Canada's natural gas liquids industry dates back to the discovery of wet natural gas at
Turner Valley, Alberta
Turner Valley is a town in the Calgary Metropolitan Region of Alberta, Canada that is surrounded by Foothills County. It is on Highway 22 (Cowboy Trail), west of Black Diamond and approximately southwest of Calgary. It was named after Robert ...
in 1914. The gas was less important than the
natural gasoline
Natural gasoline is a liquid hydrocarbon mixture condensed from natural gas, similar to common gasoline (petrol) derived from petroleum.
The chemical composition of natural gasoline is mostly five- and six-carbon alkanes ( pentanes and hexane ...
- "skunk gas" it was called, because of its distinctive odour - that early producers extracted from it. That
natural gas liquid
Natural-gas condensate, also called natural gas liquids, is a low-density mixture of hydrocarbon liquids that are present as gaseous components in the raw natural gas produced from many natural natural gas field, gas fields. Some gas species wi ...
(NGL) could be poured directly into an automobile's fuel tank.
As the
natural gas
Natural gas (also called fossil gas or simply gas) is a naturally occurring mixture of gaseous hydrocarbons consisting primarily of methane in addition to various smaller amounts of other higher alkanes. Low levels of trace gases like carbo ...
industry grew with pipeline construction in the 1950s, many companies -
Imperial
Imperial is that which relates to an empire, emperor, or imperialism.
Imperial or The Imperial may also refer to:
Places
United States
* Imperial, California
* Imperial, Missouri
* Imperial, Nebraska
* Imperial, Pennsylvania
* Imperial, Texa ...
, British American (B/A; later
Gulf Canada
Gulf Canada was a Canadian integrated petroleum company that existed between 1944 and 2001. Gulf Oil Corporation began operating in Canada in 1942, and two years later formed a Canadian subsidiary called the Canadian Gulf Oil Company. In 1956 Cana ...
) and
Shell
Shell may refer to:
Architecture and design
* Shell (structure), a thin structure
** Concrete shell, a thin shell of concrete, usually with no interior columns or exterior buttresses
** Thin-shell structure
Science Biology
* Seashell, a hard ou ...
, for example - constructed plants in Alberta to process newly discovered natural gas so it could be made
pipeline
Pipeline may refer to:
Electronics, computers and computing
* Pipeline (computing), a chain of data-processing stages or a CPU optimization found on
** Instruction pipelining, a technique for implementing instruction-level parallelism within a s ...
-ready. Many of these plants extracted NGLs from natural gas as part of
natural gas processing
Natural-gas processing is a range of industrial processes designed to purify raw natural gas by removing impurities, contaminants and higher molecular mass hydrocarbons to produce what is known as ''pipeline quality'' dry natural gas. Natural gas ...
.
For NGLs to become a major business, however, took the efforts of large and imaginative players, plus the development of a much larger gas supply from which to extract these light
hydrocarbons
In organic chemistry, a hydrocarbon is an organic compound consisting entirely of hydrogen and carbon. Hydrocarbons are examples of group 14 hydrides. Hydrocarbons are generally colourless and hydrophobic, and their odors are usually weak or ex ...
. Conditions were right in the 1960s, and the two companies that took advantage of the opportunity were
Amoco Corporation
Amoco () is a brand of filling station, fuel stations operating in the United States, and owned by BP since 1998. The Amoco Corporation was an American chemical and petroleum, oil company, founded by Standard Oil Company in 1889 around a oil re ...
and
Dome Petroleum
Dome Petroleum Limited was a Calgary-based oil and gas company. Founded in 1950 as a subsidiary of the Toronto company Dome Mines Limited, Dome was built by Jack Gallagher, who remained with the company until 1983. In 1988 Dome was purchased by ...
, neither of which is any longer in existence. Amoco took over Dome after the company essentially went bankrupt in 1988, and
BP took over Amoco in a friendly merger ten years later. Here is the story of how those two companies developed key components of the infrastructure for this vital niche industry.
Headquarters for Amoco Corporation were in
Chicago
(''City in a Garden''); I Will
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, map_caption = Interactive Map of Chicago
, coordinates =
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, subdivision_type = Country
, subdivision_name ...
, because that city is close to
Whiting, Indiana
Whiting is a city located in the Chicago Metropolitan Area in Lake County, Indiana, which was founded in 1889. The city is located on the southern shore of Lake Michigan. It is roughly 16 miles from the Chicago Loop and two miles from Chicago's ...
