that it would seek regulatory

approval, under a separate application and Environmental

Impact Assessment process, to build the Northern Lights

Upgrader in Sturgeon County, whose boundaries are

approximately 40 kilometres northeast of Edmonton. The

initial application is now solely focused on the Northern

Lights Mining and Extraction Project.

This Public Disclosure Document initiates the regulatory

approval process for the Northern Lights Upgrader (“the

Project“). The information in this document is intended to

assist in the development of the Terms of Reference for the

Environmental Impact Assessment and to support a public

consultation program that both promotes dialogue and

invites input from aff ected stakeholders and communities.

2 NORTHERN LIGHTS – Oil Sands Upgrader Project

Project Background

P R O J E C T LO C AT I O N

The Northern Lights Upgrader will be built on land

purchased by Synenco, on behalf of the Northern Lights

Partnership, covering approximately fi ve square kilometres

in Sturgeon County in Alberta’s Industrial Heartland

northeast of Edmonton, Alberta.

The Project area is located approximately nine kilometres

south and one kilometre east of Redwater’s southern

boundary. It is immediately bounded to the north by

Provincial Highway 38 and to the south by the North

Saskatchewan River. The Vinca Bridge crosses the North

Saskatchewan River slightly more than six kilometres to the

east of the Project site. These lands fall within:

NW 1⁄4, Section 28, Township 56, Range 21, W4M

NE 1⁄4, Section 28, Township 56, Range 21, W4M

SW 1⁄4, Section 28, Township 56, Range 21, W4M (partial)

NW 1⁄4, Section 32, Township 56, Range 21, W4M

NE 1⁄4, Section 32, Township 56, Range 21, W4M

SW 1⁄4, Section 32, Township 56, Range 21, W4M

SE 1⁄4, Section 32, Township 56, Range 21, W4M

NW 1⁄4 Section 33, Township 56, Range 21, W4M

NE 1⁄4 Section 33, Township 56, Range 21, W4M

SW 1⁄4 Section 33, Township 56, Range 21, W4M

SE 1⁄4 Section 33, Township 56, Range 21, W4M

This location off ers a number of advantages:

• proximity to existing or planned energy- and pipeline-

related facilities, other compatible industries and

markets for products,

• access to a skilled, stable workforce and

essential services,

• opportunities for strategic alliances and partnerships to

create value enhancement and robust economic

performance, and

• greater opportunities for cost containment both

short- and long-term.


N O R T H E R N L I G H T S’ B I T U M E N R E S O U R C E B A S E

The Project will be developed as an upgrading complex for

bitumen transported by pipeline from the Northern Lights

Mining and Extraction site northeast of Fort McMurray. On

December 31, 2005, Norwest Corporation, an independent

geological consulting fi rm, issued a report on the bitumen

resources contained on the Northern Lights Partnership’s

lands. Based on cumulative drilling data to date and

standard reporting requirements, the Norwest report

identifi ed best, low and high estimates for the Northern

Lights Partnership’s bitumen resource base.

The best estimate is 1.49 billion barrels of discovered

resources of in-place bitumen, with the low and high

estimates being 836 million and 2.38 billion barrels

respectively. This bitumen resource base is more than

suffi cient to support the production of the planned

100,000 barrels per day of light sweet synthetic crude oil at

the Northern Lights Upgrader for 30 years. Additionally, the

Northern Lights Upgrader contemplates a design to receive

and process third-party bitumen.

P R O J E C T LO C AT I O N I N S T U R G E O N CO U N T Y


Calgary

Edmonton

Fort MacKay

Fort Chipewyan

Fort McMurray


Project Concept

There have been a number of advancements in upgrading

technologies in recent years, as well as in associated

environmental control technologies. Synenco intends to

take full advantage of these advancements and new

technologies, while protecting shareholder value, in the

construction and operation of the Northern Lights

Upgrader.

The current concept for the Project is based on feasibility

and concept studies conducted by Synenco. While it is

anticipated that the Project concept will continue to evolve

to take into account refi nements in current thinking

regarding product output, design requirements, operating

specifi cations and costs among other considerations, the

Project is intended to meet the following key objectives:

• produce a high grade synthetic crude oil product with

minimal price exposure to heavy-oil price diff erentials

and

• maximize energy effi ciency and reduce dependency on

third-party energy purchases.

Synenco, as Managing Partner, is currently completing an

extensive commercial plan for the Project and the fi nal

Project Design selected will be infl uenced by several

factors including the results of additional engineering

feasibility and design studies, market conditions, material

and workforce considerations and the results of ongoing

discussions with stakeholders and regulators. Changes

between now and fi nalization of the Project Design are

likely, and these changes could be material both in scope

and cost.

The Project concept contemplates bitumen upgrading to

produce a light, sweet 38.3 degree API synthetic crude oil

with an initial planned production of 100,000 barrels per

day for 30 years.

