Sherritt completes tests on Alberta bitumen upgrading process

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Sherritt International Inc. [S-TSX] said Monday May 7 that its Alberta-based Technologies division has successfully completed a pilot-scale demonstration of a proprietary process to upgrade bitumen. It said the process has the ability to eliminate the need for addition of diluent, a high-cost thinning agent that reduces heavy oil viscosity and improve pipeline capacity.

Sherritt shares were active on the news, rising 3.48% or $0.04 to $1.19 on volume of 1.09 million shares. The stock trades in a 52-week range of 74 cents and $1.87.

The Toronto-based company is a world leader in the mining and refining of nickel and cobalt from lateritic ores with projects and operations in Canada, Cuba and Madagascar. Sherritt is the largest independent energy producer in Cuba, with extensive oil and power operations across the island. Its key asset is a nickel mining joint venture with the Cuban government.

The 50/50 partnership, formed in 1994, involves the extraction and processing of nickel and cobalt from an open pit mine at Moa Bay in eastern Cuba.

The laterite nickel ore is processed on site, producing mixed sulphides (containing nickel and cobalt) that are shipped in bags to Halifax, N.S., and then transported by rail to a refinery in Fort Saskatchewan, Alberta.

Sherritt licenses its proprietary technologies and provides metallurgical services to mining and refining operations worldwide.

“Sherritt has identified a new application of our proven processing capabilities that addresses a significant need within Alberta’s oil sands industry to reduce costs and improve pipeline capacity,” said Sherritt President and CEO David Pathe.

“The successful pilot-scale demonstration marks an important first step in commercializing this technology, and builds on our unique metals processing expertise to create longer term growth opportunities. Our next testing phase is expected to involve more extensive collaboration with Alberta bitumen producers and include demonstrations of our upgrading process on a larger scale,” he said.

Sherritt’s process was first tested in 2015 to upgrade Cuban heavy oil. More recently, Sherritt completed test work on several bitumen products form Alberta. All test work has been completed at Sherritt’s technology facility at Fort Saskatchewan.

In recent tests, Sherritt upgraded bitumen with a 10 O American Petroleum Institute [API] gravity, a unit of measurement to gauge the density of the oil to a lighter 24 O API gravity product with no loss of liquid.

When blended with raw bitumen, the upgraded bitumen product met pipeline transportation specifications and had lower sulphur, naphthenic acid, heavy metals and micro-carbon residue than Alberta benchmark diluted bitumen blend, Western Canada Select.

The addition of diluent to bitumen for transportation through pipelines is estimated to cost Alberta bitumen producers more than US$6 billion annually. According to the University of Calgary’s School of Public Policy, the value of uplift of partial upgrading of bitumen is estimated at $10 to $15 per barrel of bitumen.

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