USD completes Alberta diluent recovery facility

USD Group has completed its diluent recovery unit (DRU) in Hardisty, Alberta, and expects to start service this quarter, moving a form of concentrated bitumen by rail to the US Gulf coast.

The DRU was completed in July and is ramping up operational throughput in "a start-up phase," USD said while reporting earnings today. The company is also starting up a related terminal in Port Arthur, Texas. USD Group is the parent company of USD Partners.

The DRU project is a joint venture with Canada's Gibson Energy.

USD holds a patented technology that separates diluent from the raw bitumen and creates a more concentrated, viscous material called DRUbit that is easier to transport by rail. The DRUbit would be moved to the terminal in Port Arthur.

ConocoPhillips Canada has contracted to process 50,000 b/d of bitumen blend through the DRU to be shipped by Canadian Pacific and Kansas City Southern to the US Gulf coast.

ConocoPhillips will be able to re-blend the DRUbit to create custom blends for customers, which could include Gulf coast refiners and parties seeking to export the material.

USD is in talks with other potential customers for a second phase of growth which could include a second DRU customer committing to delivering the next 50,000 b/d of diluted bitumen into the DRU facility, said USD Partners chief executive Dan Borgen.

DRUbit is classified as a non-flammable, non-hazardous commodity because it will not readily ignite. That allows it to move at lower costs, without the need for specialized DOT-117J railcars that are required for conventional crude shipments.

The bitumen also does not have to be mixed with condensate or other diluents that are needed to ship heavy crude by pipeline or unheated rail cars.

The Port Arthur terminal has capacity for rail unloading, barge dock loading and unloading, tank storage and blending.

By Eunice Bridges