O V E R V I E W O F P R O P O S E D U P G R A D I N G P R O C E S S

Bitumen upgrading chemically converts low value,

high molecular weight hydrocarbon compounds into

higher value, lower molecular weight compounds.

The current concept for the Northern Lights Upgrader

envisages two major processes to fi rst separate the various

compounds found in the bitumen and then prepare the oil

for processing and conversion into light crude

components. At the separation stage, a diluent recovery

unit, a vacuum distillation unit, and solvent deashphalting

unit will perform the physical separation of the various

fractions of the bitumen. The current concept

contemplates possible product conversion using a delayed

coker and fi xed-bed hydrocracker unit that combines

hydrotreating and hydrocracking.

The diluent that is added to the bitumen during the

extraction process to make it less viscous will be removed

by evaporation and condensation in the diluent recovery

unit and recycled back to the extraction plant. The distillate

products removed from the bitumen in the vacuum

distillation unit will be sent to the hydrocracking unit for

further processing.

The heavier hydrocarbon compounds (vacuum bottoms)

from the vacuum distillation process will be sent to the

solvent deashphalting trains, where sulphur compounds

and metals will be removed from the hydrocarbons and the

heavier weight hydrocarbon compounds will be converted

to lower molecular weight hydrocarbons.

Hydrocracking and hydrotreating processes will be used to

further remove impurities and improve the quality of the

synthetic crude oil produced. The residues created through

this process will enter a delayed coker unit where rejected

carbon will be converted to coke. While the current

concept as described above contemplates using a delayed

coker, options for upgrading without the use of a delayed

coker are also being actively considered for the Project.


E N V I R O N M E N TA L CO N T R O L T E C H N O LO G I E S

The upgrading process produces a number of

atmospheric emissions, which must be controlled in order

to meet stringent provincial and Canadian

environmental standards.

Other emissions such as greenhouse gases, which are

released during combustion, are also of increasing concern,

as is both the volume and the quality of the water that is

returned to the environment once the upgrading process

has been completed.

Additional process engineering is required before the

volumes of the various emissions and the technologies

needed to control them can be established. However, the

Partnership is committed to the incorporation of the Best

Available Technologies Economically Achievable (BATEA)

for the Northern Lights Upgrader in order to minimize the

environmental impacts of the Project to the lowest possible

levels. This approach includes optimizing energy effi ciency

to the highest possible levels.

* As noted on page 5, other options for upgrading without using a delayed coker are being actively considered.


G A S I F I C AT I O N

The Project includes the construction of a gasifi cation unit

to produce electrical power, steam and hydrogen. This is

expected to reduce the Project’s reliance on external

sources of power and hydrogen.

Gasifi cation of residual hydrocarbons from the upgrading

process is currently the preferred approach as it utilizes

material that would otherwise be a waste product, which

would require on-site storage or disposal.

R E L AT E D U T I L I T I E S A N D I N F R A S T R U C T U R E

Connections to external utilities and related infrastructure

within Sturgeon County are likely to include roads,

electrical power, telecommunications, water, natural gas

and pipelines. These services are critical to the construction

and operation of the Northern Lights Upgrader.

It is currently anticipated that approximately 2,000 workers

will be required during the construction phase of the

Project with a requirement for a permanent workforce of

approximately 750 to operate and maintain the facility.

Synenco anticipates that the majority of these workers will

come from the surrounding region.


Synenco and the Partnership’s near term eff orts are

focused on:

• completing both the concept design and the front end

engineering work needed to fi nalize the Project Design,

• developing corporate and operational personnel

capacity and related operational systems to support

the Project,

• consulting with the various levels of government,

regulators, aff ected stakeholders and communities,

industry and the public, to ensure their concerns are

understood and addressed to the greatest extent

possible, and

• preparing and submitting the Project’s regulatory

application and Environmental Impact Assessment to

obtain all necessary approvals, permits and licenses.

The Partnership anticipates fi ling the application in the late

third quarter or early fourth quarter of 2006.

Project Timing

P R O J E C T M I L E S TO N E S


T H E N O R T H E R N L I G H T S’ CO M M I T M E N T

Synenco is fully committed to:

• conducting our business activities with openness,

honesty and integrity,

• meeting or exceeding all regulatory requirements,

• respecting community and stakeholder concerns,

• becoming an active partner in the community,

• working collaboratively with the various levels of

government, other operators and aff ected communities

to address impacts and issues associated with

development in Sturgeon County and Alberta,

• minimizing the impact on the environment through

innovation and by integrating environmental

considerations into every aspect of our business, and

• protecting the health and safety of our workers and

those people living in the region.

CO M M U N I T Y A N D

S TA K E H O L D E R E N G AG E M E N T

Community and stakeholder engagement will continue

throughout the life of the Project. The approach to

engagement will be developed in a manner that enhances

Synenco’s understanding of community and stakeholder

issues, identifi es options for their resolution and allows

Synenco the opportunity to make the appropriate choices

for the future.

