![Brian Zinchuk](https://pipeline-online-v1688357189.websitepro-cdn.com/wp-content/uploads/2021/09/Brian-Zinchuk-Panther-Rig-4-1000px-square-74x74.jpg)
Brian Zinchuk is editor and owner of Pipeline Online
![](https://pipeline-online-v1688357189.websitepro-cdn.com/wp-content/uploads/2022/09/Part-3-Lloyd-Husky-Upgrader-2350-scaled.jpg)
This was the Lloydminster Husky Upgrader, as seen in 2008. Last year it was taken over by Cenovus, when Cenovus bought out Husky. Photo by Brian Zinchuk.
This is Part 3 of a 6-part series on the two heavy oil upgraders built in Saskatchewan is based on the book So Much More We Can Be: Saskatchewan’s Paradigm Shift and the Final Chapter on the Devine Government 1982-1991, by Edward Willett, Gerard Lucyshyn and Joseph Ralko. It was published this in 2021 by the Frontier Centre for Public Policy and was recently released on Amazon.ca at this link.
I can’t say that the Regina upgrader, whose identity has been totally absorbed into the Consumers Refinery Complex, has had nearly as significant an impact as the Lloydminster one. But I can say with absolute certainty that the Lloydminster upgrader was fundamental to the development of that city, the region and the province.
(For my purposes, and the purpose of this article, I consider Lloydminster as a whole a Saskatchewan city, even if the majority of it falls on the Alberta side. That’s because even though much of its industrial parks and housing is now on the Alberta side, their focus is principally on the Saskatchewan side of the border, centred on the Lloydminster Upgrader. And when Alberta withdrew from the project and it was in deep peril, Saskatchewan stepped up to the plate and took over.)
On May 5, Lloydminster Mayor Gerald Aalbers said, “Without the upgrader, Lloydminster would likely be a community of under 15,000.”
The most recent 2021 census put the city’s population at just shy of 32,000, a marginal improvement from 2016.
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And it’s been a wild ride getting to that 32,000. In 2003, I was hired as the city hall reporter for the Battlefords News-Optimist. The city manager of North Battleford, Jim Toye, told me at the time that he wished he had the problems of his counterpart in Lloydminster. Lloydminster was building around 600 houses a year at the time, and North Battleford, 150 kilometres down the road, was building 10.
In 1991, the Lloydminster and North Battleford weren’t too far apart in size, at 17,283 vs. 14,350.
“I know we, the city, sold 95 lots in five minutes in a lot draw. There were literally people who couldn’t procure lots,” Aalbers said.
![](https://pipeline-online-v1688357189.websitepro-cdn.com/wp-content/uploads/2022/07/Patchwork-Podcast-Gerald-Albers.png)
Lloydminster Mayor Gerald Aalbers, left, Adam Waterman and Pam Becotte (off screen) joined Kurt Price in this month’s Patchwork. YouTube
Toye’s comment always stuck with me, and for good reason. That frenetic pace, both in housing construction and economic activity, continued on until oil crashed in 2014. The phenomenal growth occurred even before oil saw its $100/barrel boom years for 2008-2014, (with a short hiccup in 2009).
Drilling rigs by the dozen were punching holes throughout the Lloydminster region. Dirt movers were constantly building new access roads for wells. Service rigs were everywhere. There were at least a half dozen pump shops specializing in PC pumps in Lloydminster, and for a time, even one in Turtleford or Edam, I recall.
There were a few trucking fleets with units numbering around 100, and many more smaller operators. Specialty manufacturers locally built everything from massive oil tanks which sat on leases to sand handing equipment to a speciality truck-based servicing unit known as a flushby. For what in other parts of the world would be considered a small town, Lloydminster developed a substantial manufacturing and industrial base, unrivalled within Saskatchewan by anything except the major cities.
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I even got a job in the Lloydminster oilpatch. I spent a year running an excavator in a sand retention pit near a little dot on the map called Baldwinton. Basically, if you had a pulse and could show up, you could find a job in Lloydminster. A lot of Newfoundlanders did just that, resulting in a lot of money being sent east.
Aalbers personally spent most of his career working in the Lloydminster oilpatch. “That’s what got me to Lloyd. There was an opportunity in Lloydminster. When we moved to Lloydminster as a family 17 years ago, do to the oilpatch, there was work here, and we’ve been able to stay. That was huge,” he said. “I ended up there for six months and I never left, because the opportunities that kept springing up were endless.”
Recognition that Saskatchewan needed to develop this heavy oil
The greater opportunities in heavy oil were eventually recognized by the New Democratic Party, too, when they were in power. The founder of the Petroleum Technology Research Centre was Dr. Malcolm Wilson, one of the scientists that, as part of the Intergovernmental Panel on Climate Change, received the Nobel Peace Prize in 2007.
As the story goes, 22 years ago, then New Democrat Saskatchewan Minister of Energy and Mines Eldon Lautermilch and Ralph Goodale, who was then the Liberal federal Minister of Natural Resources, were having a smoke in Kirghizstan. Over cigarettes, they decided on the need to push for petroleum research in Saskatchewan.
![](https://pipeline-online-v1688357189.websitepro-cdn.com/wp-content/uploads/2022/09/Malcolm-Wilson-7042-scaled.jpg)
Dr. Malcolm Wilson, in 2010. Photo by Brian Zinchuk
“This landed squarely on my desk,” recalled Dr. Wilson back in 2009, when he was then director of the Office of Energy and Environment at the University of Regina. His previous job was director, energy development, for the Department of Energy and Mines, from 1981-2001. He recalled being told, “Malcolm, create a petroleum research facility.”