. Whiting was home of Amoco’s largest
oil refinery
An oil refinery or petroleum refinery is an industrial process plant where petroleum (crude oil) is transformed and refined into useful products such as gasoline (petrol), diesel fuel, asphalt base, fuel oils, heating oil, kerosene, lique ...
(and one of the largest in the world). In operation since 1890, Whiting originally refined
sour crude oil Sour crude oil is crude oil containing a high amount of the impurity sulfur. It is common to find crude oil containing some impurities. When the total sulfur level in the oil is more than 0.5% (by weight), the oil is called "sour".
The impurities n ...
from the neighbouring state of Ohio. And it was
Standard of Indiana's (Amoco's) most important single asset after the
US Supreme Court
The Supreme Court of the United States (SCOTUS) is the highest court in the federal judiciary of the United States. It has ultimate appellate jurisdiction over all U.S. federal court cases, and over state court cases that involve a point of ...
ordered the
Standard Oil Trust
Standard Oil Company, Inc., was an American oil production, transportation, refining, and marketing company that operated from 1870 to 1911. At its height, Standard Oil was the largest petroleum company in the world, and its success made its co-f ...
broken up. In its early years, Amoco was primarily a refiner and a marketer of refined products to expanding Midwestern markets. Whiting provided products that could be marketed from Chicago — a city that was itself a large market for
petroleum products
Petroleum products are materials derived from crude oil (petroleum) as it is processed in oil refineries. Unlike petrochemicals, which are a collection of well-defined usually pure organic compounds, petroleum products are complex mixtures. The m ...
.
By 1970, Amoco had become one of the largest integrated oil corporations in the world through both acquisitions and internal growth. Besides being a large-scale refiner and distributor of refined products, it was a powerful force in
petrochemicals
Petrochemicals (sometimes abbreviated as petchems) are the chemical products obtained from petroleum by refining. Some chemical compounds made from petroleum are also obtained from other fossil fuels, such as coal or natural gas, or renewable sou ...
, oil and gas exploration and production, pipelines, and in the marketing of
crude oil
Petroleum, also known as crude oil, or simply oil, is a naturally occurring yellowish-black liquid mixture of mainly hydrocarbons, and is found in geological formations. The name ''petroleum'' covers both naturally occurring unprocessed crude ...
,
natural gas
Natural gas (also called fossil gas or simply gas) is a naturally occurring mixture of gaseous hydrocarbons consisting primarily of methane in addition to various smaller amounts of other higher alkanes. Low levels of trace gases like carbo ...
and
natural gas liquids
Natural-gas condensate, also called natural gas liquids, is a low-density mixture of hydrocarbon liquids that are present as gaseous components in the raw natural gas produced from many natural gas fields. Some gas species within the raw natur ...
(NGLs).
The corporation was growing globally, but it was heavily focused in
North America
North America is a continent in the Northern Hemisphere and almost entirely within the Western Hemisphere. It is bordered to the north by the Arctic Ocean, to the east by the Atlantic Ocean, to the southeast by South America and the Car ...
. And though its oil and gas activity was concentrated in the US southwest and in western Canada, its marketing presence was strongest in
middle America. From its Chicago base, the corporation had unrivalled intelligence about
hydrocarbon
In organic chemistry, a hydrocarbon is an organic compound consisting entirely of hydrogen and carbon. Hydrocarbons are examples of group 14 hydrides. Hydrocarbons are generally colourless and hydrophobic, and their odors are usually weak or ex ...
demand in the
US Midwest
The Midwestern United States, also referred to as the Midwest or the American Midwest, is one of four census regions of the United States Census Bureau (also known as "Region 2"). It occupies the northern central part of the United States. I ...
.
Liquids extraction in Turner Valley
Between 1924 and 1927, Royalite operated two gas processing facilities side-by-side in Turner Valley: the sweetening plant and the liquids plant.
The liquids extraction plant closed in 1927 and reopened in 1933 after the company revamped the facility. The new plant used "lean oil" absorption, a process that forced raw gas into contact with lean oil in chains of steel bubble caps. Improvement of the absorption medium and contact between the gas and the oil made for substantially higher rates of liquids recovery. The new plant was so successful that other companies built two similar plants in Turner Valley, and Royalite built a second plant to handle its production from the south end of the field. Gas and Oil Products Ltd. built a similar plant at
Hartell in 1934 and British American (BA) opened one at
Longview in 1936.