The engagement will be two-way and extend to

government and regulators, communities within the

region, interested stakeholders, industry and other

industrial developments within the region and the public.

We will provide various opportunities for communities and

stakeholders to voice their opinions and share information.

While not to be limited to the following, it will include one-

on-one meetings, community meetings, open houses and

town hall meetings.

Throughout the engagement process, we will be sensitive

to the constraints of communities and stakeholders in

the region.

Social andEnvironmental Responsibility


E N V I R O N M E N TA L I M PAC T A S S E S S M E N T

The Partnership initiated the regulatory process for the

Northern Lights Upgrader Project in December 2005 with

the formal announcement of the Sturgeon County location.

Since that announcement, Synenco has been working with

Alberta Environment to fi nalize the Terms of Reference for

the Environmental Impact Assessment for the Project.

Environmental baselines studies are under way including

climate and air quality, soils, surface hydrology,

hydrogeology, vegetation, wildlife and historical resources.

As part of the Community and Stakeholder Engagement

Program, the Northern Lights Upgrader Project Team will

also be meeting with local and regional government

offi cials, community groups, stakeholders, industry and the

public to identify their issues and concerns so that they are

also addressed in the Environmental Impact Assessment.

S O C I O E CO N O M I C I M PAC T S A N D B E N E F I T S

The Northern Lights Upgrader will create a variety of

economic benefi ts and opportunities for Sturgeon County

as well as for Alberta and Canada. With a capital budget of

$3.6 billion in 2005 dollars (including $0.8 billion in

contingency and owner’s costs) and ongoing operations

extending over a 30-year period, the Project will create

many direct and spin-off economic benefi ts, including:

• business and employment opportunities related to

upgrader engineering, fabrication and construction

involving an estimated construction work force of

2,000 personnel,

• business and employment opportunities related to

ongoing operations involving a permanent work force

of approximately 750 personnel located in the

region, and

• government income through royalties and taxes.

Synenco is committed to working with local communities

and businesses to promote business development within

Sturgeon County and the region.

Synenco understands that some communities and

stakeholders have expressed concern not only about the

rate of development in Sturgeon County and throughout

Alberta generally, but the cumulative socio-economic

impacts associated with this rapid development. Concerns

have been raised related to roads and traffi c, emergency

services, hospital and medical services, municipal services

and infrastructure. A Socio-Economic Impact Assessment

will be completed as part of the Environmental Impact

Assessment for the Project and strategies for addressing or

minimizing potential negative impacts will be explored

and discussed with communities and stakeholders prior to

fi nalizing the regulatory application for the Project.


Upgrading the process of converting heavy

crude oil or bitumen to light

crude oil

Bitumen heavy tar-like crude oil recovered

from oil sands

Diluent light crude oil used as a blend

component with bitumen to create a

pumpable fl uid

Blended Bitumen bitumen and diluent

blended together

Hydrocracking process to convert heavy

hydrocarbons molecules to lighter

hydrocarbon molecules

Gasifi cation process to convert carbon

by-products to a gas

Syngas a gas produced from a

gasifi cation process

Synthetic Crude Oil light crude oil blend produced from

an upgrading process

Glossary


Synenco Energy Inc.

Managing Partner,

Northern Lights Partnership

Michael A. Supple

Executive Chairman and Chief Executive Offi cer

K. Todd Newton

President and Chief Operating Offi cer

Steven F. Gilliland

Executive Vice President, Operations

Bernard (Bert) Lang

Executive Vice President, Engineering and Design

Patricia McCunn-Miller

Executive Vice President, Corporate Responsibility

Denise F. Hendrickson

General Counsel and Corporate Secretary

Kent Hicks

Vice President, Downstream Operations

Edward Oke

Vice President, Human Resources

Chris Yellowega

Vice President, Upstream Operations

Enquiries

Tara Schauerte, Communications

(403) 261-1990

Mailing Address

Synenco Energy Inc.

Managing Partner,

Northern Lights Partnership

Suite 1000, 715 - 5th Avenue S.W.

Calgary, Alberta T2P 2X6

Phone: (403) 261-1990

Fax: (403) 514-8128

Toll free: 1- 866-SYNENCO (796-3626)

www.synenco.com, click The Northern Lights Project,

then Downstream - Upgrading for further information

and updates

Contact Information

President’s Message . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Project Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Introduction

Location

Northern Lights’ Bitumen Resource Base

Project Concept . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Overview of Proposed Upgrading Process

Environmental Control Technologies

Gasifi cation

Related Utilities and Infrastructure

Project Timing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Project Milestones

Social and Environmental Responsibility . . . . . . . . . . . . . 9

The Northern Lights’ Commitment

Community and Stakeholder Engagement

Environmental Impact Assessment

Socio-Economic Impacts and Benefi ts

Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Contact Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Contents

Oil Sands Upgrader Project

Public Disclosure Document

March 2006

Northern Lights

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