Harvesting wealth from oilsands waste

As the debate rages over the threat oilsands waste poses to the environment, a Canadian company is on the verge of showing whether its technology will make oilsands tailings pondsless toxic and even extract valuable products.

After six years in development, Edmonton-based Titanium Corp.'s technology has shown in a small-scale experiment that it can meet targets for recovering oil, solvents, water and valuable heavy metals such as zircon from effluent pipes before the waste enters the ponds.

"It wasa lot of hard work by a lot of very, verybright people," Titanium CEO Scott Nelson told CBC News.

The next step is to demonstrate whether the technology can be profitable on an industrial scale.

If it succeeds, the timing could be fortuitous for the oil industry.

In October, oilsands operator Syncrude paid a $3-million penalty for the deaths of 1,600 ducks in a tailings pond in April 2008.

More recently, aboriginal hunters at Fort McKay, near the pond run byCanadian Natural Resources Ltd. (CNRL), said they no longer use part of their traditional hunting grounds because they fear animals will be contaminated.

Ore treated in 2 stages

The tailings ponds exist to hold the waste from the oilsands mining process, whichseparates oil, or bitumen, from sand in two stages. The firstmixes the oilsands ore with treated hot water and agitates the mixture to draw the bitumen out.

That causes the oil to float on top of the water, which was the problem that killed the ducks in Syncrude's pond.

"Preventing hydrocarbons from going into the ponds is clearly in everyone's interest," Nelson said.

The bitumen left after the first stage still includes clay and other minerals, which are the trickiest components to deal with, because they either want to stick to the bitumen or they form muddy suspensions in the water that are hard to turn back into a solid.

So the second stage uses solvents, such as naphtha, to separate oil from the rest of the mixture in a process that resembles dry cleaning.

That also uses a lot of water, which leaves behind emulsions, a lot like soapy water, which are very expensive ifthey can't be recovered.

Those emulsions are also a source of volatile organic compounds, which can affect the environment and human health.

In atrial using tailings fromSyncrude's pond over four monthsending in October, Titanium met or exceeded its targets for recoveries.

It extracted75 per cent of the bitumen, the same proportionof solvents, 70 per cent of valuable heavy minerals as well as dry tailings and water.

A similar trial is currently underway onmaterial from Canadian Natural Resources' pond and Titanium will run a third test, onSuncor's effluent,in January.

After that, the next step will be to negotiate with each ofthose operations and reach a deal with one of them to builda larger, $15-million project to show that the technology can make money, something Nelson believes will succeed.

"We're extremely confident now." hesaid. "We did two to three years of development that was supported by a lot of government experts.

"Titanium Corporation is doing something new in oilsands," said Michael Lipsett, a professor of mechanical engineering at the University of Alberta in Edmonton, who has followed Titanium's progress, and is not an investor.

"The biggest challenge was to figure out how to produce enough of the useful minerals from the waste stream,"Lipsett said, "without having hydrocarbon stick to them."

The technology works by spinning the contents of the waste stream andseparating the various components which are subjected to different recovery processes. Titanium has secured five patents aimed at protecting its investment.

Titanium estimates that if its technology were employed at four oilsands operations those run by Syncrude, Suncor, CNRL, and Shell the totalrecoveries would be worth $500 million annually.

If the commercial-scale test pans out, Titanium estimates it could build a full-scale plant at one of those operations at a cost of $350 million.

And there's the potential opportunity togrow beyond the existing four operationswith Imperial Oil's Kearl site production due for commissioning in 2012, and Total's Joslyn mine undergoing in regulatory review.

If those go ahead, bitumen production is forecast to more than double to three million barrels a day in10 years.

Titanium's technology is promising enough that the Alberta government has invested $3.5 million in its development, Ottawa has put in $5 million and Nelson's been able to find investors to put up another $10 million.

It's also attracted investor interest, with its shares rising from 44 cents to $2 over the last year.

Part of that interest is based on the potential market for zircon, a hard, heat-resistantmineralused in ceramic construction materials.

China now accounts for 40 per cent of world demand and with zircon in short supply, and China's economy in high growth mode, prices could escalate from their present level of about $1,000 US per tonne.

"The price has been moving up steadily," said Nelson. "It's a very difficult material to find and there's a very high demand."

As its name suggests, the company originally focused on extracting titanium, but the price for thatmineral is only $100 a tonne and shows few signs of increasing.

"Until the price gets somewhat higher, we're going to focus on recovering the zircon," Nelson said.

While its technology looks promising,Titanium still has challenges.

It must show that its commercial-scale project can still work given the widely varying changes in the different kinds of waste that flow through the effluent pipe.

It will also face the challenge of successfully negotiating an agreement on what price the companies will pay for the recovered bitumen and solvents as well as securing contracts to sell the minerals.

Still, if successful, this could rank as a Canadian achievement, Lipsett said.

"Minimizing the amount of energy you're using, minimizing the tailings, doing it in a cost effective way, and returning value to Canada, doing all of those and doing it in the middle of northern Alberta is really difficult to do," he said.