Once Alberta's
Petroleum and Natural Gas Conservation Board began operating in 1938, the BA and Gas and Oil Products Limited plants had to change their operations significantly. Only Royalite had a market for its residue of gas stripped of liquids in the
Canadian Western Natural Gas
Canadians (french: Canadiens) are people identified with the country of Canada. This connection may be residential, legal, historical or cultural. For most Canadians, many (or all) of these connections exist and are collectively the source of ...
distribution system. The other two plants
flared or burned off most of their residue gas until the board ruled that only wells connected to a market could be produced, stopping the practice. Since the rule applied only to wells that tapped the
oil reservoir
A petroleum reservoir or oil and gas reservoir is a subsurface accumulation of hydrocarbons contained in porous or fractured rock formations.
Such reservoirs form when kerogen (ancient plant matter) is created in surrounding rock by the presence ...
's overlying gas cap, the Hartell and Longview plants stayed in operation by processing solution gas, or gas dissolved in oil from the Valley's wells.
Amoco/Dome Synergies
As the Turner Valley story illustrates, the extraction of natural gas liquids goes back to the industry's early years. However, the development of partnerships between the large American
oil company
The petroleum industry, also known as the oil industry or the oil patch, includes the global processes of hydrocarbon exploration, exploration, extraction of petroleum, extraction, oil refinery, refining, Petroleum transport, transportation (of ...
Amoco
Amoco () is a brand of fuel stations operating in the United States, and owned by BP since 1998. The Amoco Corporation was an American chemical and oil company, founded by Standard Oil Company in 1889 around a refinery in Whiting, Indiana, a ...
and the young, dynamic
Dome Petroleum
Dome Petroleum Limited was a Calgary-based oil and gas company. Founded in 1950 as a subsidiary of the Toronto company Dome Mines Limited, Dome was built by Jack Gallagher, who remained with the company until 1983. In 1988 Dome was purchased by ...
to create sophisticated liquids infrastructure in
Western Canada
Western Canada, also referred to as the Western provinces, Canadian West or the Western provinces of Canada, and commonly known within Canada as the West, is a Canadian region that includes the four western provinces just north of the Canada†...
.
Headquartered in
Calgary
Calgary ( ) is the largest city in the western Canadian province of Alberta and the largest metro area of the three Prairie Provinces. As of 2021, the city proper had a population of 1,306,784 and a metropolitan population of 1,481,806, makin ...
, Amoco Canada’s
liquids
A liquid is a nearly incompressible fluid that conforms to the shape of its container but retains a (nearly) constant volume independent of pressure. As such, it is one of the four fundamental states of matter (the others being solid, gas, an ...
marketing group had a great deal of independence in the early years. However, many synergies were possible through cooperation between
Chicago
(''City in a Garden''); I Will
, image_map =
, map_caption = Interactive Map of Chicago
, coordinates =
, coordinates_footnotes =
, subdivision_type = Country
, subdivision_name ...
and Calgary. As importantly, Amoco and
Dome Petroleum
Dome Petroleum Limited was a Calgary-based oil and gas company. Founded in 1950 as a subsidiary of the Toronto company Dome Mines Limited, Dome was built by Jack Gallagher, who remained with the company until 1983. In 1988 Dome was purchased by ...
formed a number of strategic partnerships in the liquids business during the 1960s. So extensive were those partnerships that, when Dome went on the block in 1986, it was inevitable that Amoco would be an aggressive suitor.
Alberta’s liquids business dates to the development of the Pembina field, when Dallas-based
Goliad Oil and Gas received rights to recover
solution gas from the field. Also known as "casing head gas" or "associated gas," solution gas is dissolved in reservoir oil at underground pressures. Released under the relatively low pressures at
Earth
Earth is the third planet from the Sun and the only astronomical object known to harbor life. While large volumes of water can be found throughout the Solar System, only Earth sustains liquid surface water. About 71% of Earth's surfa ...
’s surface, it usually includes natural gas liquids. Often, as at Pembina, these can be profitably extracted. While Goliad received the gas from Pembina, the separated liquids were returned to the producers.
At about the same time, Dome developed a solution gas gathering business based on oilfields around Steelman,
Saskatchewan
Saskatchewan ( ; ) is a Provinces and territories of Canada, province in Western Canada, western Canada, bordered on the west by Alberta, on the north by the Northwest Territories, on the east by Manitoba, to the northeast by Nunavut, and on t ...
