Kerrobert – A new “micro-refinery” appears to be in the works for the Kerrobert district.
An advertisement in the West Central Crossroads newspaper on Nov. 15 indicated that the council for the Rural Municipality of Oakdale No. 320 would be considering an application for a discretionary use development permit from Independent Energy Inc.
The hearing would take place at the Coleville Community Hall on Nov. 25 at 9 a.m.
“The application proposes to develop a crude oil processing facility for the production of saleable ultra-low sulphur diesel fuel at Ptn. SW-27-33-22-W3M,” said the public notice.
That location is within close proximity to major oil pipeline, rail and power facilities. At SW-27-33-22-W3, it would be south of the Enbridge Kerrobert terminal, and with it, the Enbridge mainline pipeline system. Inter Pipeline also has a terminal at Kerrobert which handles heavy and light sweet crude.
This location is also close to the Plains Midstream Canada crude-by-rail terminal, which is, itself, southeast of the Enbridge terminal. That facility, at NE-23-33-22-W3, with its loop track, is capable of handling unit trains. In this manner, the proposed refinery location would mirror other major refineries in Alberta and Saskatchewan, with immediate access to major pipelines and rail facilities.
The proposed site would be nearly immediately adjacent to SaskPower’s Ermine Power Station and its accompanying substation. Additionally, it is close to light oil production in the Viking field.
Pipeline Newsspoke to Glen Weisbrod, vice-president of environmental and regulatory compliance with Independent Energy on Nov. 15 by phone.
Weisbrod is a professional engineer whose LinkedIn profile notes senior environmental managerial positions with GFL Environmental, Pinter & Associates Ltd. and SNC-Lavalin over the course of the last 15 years before joining Independent Energy. He noted he has over 25 years experience in processing and regulatory compliance.
“We’ve been running below the radar. You won’t see too much. There’s been no press releases. There won’t be any press releases. We are pretty, extra low key organization at this time,” he said.
“Like the public hearing noted, we are proposing a refinery in the Kerrobert area to process crude oil into diesel fuel.”
“It’ll be around 15,000 barrels per day. It would be a light, sweet oil that we’re using.”
Asked if it would be a topping plant, he said, “Essentially, correct.”
(The U.S. Energy Information Administration’s website explains “The simplest refineries have a distillation column and nothing else. These refineries are often referred to as topping refineries.”)
“We will probably be looking at various crude supply agreements,” Weisbrod said when asked if they would be looking to use locally-produced oil.
He declined to say how much the facility would cost at this time. Indeed, he was reluctant to provide much information at all, noting reinforcing they are seeking first-mover advantage.
Weisbrod said, “We’re going through the environmental permitting. We’re in our discussions with the ministry, and we’re doing our due diligence in moving this project ahead.”
The company has its head office in Calgary, but Weisbrod said he is based in Saskatoon.
“We’re going through the permitting process. We’ve got our discretionary land use public hearing coming up the 25th of November. We’re preparing to start fabrication of some of our key items,” Weisbrod said.
For provincial permits, he said, “I’ve met with them. We’re going to be submitting the technical proposal in a week-and-a-half to 14 days.”
As for timelines, the next step is the municipal approval process, then filing their technical proposal and permits for constructing an industrial waste works and hazardous storage for dangerous goods. Beyond that, Weisbrod did not provide any further timelines for planned construction.
“We’ve got our project timeliness prepared. We’ve been in communication with the RM on that,” he said. “It’s up to the municipal process to get the required approvals.”
“Our business model is we are going to comply with absolutely every municipal, provincial regulatory, environmental compliance regulatory requirement that there is out there. We are real. But our business model is for us to be first to market, and for us to be first to market, especially considering the number of projects that I have seen that were pie in the sky,” he said, referencing the series of stories Pipeline New ran in May 2018 about the defunct proposal by another company to build a 40,000 bpd refinery at Stoughton.
“We have also done all of our research. We have our timelines. We have our schedules. We have our plans for when we want to be up, running construction. But our plan is to be compliant with the regulations, with no fanfare.”
The public hearing with the RM of Oakdale is for the application that has been submitted to the R.M. It’s not an information session. The notice went out to the residents in a one-kilometre residence.
