project: shell scotford upgrader expansion one celebrate … · 1 executive summary shell canada -...

Community: Strathcona county Economic DEvElopmEnt & touriSm

ProjeCt: ShEll ScotforD upgraDEr ExpanSion onE

Celebrate SuCCeSS

entry for the 2011 Alex metCAlfe AwArds

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Executive Summary Shell Canada - Scotford Upgrader Expansion One

The Scotford Upgrader is located next to Shell Canada’s Scotford Refinery in Strathcona County, Alberta. The Scotford Upgrader uses hydrogen-addition technology to upgrade the high viscosity “extra heavy” crude oil (called bitumen) from the Muskeg River Mine into a wide range of synthetic crude oils. A significant portion of the output of the Scotford Upgrader is sold to the Scotford Refinery. Both light and heavy crudes are also sold to Shell’s Sarnia Refinery in Ontario. The balance of the synthetic crude is sold to the general marketplace.

What is Upgrading?

Upgrading is the process of breaking large hydrocarbon molecules (such as bitumen) into smaller ones by increasing the hydrogen to carbon ratio. These upgraded crude oils are suitable feedstocks for refineries, which will process them into refined products like gasoline.

Scotford’s upgrading process adds hydrogen to the bitumen, breaking up the large hydrocarbon molecules - this process is called hydrogen-addition or hydrogen-conversion.

The original Upgrader completed in 2003 had a capacity of 155,000 barrels per day (bpd). Shell Expansion One will add 100,000 bpd. This project will start production in 2011. Most of the construction was completed in 2010.

Economic Impact

• Construction jobs: Peaked in 2010 at 12,000 workers on site. This was the largest union construction project in Canada.

• Permenant jobs: 300 permanent full time jobs and 100 full time contractors1

• Increase in tax base: Estimated between $14.0 million to $16.0 million2 per year in property taxes for Strathcona County.

• Estimated Project Cost Strathcona Portion: $2.8 billion3

• Estimated additional jobs created 3600 (multiplier of 9)4

• Estimated Project spending (Metro Edmonton and Alberta): $1,390,565,0005

1 Source: Shell Canada Environmental Impact Assessment (EIA) 20052 Source: Strathcona Taxation & Assessment3 Source: Shell Canada EIA 20054 Source: Shell Canada and CAPP5 Source: Shell Canada

Strathcona County Economic Development and Tourism Shell Scotford Upgrader Expansion One Entry for Alex Metcalfe Award (Large Population 50,001)

Shell Scotford Upgrader Expansion One increased production by 100,000 barrels per day.

Strathcona County Economic Development and TourismShell Scotford Upgrader Expansion One

2011 EDA Awards EntryAlex Metcalfe Award (Large Population 50,001)

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Role of Strathcona County Economic Development and Tourism Department

Since the completion of Shell Scotford Upgrader in 2003, our department along with Alberta’s Industrial Heartland Association has been working diligently to maintain our strong relationship with Shell Canada to retain and expand their projects located in Alberta’s Industrial Heartland. These projects include Shell Refinery 100,000 bpd producing gasoline, low sulfur diesel, jet fuel and Shell Chemicals producing styrene monomer (used to manufacture plastics) and ethylene glycol (used for fleece jackets). Total employment for all plants is 1100 full time employees and 400 full time contractors.

Business Partnerships, Programs and Activities

1. Annual meeting and update to Strathcona County Council with Shell Group. This is a very effective way to communicate with the Mayor and councillors about Shell activity in Strathcona County.

2. Annual Update to Sherwood Park & District Chamber of Commerce – We worked with the Shell communications group to give an annual update at the Sherwood Park & District Chamber of Commerce Luncheon.

3. Annual meetings in Calgary with Shell to provide insight and information towards future plans. Currently Shell is looking at a debottle necking process which will increase production by 85,000 bpd. They are also involved in a carbon capture and sequestration (ccs) project.

4. Attend meetings with local resident groups where Shell and other companies update residents about their activity.

5. Nomination of Shell for various awards towards sustainability and job creation and growth.

6. Provide contact information about the Shell procurement process for companies located in the Metro Edmonton area, Alberta and Canada.

7. Attend the Buyer Seller Forum in Edmonton and introduce delegates from across Canada to the Shell Delegates.

8. Provide “fence line” tours of the Shell Scotford manufacturing facilities. We also arranged “special occasion” tours of the uprader and refinery if required.