. And in Alberta,
plants
Plants are predominantly Photosynthesis, photosynthetic eukaryotes of the Kingdom (biology), kingdom Plantae. Historically, the plant kingdom encompassed all living things that were not animals, and included algae and fungi; however, all curr ...
like the one at
Whitecourt
Whitecourt is a town in central Alberta, Canada that is surrounded by Woodlands County. It is approximately northwest of Edmonton and southeast of Grande Prairie at the junction of Highway 43 and Highway 32. It has an elevation of .
Whiteco ...
began processing liquids-rich gas in 1961. Amoco began planning this gas plant in 1957, as local gas discoveries made it clear a major new plant was necessary. When it went into production, West Whitecourt quickly began to boast the biggest volumes of condensate production in Canada: . And from there, volumes went up. Since that time, bigger plants have made the records of 1962 seem small. However, this plant was nonetheless an industry pioneer.
Extracting NGLs
Separated from a gas stream,
NGLs are an undifferentiated batch of light
hydrocarbons
In organic chemistry, a hydrocarbon is an organic compound consisting entirely of hydrogen and carbon. Hydrocarbons are examples of group 14 hydrides. Hydrocarbons are generally colourless and hydrophobic, and their odors are usually weak or ex ...
—
ethane
Ethane ( , ) is an organic chemical compound with chemical formula . At standard temperature and pressure, ethane is a colorless, odorless gas. Like many hydrocarbons, ethane is isolated on an industrial scale from natural gas and as a petr ...
,
propane
Propane () is a three-carbon alkane with the molecular formula . It is a gas at standard temperature and pressure, but compressible to a transportable liquid. A by-product of natural gas processing and petroleum refining, it is commonly used a ...
,
butane
Butane () or ''n''-butane is an alkane with the formula C4H10. Butane is a gas at room temperature and atmospheric pressure. Butane is a highly flammable, colorless, easily liquefied gas that quickly vaporizes at room temperature. The name but ...
and
condensate
Condensate may refer to:
* The liquid phase produced by the condensation of steam or any other gas
* The product of a chemical condensation reaction, other than water
* Natural-gas condensate, in the natural gas industry
* ''Condensate'' (album) ...
. To separate them into more valuable individual products requires fractionation facilities.
Fractionation towers separate a stream of mixed NGL feedstock into specification-grade ethane, propane, butane and condensate products.
Distillation is the process used to fractionate NGLs. The different components in a liquids mix evaporate at different temperatures. Thus, when heat is applied to a stream of product entering a fractionation tower, lighter components vapourize and move to the top of the tower; heavier components drop to the bottom. The amount of heat applied to the brew depends on which component is being separated out for sale to the customer.
The lighter product coming off the top of the tower as a
vapour
In physics, a vapor (American English) or vapour (British English and Canadian English; see spelling differences) is a substance in the gas phase at a temperature lower than its critical temperature,R. H. Petrucci, W. S. Harwood, and F. G. Herr ...
— called the overhead product — is then cooled so it will condense back into a liquid. To achieve full separation, a stream of product is processed through a series of towers. "Spec" or high-grade product is taken off the top of a tower, and the bottom product becomes the feedstock for the next tower.
In the mid-1960s, there were only two fractionation facilities in Alberta. One was a plant at
Devon, Alberta
Devon is a town in the Edmonton Metropolitan Region of Alberta, Canada. It is approximately southwest of Edmonton, the provincial capital, along the southern bank of the North Saskatchewan River.
History
Devon owes its existence to one of t ...
, and owned by Imperial Oil. That plant processed liquids from Leduc, Redwater and other Imperial-operated fields. Later, it also processed liquids from
Swan Hills
Swan Hills is a town in northern Alberta, Canada. It is in the eponymous Swan Hills, approximately north of Whitecourt and northwest of Fort Assiniboine. The town is at the junction of Highway 32 and Grizzly Trail, and is surrounded by Big Lake ...
, a wet gas field which was operated by other companies. Also, in 1964 Imperial constructed another plant for solution gas/liquids extraction to service Judy Creek, Swan Hills, and other fields.
Originally,
Hudson’s Bay Oil and Gas Company had applied to construct, operate and own that plant. Imperial then made a proposal of its own. Amoco and British American intervened at an Oil and Gas Conservation Board hearing with a proposal that would give all operators a share of the plant. Under pressure from the Amoco/BA plan, Imperial modified its proposal and was awarded the project. As a result of the Amoco/BA intervention, Imperial became operator, but Amoco and the other producers were partners.