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They did this squarely upon the recognition of the need to develop our massive heavy oil reserves, according to Wilson.
Thus begat the Petroleum Technology Research Centre (PTRC), a not-for-profit research company located in a dedicated building at Innovation Place in Regina, beside the university. And its purpose was to figure out how to get as much of Saskatchewan’s oil out of ground as possible, with a particular focus on our tens of billions of barrels of heavy oil.
Its work, particularly in the Joint Implementation of Vapour Extraction (JIVE) project, led to development of cyclic solvent injection (CSI), which uses carbon dioxide (CO2) and other solvents such as methane, ethane and propane to produce more oil in Edam and Lashburn areas. The JIVE program led to Husky’s development of the Lashburn and Tangleflags fields as well, where over 2 million barrels of oil have been recovered using this type of CO2 injection. The PTRC is continuing heavy oil research to this day with a particular focus on solvents and CSI.
Shift to thermal
More significantly, Husky made a huge shift in strategy, in what they referred to as their “Lloydminster Thermals.” Those projects became the most significant developments in Saskatchewan heavy oil since PC pump and the upgrader, itself.
About ten years ago, Husky decided to go into thermal in a big way. They stopped almost all expansion of CHOPS, and poured billions into thermal oil development. Almost all of that was spent on the Saskatchewan side of the border.
After some pioneering work in using steam to produce heavy oil, trying several different extraction methods, Husky started building essentially cookie-cutter projects. Each involved a steam plant, and several well pads composed of well pairs using a technology called “steam assisted gravity drainage,” or SAGD. That might sound like a lot of technobabble until you realize the important points: Each of these thermal projects produces 10,000 barrels of oil per day, and cost $250 to $350 million a pop to build. And Husky built 11 of these projects in northwest Saskatchewan by 2020, prior to the onset of the COVID-19 pandemic and the corresponding crash in oil markets.
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In 2021, Husky was acquired by Cenovus. And now as Cenovus, the 12th Lloydminster Thermal project, Spruce Lake North, is expected to be online in late 2022. Drilling is going on in the region right now in preparation for the Spruce Lake project.
According to Cenovus’ August 2022 corporate presentation, its Lloydminster thermals are expected to account for 100,000 to 110,000 barrels per day of production by the end of 2022. That’s between a fifth and a quarter of the entire province’s oil production, and doesn’t count CHOPS. Lloydminster’s conventional heavy oil (some of which is on the Alberta side of the border) is expected to produce 16,000 to 19,000 barrels per day by the end of 2022.
Those thermal projects are tied in by pipeline to Lloydminster, where their heavy oil is upgraded for sale.
![](https://pipeline-online-v1688357189.websitepro-cdn.com/wp-content/uploads/2022/05/Husky-Dee-Valley-6155-3000px-scaled.jpg)
Built by Husky, the now-Cenovus Dee Valley thermal plant is one of 12 built in northwest Saskatchewan, costing between $250 and $350 million each. Photo by Brian Zinchuk
It’s safe to say that likely none of those 12 projects, at a quarter billion a piece, would have been developed without the Lloydminster Upgrader to process that heavy oil. And additional Lloydminster Thermal projects are planned.
When Cenovus purchased Husky in 2021, its refining assets in Lloydminster were a key part of the deal. According to Cenovus, the Lloydminster Upgrader has an 81,000 barrel per day throughput capacity, producing “high quality, low sulphur synthetic crude oil and diesel fuel.” It recovers diluent from its feedstock, and the condensate is cycled back to nearby thermal operations. Its feedstock is 97 per cent heavy oil, seven per cent “other.”
The upgrader’s output is 69 per cent synthetic oil, 12 per cent distillates, and 19 per cent “other.”
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The Lloydminster asphalt refinery processes a further 30,000 barrels per day, producing “more than 30 different types and grades of road asphalt from heavy oil.”
Lloydminster Upgrader’s next chapter
There is another chapter in the tale of the Lloydminster Upgrader that is just beginning. On April 27, Cenovus president and CEO Alex Pourbaix told an earnings conference call, “When we think of further margin expansion, we are advancing the Rewire Alberta project, so a way to introduce Foster Creek and Christina Lake crudes into the upgrader and the refinery. That has several benefits. It allows us to recycle more of the condensate in the province. It allows us to expand our margin because we’re using lower quality, lower cost crudes in the upgrader and the refinery versus LLB, which we’ll then just sell to the market. And obviously, the expansion helps us on our unit costs and product make, so good initiatives underway there.”
This marks a major shift for the upgrader, whose purpose was to foster the development of Lloydminster region heavy oil. Asked for clarification on this, Cenovus responded by email on May 5, “The Lloydminster Upgrader and Refinery are a great industrial complex and we are looking at ways to extract more value out of these facilities, including introducing oil sands crudes from Foster Creek and Christina Lake to both facilities. This allows us to expand our margin because we’re using lower cost crudes in the upgrader and the refinery versus LLB, which we’ll then just sell to the market. We will continue to process our Upstream feedstock at our Lloydminster assets while looking at ways to debottleneck the facility for increased capacity and efficiency.”
Apparently, we are now in the opening paragraphs of this next chapter. We will have to see how it plays out, and how it affects further development of the Lloydminster Thermals.
Brian Zinchuk is editor and owner of PipelineOnline.ca and occasional contributor to the Frontier Centre for Public Policy. He can be reached at brian.zinchuk@pipelineonline.ca.
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