9. Provide an update for the Shell projects as part of the normal Strathcona Updates for outside groups.

10. Work with Shell to provide input towards Alberta and Canadian Chamber of Commerce policy issues such as Accelerated Capital Cost Allowance (ACCA) and labour issues.

11. Work with Shell to provide information for the management groups on activity within Strathcona County and Alberta’s Industrial Heartland.

12. Work with Shell to provide opportunity for community involvement projects. One result is the Millennium Place funding program.

Shell Scotford Upgrader One Expansion was the largest union construction project in Canada.



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13. Work with internal groups within Strathcona County to provide input towards special projects. These include:

a. Heartland Servicing Team – meeting on monthly basis for capital decisions on servicing and infrastructure requirements for projects in Alberta Industrial Heartland Strathcona portion.

b. Airport Expansion – work with Shell to provide funding support of 75% towards the expansion of the Warren Thomas Josephburg Aerodrome runway and providing extra firefighters with equipment when Shell corporate plane arrives on a daily basis.

c. Provide feedback and facilitation within Strathcona County when it sold Shell land for expansion in 2007.

d. Provide feedback with key departments for Shell when community audits were performed in 2009.

e. Working with our Emergency Services Department to liaise with Shell for the planning for major incidents.

f. Working with our communications department for updates about Shell in our publications.

14. Working closely with Alberta Finance and Enterprise about Shell activity and supply relevant information and aerial photographs.

15. Develop an aerial photo library (on a yearly basis) of the Shell Scotford project.

16. Attend any open house presentations with Shell and other Strathcona County departments.

17. Provide local industry information about “turn around projects” for Shell. The last turn around project spent an estimated $50 million on labour and materials.

18. Provide input towards the transportation policy of Shell of bussing workers to the site. They achieved a ridership of over 73% peaking at over 133 buses.

19. Utilizing spokesperson from Shell for community videos. This was shown in Montreal at the IPAC conference with over 1000 delegates.

20. Providing Shell with meeting space with Strathcona County Hall and the new Community Centre for corporate updates and internal meetings.

Shell Scotford Upgrader Expansion One created 300 permanent full time positions, 100 full time contractors and added an estimated 3600 jobs across Canada.



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Relevance and Transferability to other communities: Key Learnings

1. Important to develop relationships across all parts of the oil company from production to communciation to business development for Canada and Internationally.

2. Communication for projects status and updates within the municipality focused at the Mayor – council level to all operating departments.

3. Develop a cross department team composed of economic development, planning, engineering, utilities, and other key departments to meet on a monthly basis.

4. Work with the local, provincial and national chambers of commerce to promote messaging and policy issue for large projects.

5. Work with all relevant provincial departments to communicate the importance of this project

6. Develop photo libraries for use with internal and external groups.

7. Provide opportunity for community investment from large companies understanding their strategic goals and processes.

8. Celebrate Success.

Aerial View of Shell Scotford Fall 2005

Aerial View of Shell Scotford Fall 2009



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Summary

Through hard work with partnerships, particularly Alberta’s Industrial Heartland, and visionary land planning framework; Shell Canada made the decision to move ahead with Scotford Upgrader Expansion One. Strathcona County Economic Development and Tourism, along with many others played a key role in this capital decision. The total value of the Upgrader, pipeline and expansion of mine in Ft. McMuarry was in the range of $12.9 Billion. This was a result of the Strathcona County Vision and Strategic Plan giving direction to the Social Sustainability Framework, Environmental Sustainability Framework and Economic Susainability Framework. These frameworks gave direction to our Economic Development Strategic Plan and finally to our day to day work plans. Through continuous hard work and taking advantage of opportunity, we have generated over 400 new full time jobs through this project. The job multiplier identified through Canadian Association of Petroleum Producers (CAPP) is nine; meaning there were at least 3600 additional direct, indirect and induced jobs created in Canada. There will be new property taxes generated in the range of $14.0 million to $16.0 million per year for Strathcona County. It is estimated there will be over $90 million worth of taxes paid annually to the provincial and federal governments.6 It is estimated by Shell that they will be spending over $1.4 billion in the Alberta Region for materials.

Shell Chemicals

Shell Upgrader Expansion 1

Shell Upgrader Shell Refinery

Construction Storage

6 Source: Shell Canada EIA 2005

ShEll ScotforD upgraDEr ExpanSion onE

Celebrate SuCCeSS

project: shell scotford upgrader expansion one celebrate … · 1 executive summary shell canada -...

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