Because Amoco would soon begin to receive its considerable liquids from Swan Hills in kind, the need to find ways to get optimum value from these liquids was clear. Markets in western Canada could not absorb the large and growing liquids volumes that Alberta was producing. However, markets in
central Canada
Central Canada (french: Centre du Canada, sometimes the Central provinces) is a region consisting of Canada's two largest and most populous provinces: Ontario and Quebec. Geographically, they are not at the centre of Canada but instead overlap w ...
and the
US Midwest
The Midwestern United States, also referred to as the Midwest or the American Midwest, is one of four census regions of the United States Census Bureau (also known as "Region 2"). It occupies the northern central part of the United States. I ...
could. Working with Chicago, Amoco Canada began developing a marketing strategy, a critical part of which would be the delivery system.
Recycling plants
Recycling plants such as those at Kaybob, West Whitecourt and Crossfield produced liquids-rich gas from "retrograde condensation" reservoirs. They stripped condensate and natural gas liquids and sulfer (which they alternately stored in blocks or sold, depending on demand and price), then re-injected the dry gas to cycle the reservoir to capture more liquids. Usually these plants needed make-up gas to replace the volume of the liquids stripped which came from other reservoirs. In the case of West Whitecourt, they also processed dry but sour gas from the Pine Creek field (near Edson) as a source of make-up gas. In the case of Crossfield, the liquids-rich gas came from the Wabamun D-1 zone and the make-up gas from the uphole Elkton zone. Most of these plants were built in the days of 16 cent (per 1000 cubic feet) long-term contracts from TransCanada PipeLine when the
National Energy Board
The National Energy Board was an independent economic regulatory agency created in 1959 by the Government of Canada to oversee "international and inter-provincial aspects of the oil, gas and electric utility industries". Its head office was located ...
required 25 years of reserves in the ground to gain an export permit (from Canada). What drove the economics of this procedure was not gas production, but the liquids that could be recovered and sold as part of the crude mix.
Dome-Amoco partnership
Dome had built the other fractionation plant, known as the Edmonton Liquid Gas Plant, in 1962. As Amoco made plans to build liquids as a business, in 1967 the company bought a half interest in this facility. This arrangement was the beginning of a series of liquids-related deals that would soon see Amoco and Dome partnering to become the largest players in Canada’s NGL business.
Another Amoco/Dome joint venture soon followed. At the end of the ‘60s, Alberta and Southern Gas Company began building a larger plant at
Cochrane Cochrane may refer to:
Places Australia
*Cochrane railway station, Sydney, a railway station on the closed Ropes Creek railway line
Canada
* Cochrane, Alberta
* Cochrane Lake, Alberta
* Cochrane District, Ontario
** Cochrane, Ontario, a town wit ...
, a small town just west of Calgary. In industry parlance, this was a straddle plant. Another step in the development of the Amoco/Dome liquids system was Dome’s construction — in 1976 — of the Edmonton Ethane Extraction Plant. This straddle plant replaced an earlier facility.
Straddle plants extract ethane and heavier liquids from the gas stream, returning drier gas (by now almost entirely methane) to the pipeline. Liquids fetch a higher price (relative to their energy or BTU content) because they have uses other than firing furnaces — as
gasoline
Gasoline (; ) or petrol (; ) (see ) is a transparent, petroleum-derived flammable liquid that is used primarily as a fuel in most spark-ignited internal combustion engines (also known as petrol engines). It consists mostly of organic co ...
additives and
petrochemical
Petrochemicals (sometimes abbreviated as petchems) are the chemical products obtained from petroleum by refining. Some chemical compounds made from petroleum are also obtained from other fossil fuels, such as coal or natural gas, or renewable sou ...
feedstocks, for example.
While plant construction was underway, Dome and Amoco built a 320-kilometre pipeline from Cochrane to Edmonton (the Co-Ed line), with Dome as operator. This line fed liquids to Dome/Amoco’s new Fort Saskatchewan liquids terminal, and helped the company develop expertise in pipeline operations. Other Dome- and Amoco-operated lines were soon delivering NGLs to the Fort Saskatchewan plant.
