by Dave S. Clark
  
New government regulations for desulphurized fuel and a switch from light conventional crude to bitumen-based crude are the goals of $3 billion worth of work at the Petro-Canada Edmonton refinery.
The refinery, which produces 135,000 barrels of oil per day, is about to undergo a conversion that will change the source of 85,000 of those barrels.
“The conventional oil in Western Canada is declining and with the heavy oil sector is increasing there is a big opportunity for us,” said Jim Rowley, general manager of the refinery conversion project.
Of the 85,000 barrels a day that are now refined from a light conventional crude, in 2008 they will come from a bitumen based source. About 22,000 of them will come from the company’s MacKay River facility; 26,000 will be purchased from Suncor; and between 30,000 and 40,000 will come from the MacKay River expansion.
The feedstock conversion alone will cost the company $1.6 billion by the time it is finished in the summer of 2008.
Rowley said that bitumen can be purchased at a discount compared to conventional oil, but the discount varies greatly with market trends. By using its own bitumen, the company can be independent of those market trends. If bitumen is down in price, costs will be covered in the refining stage. If bitumen is up in price, the company makes money on it, to balance out the drop in the profit margin on refining the oil.
The project was given final approval in October 2005 and the work so far has been preliminary engineering.
“It’s a busy time. We are working inside an operating refinery so that is an additional bit of complexity,” said Rowley.
When construction peaks in the summer of 2007, it is expected there will be 2,700 people working on the project. Rowley said the company always plans to do a large portion of construction in the summer months so there is less to do over winter.
But despite the large number of workers and the money spent, since the output of 135,000 barrels a day will remain the same, there will be few new jobs created.
However, the new process has enabled Air Products, a company that adds hydrogen to crude to upgrade it for the refinery, to build a facility specifically for that purpose.
The other two projects at the refinery, desulphurization of diesel and gas, make up the other $1.4 billion in upgrades.
The gas desulphurization project was completed last year, and the diesel project is in its final stages. 
“Both the projects went very well,” said Rowley. “They met scheduled costs. We hope to build on that and deliver the refinery conversion project the same way.”
The diesel desulphurization is scheduled to require 4.7 million man hours in construction time. In June, the construction site peaked with over 2,000 workers.
“We are proud to say we haven’t had a lost time accident,” said Rowley. 
He said it was a huge accomplishment not to have such an incident over that time frame.
Diesel desulphurization is scheduled to be finished in May to meet with government regulations that come into effect later in the year.