Independent Energy’s website, independentenergy.ca, as of yet is quite spartan. It states, “Independent Energy Corp. is a privately funded corporation focused on the development of economical, environmentally friendly micro-refineries utilizing proprietary technology and high standards. Our senior management team has nearly 100 years of experience in all facets of upstream oil and gas production, transportation and refining experience including facility conception and design, construction, operation and regulatory compliance.
“Independent Energy is committed to developing projects that bring economical value to the local communities while remaining in strict compliance with all applicable municipal, provincial and federal regulations and industry best practices. Our success is built on the relationships we develop and maintain with all stakeholders throughout our projects.”
As for projects, its website says, “Our projects consist of developing micro-refineries within Saskatchewan utilizing locally produced light sweet crude oil feedstock. Our facilities encompass a small footprint and are located where we have direct access to existing utilities and infrastructure including rail services, power and natural gas and crude oil.
“Our facilities are constructed of modular components built within Canada and range in capacity from 10,000 barrels per day (bpd) up to 50,000 bpd with expansion capabilities based on market demands. The primary product produced is an ultra-low Sulphur (less than 15 parts per million sulphur) diesel for the transportation and stationary engine markets across Western Canada. Other by-products produced from the facility include naphtha and heavier hydrocarbon chain products.”
At this point no management, board members or, indeed, any individuals are listed on the website, nor is an address. Weisbrod said they have teams in Saskatchewan and Alberta. The phone number listed on the website is a Saskatoon number.
Saskatchewan’s oil and gas processing incentive
This past August, Gibson Energy Inc. was the first company to take advantage of the Saskatchewan Oil and Gas Processing Investment Incentive (OGPII). Gibson used it for an expansion of its Moose Jaw Refinery, which increased its throughput capacity by approximately 30 per cent—from 17,000 barrels per day to 22,000 barrels per day. That expansion was completed June 29, 2019.
If Independent Energy Inc. does build a refinery southeast of Kerrobert, it would likely qualify for this incentive.
The province became serious about an oil processing incentive a few years ago when Husky Energy had proposed an additional refinery at Lloydminster, which has since been put on the back burner. Another refinery at Stoughton, initially proposed at roughly the same time in early 2017 by Dominion Energy Processing Group and its parent, Quantum Energy Inc., went nowhere.
The incentive, which became open for applications April 1, 2019, offers transferable royalty/freehold production tax credits for qualified greenfield or brownfield value-added projects at a rate of 15 per cent of eligible project costs. Applications will be accepted until March 31, 2024.
OGPII is open to value-added processing projects as well as gas, byproduct, or waste product commercialization projects across all segments of Saskatchewan's oil and gas sector. Eligible projects may include, but are not limited to refineries/upgrading facilities, gas commercialization projects; regional gas-gathering projects and projects with multiple phases may also be considered under a single project application, petrochemical facilities, helium processing and liquefaction facilities, oil and gas production byproduct and waste commercialization, and enabling infrastructure, that is directly linked and dedicated to an eligible project, may also be considered.
A similar refinery was built in North Dakota recently, but it’s now being converted to biodiesel
MDU Resources Group, Inc. completed its Dakota Prairie Refinery at Dickinson, N.D. in 2015, commencing operations in May of that year. Dickinson is located just south of the major Bakken oil play in North Dakota.
The Dickinson refinery is pegged at 19,000 bpd., slightly larger than the 15,000 bpd facility being proposed for Kerrobert.
A press release from MDU on May 4, 2015, noted, “Construction of the facility began on March 26, 2013 on a 318-acre site that is located about four miles west of Dickinson in southwest North Dakota. More than 800 workers were on site at peak construction. Total cost of the plant is estimated to be approximately US$425 million to US$435 million, and the facility employs about 80 people.”
In 2016, that refinery, which struggled in the oil downturn, was purchased by Tesoro Refining & Marketing Co. LLC. It is now owned by Marathon Petroleum, which, according to its website, “plans to convert this refinery into a 12,000 bpd, 100 percent renewable diesel facility, which will process refined soy oil and other organically derived feedstocks, by December 2020.”
“MPC intends to sell the renewable diesel into the California market to comply with the California Low Carbon Fuel Standard,” its Oct. 31 third quarter results press release stated. “Construction continues on the Dickinson Renewable Diesel project, which remains on-track for planned completion in late 2020.”