Built in the early 1970s,
Fort Saskatchewan
Fort Saskatchewan is a city along the North Saskatchewan River in Alberta, Canada. It is northeast of Edmonton, the provincial capital. It is part of the Edmonton census metropolitan area and one of 24 municipalities that constitute the Edmont ...
supplemented the Edmonton Liquid Gas Plant. Key to the plant’s success was the existence underground of large salt formations. The operator was able to dissolve ("wash") huge storage caverns in these formations. Those caverns provided large volumes of inexpensive, safe inventory capacity for the plant. Having storage capacity for NGLs enabled the company to buy and store surplus NGLs year round, including times when markets were soft and prices dropped to seasonal lows.
The Dome-operated plant quickly became a hub of western Canada’s liquids business. The reason is that Amoco and Dome created a partnership to do something that had never been tried before, anywhere. Using Fort Saskatchewan as a staging point, they batched natural gas liquids through Interprovincial’s oil pipeline to
Sarnia
Sarnia is a city in Lambton County, Ontario, Canada. It had a 2021 population of 72,047, and is the largest city on Lake Huron. Sarnia is located on the eastern bank of the junction between the Upper and Lower Great Lakes where Lake Huron fl ...
. In 1980, the partnership added
fractionation
Fractionation is a separation process in which a certain quantity of a mixture (of gases, solids, liquids, enzymes, or isotopes, or a suspension) is divided during a phase transition, into a number of smaller quantities (fractions) in which the ...
facilities at Fort Saskatchewan.
The impact of this arrangement on the
economics
Economics () is the social science that studies the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods and services.
Economics focuses on the behaviour and intera ...
of transporting large volumes of NGL was considerable. To send propane that distance by rail at the time cost $3.50-$4.20 per barrel. Batching the stuff through Amoco/Dome facilities and IPL brought transportation costs down to approximately $1 per barrel.
Sarnia
Liquefied petroleum gas
Liquefied petroleum gas (LPG or LP gas) is a fuel gas which contains a flammable mixture of hydrocarbon gases, specifically propane, propylene, butylene, isobutane and n-butane.
LPG is used as a fuel gas in heating appliances, cooking e ...
es (or LPGs, another name for propane and butane) have to be contained well above atmospheric pressure to remain in liquid form. The partners therefore had to build special "breakout" facilities in
Superior, Wisconsin
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, nickname =
, total_type =
, motto =
, image_skyline = Tower Avenue.jpg
, imagesize =
, image_caption = Downtown Superior
, ima ...
, to enable this operation to work. They also had to construct batch receipt facilities, storage, and a fractionation plant at Sarnia. That plant went on stream in 1970.
Sarnia
Sarnia is a city in Lambton County, Ontario, Canada. It had a 2021 population of 72,047, and is the largest city on Lake Huron. Sarnia is located on the eastern bank of the junction between the Upper and Lower Great Lakes where Lake Huron fl ...
was chosen for several reasons. Most importantly, of course, it is the terminus of
Interprovincial Pipelines’ main lines. The city itself is a big part of
central Canada
Central Canada (french: Centre du Canada, sometimes the Central provinces) is a region consisting of Canada's two largest and most populous provinces: Ontario and Quebec. Geographically, they are not at the centre of Canada but instead overlap w ...
’s petroleum market. Near the 1857 Oil Springs discovery, Sarnia became a refining centre during Ontario’s 19th-century oil boom and a petrochemical centre during World War II. Sarnia has underground salt formations like those at Fort Saskatchewan. Caverns washed into those formations were used to receive NGL from IPL, and to store specification grade products to meet seasonal demand.
From the Sarnia plant, Amoco and Dome could meet regional requirements for liquids by rail, water and road links to central Canada and the US Midwest. Also, of course, pipelines were constructed to local
petrochemical
Petrochemicals (sometimes abbreviated as petchems) are the chemical products obtained from petroleum by refining. Some chemical compounds made from petroleum are also obtained from other fossil fuels, such as coal or natural gas, or renewable sou ...
plants. Thus, Sarnia had the essential infrastructure for a successful marketing operation.
Initially, the plant was small. Daily capacity was of liquefied petroleum gases (propane and butane), and of condensate and crude oil. It grew quickly, however: salt storage caverns were soon added, and a 1974 expansion of the fractionation plant increased NGL processing capacity to nearly .
The early growth of Amoco’s liquids business was astonishing. By 1970 Amoco Canada’s NGL production had reached . Amoco Corporation’s North American liquids operations processed of gas per day to produce of liquids. Those volumes represented about 4 per cent of North America’s gas processing capacity, 5 per cent of the continent’s liquids capacity.
