CN Rail lining up pilot plant partners to make oilsands bitumen pucks

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CALGARY — Canadian National Railway Co. says it is planning to build a pilot plant worth up to $50 million next year to create pucks made of oilsands bitumen to transport by rail and ships to customers around the world.

CN has been working for years on a technology that mixes and coats the heavy, sticky oil with polymer plastic, creating a pellet-shaped product called CanaPux that can be shipped in rail cars and will float if spilled into water.

The railway is in discussions with the federal and Alberta governments, along with potential oilsands industry partners and the Heart Lake First Nation of northern Alberta, to fund the 10,000-barrel-per-day pilot plant, said James Cairns, vice-president of petroleum and chemicals at CN.

“So far we have enthusiastic support from both levels of government, now we just have to see if it translates into a financial commitment,” he said Thursday in an interview.

“Ideally, we want it to be … a third government, a third CN and a third industry.”

If the pilot succeeds, CN would build a commercial-sized plant with capacity to convert up to 50,000 barrels per day of heavy crude into pucks.

Bitumen is usually diluted with lighter oil during its recovery from the oilsands, with more diluent added to allow it to flow in a pipeline.

CN plans to install a diluent recovery plant alongside the commercial CanaPux facility to recover the valuable diluent for resale, Cairns said.

CN has signed a memorandum of understanding with an unnamed Asian customer who is interested in importing the pucks to his country and separating the oil and polymer for processing and sale, he added, declining to give further detail.

Cairns said the pucks can help generate industry profits by allowing Alberta bitumen and other heavy crude a less environmentally risky way to access new markets.

“It’s not going to replace pipelines, not even close,” Cairns said.

“This is just another idea, another way of getting Canadian product to market, that we can build upon.”

Companies in this article: (TSX:CNR)

Dan Healing, The Canadian Press