Stoughton – Before the end of the decade, there could be a new oil refinery near Stoughton, processing Saskatchewan oil and selling the finished product to Saskatchewan vendors.
On Dec. 1, Quantum Energy, Inc. of Tempe, Az., announced it was forming a Canadian subsidiary, Dominion Energy Processing Group, Inc. (DEPGI), whose focus would be building a 40,000 barrel per day oil refinery near Stoughton. The project is expected to cost of $600 million.
A week later the Quantum announced it had contracted 320 acres of land for the project, located immediately adjacent to the Crescent Point Energy Corp. Viewfield gas plant. That gas plant is 3.2 kilometres west and 4.8 kilometres south of the intersection of Highways 13 and 47, the southern edge of Stoughton. The land location for the proposed refinery site is the western half of 8-8-8-W2, according to Guy Shepherd of Moosomin’s Farm Boy Realty, who handled the transaction.
The Crescent Point Viewfield facility is also connected the Tundra Energy Marketing Ltd.’s (formerly Enbridge’s) Westspur pipeline system, the principal gathering network for southeast Saskatchewan.
Keith Stemler is CEO of Dominion Energy Processing Group, Inc. Pipeline News spoke to him by phone at length on Dec. 14.
Incorporated nationally, Dominion’s corporate headquarters will be in Regina.
As their chosen site is right beside Crescent Point Energy’s main facility in the prolific Viewfield Bakken region, which has its own associated rail loading facility a few kilometres to the north, we asked about their relationship with Crescent Point.
“We’re in negotiations with them on a feedstock, but that’s still not been 100 per cent finalized. But they’re part of our strategic alignment in the location. That’s all I can say at this point,” Stemler said.
The announced capacity, 40,000 bpd, is not far off from Crescent Point’s production in the area. A few years ago, Crescent Point was producing over 50,000 bpd from its Viewfield area. Will this refinery act as a merchant refinery, and accept crude from surrounding producers, or would it be locked up largely, and perhaps exclusively, by Crescent Point?
Stemler said, “Still undecided. We’re still working with about three other vendors, not directly, but indirectly, to make sure we get our volumes.
“We understand what the pipeline connection points are, and where we might have to tap off a line. But we’re still in negotiations with different vendors to make sure we get our 40,000. So the volume is still in the works, as far as our daily volumes.”
Their own gathering system from other suppliers has been discussed. “We haven’t moved forward on any sort of avenue with regards to (a) collection system. But it’s been discussed. In the area, we’ve looked at the network that’s there. There’s been a variety of different discussions on meeting the volume of 40,000,” Stemler said.
When it comes to transporting out refined product, he said, “We’re a little premature. We’ve been discussing some off-take situations with different off-take vendors that we want to work with. There’s been some question with regards to railing it, or trucking it into the Regina or Estevan area. The product would be staying in Saskatchewan. As far as the movement goes, right now we’re still discussing trucking.
“As far as upgrading the infrastructures around the plant, it has been discussed with the municipality, as well as the Ministry of the Economy. We have discussed all those points on traffic. One of the key things about the traffic is just how the infrastructure is designed, how it’s built, what do we need to do to rehabilitate it to get it to a level of comfort, just to get our equipment it. It is definitely a huge discussion point at this time.”
“We’re still in the detailed design stage,” he said.
Stoughton refinery should be up by late 2019
Dominion CEO Keith Stemler addresses Weyburn Chamber
WEYBURN REVIEW
MARCH 29, 2017 05:00 AM
By Greg Nikkel
Progress is ongoing to prepare for the construction and operation of new oil refinery at Stoughton, with the goal to be in operation by November of 2019, members and guests of the Weyburn Chamber of Commerce heard on Wednesday evening in an update by Keith Stemler, CEO of Dominion Energy Group Processing.
He was the guest speaker for the chamber’s annual President’s Dinner and AGM at the Legion Hall. The evening included the presentation of the Golden Spike Award to Mal Barber.
In his speech to the chamber, Stemler said one of his goals of this startup company is to be completely transparent with the community about what is happening with the project, noting “we are currently in a position where we have satisfied about 2,800 questions out of 3,000” in making the necessary preparations. These include being able to satisfy the investors that this is a viable project, in addition to the many regulatory and environmental processes they will have to satisfy.
Once the plant is up and running, Stemler said there would be around 60 full-time positions, divided into three shifts for round-the-clock operations, not including the EMTs that will be on duty.
Among the arrangements that have to be made is signing an agreement for the off-take from the plant, and engaging an Engineer of Record (EOR) as this will be a huge project. Stemler said the EOR doesn’t yet want their name out there yet because of the deluge of calls and emails they would then receive.
Stemler noted that after he held a meeting with contractors on Feb. 15, he asked that they not email him with questions after — and he subsequently received 7,400 emails, “sometimes 20 from the same place”.
“The EOR is responsible for everything that happens in the plant for the first year. We’ll pay an enormous amount of money to do this, but it’s worth it. It’s a small cost to pay,” said Stemler, noting that the EOR is a worldwide company with a strong reputation, considered one of the top five engineering firms in the world.
If everything goes well in preparing for the startup of construction, and then the construction itself goes well, the plan is tentatively to be starting production by November of 2019, or by early 2020 if there are delays.
Once production gets rolling, the capacity will be 42,100 barrels a day of refined crude oil.
Showing how the plant will be set up on the site, to be located adjacent to Crescent Point Energy’s Viewfield gas plant, part of the design will prepare for a future requirement of the federal government to increase the ethanol content of gasoline in Canada from 10 to 15 per cent.
“We’re putting in that huge building kit so we don’t have to retrofit the plant in the future. When other plants go down for retrofitting, we’ll be ready to go,” said Stemler.
On the plant construction side, he estimates a staff of over 200 during the construction phase with as many as seven different disciplines on site at any given time. The estimated cost of construction will be around $575 million, and Stemler noted the cost to run the plant for the first 90 days will be about $155 million.
Part of the reason for that is, the plant will need to purchase a supply of oil to hold in storage for the startup of the refinery, and it will have to be heated to about 1000 degrees, and with two lines of oil being processed at once, a total of 3,400 barrels an hour will be processed.
Asked when the training for workers will need to start in order to prepare for the plant’s opening, Stemler said the first modules will need to start by January of 2018 for the operator training, with the company supplying the specialized refining equipment bringing in the modules to train the employees.