As Amoco prepared to increase
market share
Market share is the percentage of the total revenue or sales in a market that a company's business makes up. For example, if there are 50,000 units sold per year in a given industry, a company whose sales were 5,000 of those units would have a ...
for liquids in the Midwest, its US liquids subsidiary — Tuloma Gas Products by name — moved headquarters from
Tulsa
Tulsa () is the second-largest city in the U.S. state, state of Oklahoma and List of United States cities by population, 47th-most populous city in the United States. The population was 413,066 as of the 2020 United States census, 2020 census. ...
to Chicago. Clearly, the business would grow through partnership between Calgary and Chicago.
Empress
During this early period of growth, Dome proposed to build a liquids recovery plant — in effect, a very large straddle plant — at the
Empress, Alberta
Empress is a village in southern Alberta, Canada that is adjacent to the provincial boundary between Alberta and Saskatchewan. It is north of Medicine Hat. The village was named, in 1913, for Queen Victoria, who was also Empress of India. In the ...
, delivery point to the
TransCanada transmission line. The Empress plant sits just inside the Alberta/Saskatchewan border. This is for reasons related to both
politics
Politics (from , ) is the set of activities that are associated with making decisions in groups, or other forms of power relations among individuals, such as the distribution of resources or status. The branch of social science that studies ...
and
infrastructure
Infrastructure is the set of facilities and systems that serve a country, city, or other area, and encompasses the services and facilities necessary for its economy, households and firms to function. Infrastructure is composed of public and priv ...
. Politically, Alberta wanted value to be added inside provincial borders. As importantly, it made sense to extract liquids before sending the dry gas that remained - unadulterated methane - into the export market.
During inquiries into natural gas exports in the 1950s, the ERCB recommended the creation of a province-wide natural gas gathering system. The thinking behind this idea was twofold: first, it would be more efficient to develop a single gathering system than to let gathering systems evolve piecemeal. Second, such a system would eliminate the possibility of federal regulation of gas within the province. Alberta was jealous of its hard-won control over natural resources and saw gas transportation within the province as an aspect of
resource management
In organizational studies, resource management is the efficient and effective development of an organization's resources when they are needed. Such resources may include the financial resources, inventory, human skills, production resources, or i ...
. The province was also very conscious of the potential of natural gas and its products for provincial industrial development.
Accordingly, Alberta passed the Alberta Gas Trunk Line Act.
Alberta Gas Trunk Line (later known as
NOVA Corporation
NOVA Chemicals Corporation is a Canadian petrochemical company that has been in operation since 1954. NOVA was formed as provincial crown corporation called the Alberta Gas Trunk Line Company Limited to manage Alberta's natural gas collection s ...
’s Gas Transmission Division) would gather gas within the province, delivering the commodity to federally regulated TransCanada PipeLines and other export pipelines just inside the Alberta border. Empress was the site at which TransCanada PipeLines would receive gas for delivery to eastern markets.
Pacific Petroleums
Pacific Petroleums Limited was a Canadian integrated petroleum company that existed between 1939 and 1979. The company was founded and run by Frank McMahon, a wildcat driller from British Columbia
British Columbia (commonly abbreviated as BC ...
(acquired by
Petro-Canada
Petro-Canada is a retail and wholesale marketing brand subsidiary of Suncor Energy. Until 1991, it was a federal Crown corporation (a state-owned enterprise). In August 2009, Petro-Canada merged with Suncor Energy, with Suncor shareholders rece ...
) had already built a straddle plant at Empress to extract liquids, so Dome’s idea was not new. However, Dome built a much larger facility there. The facility was constructed on a patch of bald prairie in the early 1970s. The owners were Dome and a TransCanada subsidiary, which later sold its interest to
PanCanadian Petroleums.
The NGLs recovered at the new Empress plant needed to be transported to market, and the largest markets continued to be in the US Midwest. So Dome built injection facilities at nearby Kerrobert, Saskatchewan. Those facilities enabled Dome to inject additional liquids into the batches that were flowing from Fort Saskatchewan through Interprovincial Pipeline.
At the same time the team of
Dow Chemicals
The Dow Chemical Company, officially Dow Inc., is an American multinational chemical corporation headquartered in Midland, Michigan, United States. The company is among the three largest chemical producers in the world.
Dow manufactures plastics ...
