OILSANDS INNOVATOR: Dr. Columba Yeung

“Too good to be true.”

That’s what skeptics have said when first hearing about the new oil sands upgrading technology developed by Dr. Columba Yeung (Chem 7T1; MASc 7T3; PhD 8T1), Chairman and CEO of the Value Creation Group (VCG).

Yeung’s proprietary technology has been described as the most energy-efficient, environmentally friendly and cost-effective method developed to date to extract and refine bitumen from Alberta’s oil sands. But even skeptics stop in their tracks when they learn more about Yeung’s impressive
history of finding answers to “mission impossible” technological problems in his 24 years at Shell Canada and Royal Dutch, the details of his techno-economic innovation, and the dramatic savings his breakthrough methods promise. At $45,000 per flowing barrel – an industry measure of capital intensity – VCG’s estimated costs are less than half of other developers.

With oil prices soaring, it’s no wonder VCG’s announcements have sparked recent headlines
in major business publications; or that the start-up has been fielding calls from many of the world’s mega-oil companies. Enbridge Inc. signed on as its strategic partner in 2005 to pursue oil sands energy infrastructure development. And it’s no wonder that Alberta Venture magazine
recently chose Yeung as one of its “50 most influential people of 2007”.

Adding to the young company’s strength in a field dominated by large, well-capitalized companies is the enormous Alberta land position VCG has assembled near Fort McMurray, said to be the largest wholly owned oil sands resource held by a private Canadian corporation.

VCG comprises three companies: Value Creation Inc., founded by Hong Kong-born Yeung in 1998; Technoeconomics Inc., the company’s technology development arm; and subsidiary BA Energy Inc., formed to design, construct and operate a new upgrader near Edmonton, using VCG’s technology. The firm anticipates that its Heartland Upgrader will ultimately produce 260,000 barrels per day of oil products tailored to North American refineries. Phase one is slated for 2009.

Yeung is one of four Skule™ alumni involved in VCG. Others include: Dr. Ian Chan (Chem 7T3),
VCG’s Vice President, International Alliances and a Director on the BA Energy Board; Scott
Joliffe (Chem 7T3), also a BA Board Director; and Kevin Melnyk (Chem 8T8), BA’s Vice
President of Operations. Skule™ classmates may recall that Joliffe was EngSoc President
and Chan was Treasurer.

As a student, Chan says Yeung was, “the number one guy in his class”. The two later became very close when Chan joined Yeung’s team at Shell in the early 1980s. Chan described Yeung as “legendary” for his contributions to Shell Canada’s Scotford refinery and its Athabasca Oil Sands Project, as well as Royal Dutch Shell’s multi-billion dollar Nanhai refinery and petrochemical complex in China.

“Columba is the type that gets consumed by a problem,” stated Chan, recalling that Yeung
was so determined to solve a challenging technical quandary he faced at Shell, that he
stayed awake for three nights straight.

That single-mindedness stood Yeung in good stead in 1998, when he started a five-year quest in Alberta labs, to find more viable ways of refining bitumen, by analyzing every aspect of the oil sands development value chain. His new process involves two stages. First, instead of adding diluent to make the viscous bitumen flow through a pipeline, as is conventionally done, Yeung applied the principles of colloidal physics. Contaminants are selectively removed at low
pressure and temperature, including about 99 per cent of the asphaltenes which make
the crude thick and tar-like. The result is a low contaminant crude, pumpable with no or
little diluent. Another plus is that the rejected asphaltenes can also be used as an energy
source, for example, to replace coal in cement production.

The second stage, “ultra-selective pyrolysis” (USP), employs a rotating drum reactor, unique in the oil industry (visualize cement drums). The drum rotation, high temperature and very low reaction time used, maximize the amount of liquid produced. A bonus byproduct of USP is a light gas that can be used to eliminate or reduce the need for natural gas, as well as producing petrochemical feedstock.

“What Columba is doing is amazing,” said Chan, admiringly, calling his friend’s new
process “robust, ingenious and logical.” When Yeung first called Chan with his fledgling idea, his classmate didn’t hesitate to invest. Chan smiled, “I’ve seen his crazy notions become great ideas”.

FAST FACTS ABOUT VCG TECHNOLOGY
More than 50% reduction in:
• Gas emissions, compared to existing technologies
• Energy consumption, compared to conventional upgrading processes
• Operating costs, compared to industry benchmark

FAST FACTS ABOUT VCG
• Estimated 30 to 35 billion barrels of original-oil-in-place on leases owned by
VCG, one of the largest oil sands blocks held in Canada by a private company
• The firm is building western Canada’s first merchant bitumen upgrader, with
about 260,000 barrels per day capacity