CN Rail, First Nation plan to break ground on new 'bitumen puck' facility this year

As apuck made of oilsands bitumen was tossed into the air, railway executive James Auld joked, "we almost had an oil spill there."

Auld and other officials were upbeat as they gave their first public presentation on the pucks a solid product similar to coal that canfloat inwater.

CN Rail and an Alberta First Nation want to start building a new facility to produce bitumen pucks this year and beginshipping the product around the world before the end of 2020.

They made the announcement following their presentation at the Indian Resource Council conference in Calgary on Thursday.

Bitumen pucks are the common term for CanaPux, which havebeen developed by the railway company and Wapahki Energy, a business owned by Heart Lake First Nation. The community is located about 300 kilometres northeast of Edmonton.

The pucks resemble a single-serving yogurt container and are about the size of a bar of soap. Bitumen is converted into a solid product and sealed inplastic. The pucks are designed to be transported in regular container cars by train and loaded onto cargo ships at under utilized coal terminals on the West Coast.

Could increase profit by $15 per barrel

If the technology is successful, the oil industry would be able to sell bitumen close to world oil prices without the use of pipelines or oil tankers. Oil producers could earn an additional $15 per barrel of oil on average using CanaPux because of the ability to reach foreign markets and the cost savings of not having to use diluent, a fluid required to move bitumen in pipelines, according to Alfred Fisher with Sproule, an energy consultancy firm involved in the project.

Project proponents are currently working with the oil industry and regulators before they build their pilot facility, which would process up to 10,000 barrels of bitumen and about 275 tonnes of plastic per day.

"The facilities are expandable and scaleable. This is our pilot project. We designed it that size because it makes commercial sense and it's economic," said Fisher. "At the same time, we still have to learn. We built it small enough that we can learn. If we have a problem, it's not that big of a deal."

Part of the reason we want it to float is that it would be easy to clean up.- Jeff Paquin, chief executive of Wapahki Energy

The pilot facility will cost $50 million to build. CN Rail and Wapahki are each contributing $16.7 million with the remaining funds expected to come from government or a private investor.

The pucks would be produced using recycled plastics made from low-density materials such asplastic bags.

"Part of the reason we want it to float is that it would be easy to clean up," said Jeff Paquin, chief executive of Wapahki Energy.

The pucks would be processed at foreign refineries by heating the product to 130 C to separate the bitumen and plastic.

The Heart Lake First Nation is located near several oilsands facilities. CanaPux have been in development since early 2016.