, Nova and Dome put together the Alberta Ethane Project. This plan was essentially a $1.5 billion blueprint for the creation of a petrochemicals business in Alberta based on natural gas liquids, especially
ethane
Ethane ( , ) is an organic chemical compound with chemical formula . At standard temperature and pressure, ethane is a colorless, odorless gas. Like many hydrocarbons, ethane is isolated on an industrial scale from natural gas and as a petr ...
. And the plan took on a political life of its own, since it offered the opportunity for value-added products to be manufactured in Alberta for export. The provincial government stood four-square behind it.
Other components
The plan consisted of four components. The straddle plants at Empress were the first. The second was a petrochemical complex at Joffre — then a village near the city of
Red Deer
The red deer (''Cervus elaphus'') is one of the largest deer species. A male red deer is called a stag or hart, and a female is called a hind. The red deer inhabits most of Europe, the Caucasus Mountains region, Anatolia, Iran, and parts of wes ...
— to convert ethane to the petrochemical feedstock
ethylene
Ethylene (IUPAC name: ethene) is a hydrocarbon which has the formula or . It is a colourless, flammable gas with a faint "sweet and musky" odour when pure. It is the simplest alkene (a hydrocarbon with carbon-carbon double bonds).
Ethylene i ...
. This would form the basis for a petrochemical manufacturing centre. That centre grew dramatically during the decades that followed. By the late 1990s, ten large-scale petrochemical plants were operating there.
A third component was the Alberta Ethane Gathering System (AEGS,) which would deliver ethane from Alberta straddle plants to storage caverns at Fort Saskatchewan. This system would include a reversible connection to the Joffre petrochemical complex. In addition, one leg of the AEGS pipeline would connect Empress, which would soon become the largest gas processing centre in the world.
The fourth component was the Cochin Pipeline, which would ship ethylene from Alberta to Sarnia, and would also export ethane and propane to the US. The world’s longest NGL pipeline went on stream in 1978. Amoco had the opportunity to participate in this venture, but chose not to do so. (There is irony in this, since Amoco became operator of both the Cochin pipeline and Empress after the acquisition of Dome.)
To complete the picture of the Canadian liquids business, it is worth noting that in 1977 Amoco and Dome bought the Canadian assets of Goliad Oil and Gas Company. This increased the supply of liquids available to Amoco by about . But this acquisition also had symbolic importance, since Goliad had such a key role in the early liquids business.
Although not primarily related to the liquids business, the merger with Dome brought Amoco another large transportation system. The Rangeland Pipeline, which was originally developed by
Hudson’s Bay Oil and Gas, by 1998 moved about of oil per day. Because the company had developed pipeline expertise primarily through the liquids business, Amoco’s liquids organization operated the line.
While Amoco and Dome were the lead players in developing Canada’s liquids industry, neither company neglected exploration, development and production operations. Both companies helped pioneer conventional exploration and production in western Canada during the 1950s and '60s. And beginning in the 1960s, they were also pioneers in Canada’s
geographic frontiers and in
oil sands and heavy oil development.
Metric conversions
*One cubic metre of oil = 6.29 barrels.
*One cubic metre of natural gas = 35.49 cubic feet.
*One kilopascal = 1% of atmospheric pressure (near sea level).
Canada's oil measure, the cubic metre, is unique in the world. It is metric in the sense that it uses metres, but it is based on volume so that Canadian units can be easily converted into barrels. In the rest of the metric world, the standard for measuring oil is the
tonne
The tonne ( or ; symbol: t) is a unit of mass equal to 1000 kilograms. It is a non-SI unit accepted for use with SI. It is also referred to as a metric ton to distinguish it from the non-metric units of the short ton ( United State ...
. The advantage of the latter measure is that it reflects oil quality. In general, lower grade oils are heavier.
See also
*
Energy policy of Canada
Canada has access to all main sources of energy including oil and gas, coal, hydropower, biomass, solar, geothermal, wind, marine and nuclear. It is the world's second largest producer of uranium, third largest producer of hydro-electricit ...
References
*
*
*Robert Bott, ''Our Petroleum Challenge: Sustainability into the 21st Century'', Canadian Centre for Energy Information, Calgary; Seventh edition, 2004
External links
Canadian Centre for Energy Information
{{DEFAULTSORT:History Of The Petroleum Industry In Canada (Natural Gas Liquids)
History of the petroleum industry in Canada
Petroleum industry in Canada