Information Session (August 6, 2009) Your questions answered
Capacity
Economic Components
Federal
Feedstocks
Participants
Time line
Is the requirement that a 3rd party, other than the Crown, secure throughput volumes comprising not less than 25% of the Process Facility design throughput a mandatory contractual condition. This is noted in item 7 of the “Evaluation Criteria and Metrics” but NOT directly stated in Section 2.1.
Yes, that condition is implied in section 2.1 that itemizes both the minimum processing plant capacity at 100,000 bpd and the maximum Crown bitumen supply of 75,000 bpd.
Explain why you mandate a minimum of 100,000 bpd of a processing facility to further process Crown’s 50,000 to 70,000 bpd bitumen. Can this 100,000 bpd be the ultimate capacity of this processing facility?
and
Why does the Crown require a facility with 100,000 bpd at capacity to satisfy a 50,000-75,000 bpd commitment?
A condition of the RFP is that Crown barrels will be leveraged up to a minimum plant capacity of 100,000 bpd with additional industry supply requirement. This requirement creates a risk sharing commitment by both industry and government. This is the minimum plant size under this RFP.
What is the reasoning behind having at least 25% of feedstock as unspecified volumes? In instances where the facilities are operating at less than design capacity, will Alberta Government barrels take precedent over unspecified volumes?
Design capacity utilization terms and conditions are expected to be negotiated directly with successful applicants, however it is anticipated that there will be contractual terms regarding processing the specified volumes.
Is the 100,000 bpd bitumen processing capacity for the Processing Facility to be fully operational upon commencement of the term an absolute mandatory condition? Can ramp-up to 100,000 bpd be completed in multiple phases?
There is generally a ramp up curve and this will be recognized in the evaluation of the proposals. The current expectation is the plant will meet the actual specified volume through-put by the term selected. Further analysis is now being considered to review the impact of the ramp up period on both the timing and plant capacity as specified in the current RFP draft.
What is the basis of the light/heavy price differential assumption given the current differential? Why is the government’s assumption much more optimistic than other industry expert forecasts?
and
What was the rationale behind the selection of 30% heavy (Western Canada Select -WCS) differential as the base case for determining project economics?
The baseline differential was set based on long-term light/heavy historical price information and developed from extensive analysis. This differential will be applied to insure a consistent approach is used during the evaluation process. Proponents have the opportunity to provide additional scenarios they deem more appropriate with given rationale. The Government of Alberta (GOA) will be conducting sensitivity analysis at other differentials. The GOA is monitoring this key variable to ensure the latest market information is considered as the RFP Process goes forward.
In the case of adverse market pricing for bitumen other then what has been assumed, would the government be open to support through suitable adjustment to bitumen pricing?
All pricing formulas proposed must reflect a market-based price.
Where (in the BRIK RFP document) are the criteria to demonstrate the commercial viability of the proposed technology?
RFP Appendix, Part 5-Section 2 - Technology and Section 8 - Project Economic Viability.
What discount rate will government use to evaluate the proposal?
All three rates provided in the RFP document will be used and applied on a mid-year basis during the project evaluation process.
Referring to the 4th point of Appendix, Part 8 (Project Economic Viability) regarding assessment of expected competitiveness, are the cash costs referred to cash operating costs?
Yes.
How does BRIK affect other value added initiatives, like the Incremental Ethane Extraction Program (IEEP)? Will there be any impact on timing or funds for other initiatives?
The BRIK program is designed to be standalone; however this does not preclude the proponents to secure government funding to support their project. We will recognize any funding received by any other government value-added initiatives. Please refer to Section 8 of the RFP to review disclosure required of all government funding.
The Crown is asking for security deposit of $50 million, are there any other security deposits required, for either purchase or process arrangement?
None are expected at this time, however appropriate security assurance may be discussed further during the contract negotiations and may be somewhat dependent on the selected project.
The GOA’s undertaking to deliver bitumen is limited if the Federal Government takes actions. What actions are considered possible?
No actions are anticipated, but the Province is clarifying what happens to its commitment if there were to be changes in Federal policy under its jurisdiction that impacted the Crown’s ability to deliver specified volumes.
Can we assume that the GOA will publish an up-to-date list of consultants it is using who have had and/or are providing services to potential Proponents of the BRIK RFP (including an appropriate level of detail)?
The successful consultants chosen under the RFP to provide expert support to the evaluation team will be made public when awarded.
Until an actual proposal is submitted, how will a possible proponent’s participation be kept confidential? The Alberta Purchasing Connection (APC) process seems to disclose all parties simply by registering for the BRIK RFP. It would be inappropriate to assume that means that a proposal will be made.
The APC site does disclose all of the interested parties’ registration to the site as standard government protocol. Concerns about confidentiality can be overcome through the use of agents in registering to access the site. However, actual RFP submissions will not be made public on the site and will be kept confidential to the evaluation team.
Is the Power Point presentation (summary) available electronically? Is a list of attendees (or interested parties) available?
Yes, Bitumen Royalty-in-Kind Program Request for Proposals“Processing of Crown Royalty Bitumen” Technical Information Session
(August 6, 2009)
The list of attendees at the information session will not be made public.
How does BRIK propose to handle dilbit volumes vs. neat bitumen deliveries?
These are issues being currently addressed as the GOA refines its BRIK program design and cannot be defined at this point. The requirements for infrastructure should be laid out in the proposal.
Does the government envision providing dilbit, synbit, or both (a combination of the two)? This was not specified in the document, and only refers to quality.
The upgrader should be capable of processing a volume and quality of feedstock from the Crown that is representative of the range of qualities of all of the marketable streams of bitumen. The range of qualities to be supplied will be worked out as the BRIK program design progresses and will be addressed with potential RFP winners. A Crown Agent will be responsible for meeting the bitumen supply obligations. Comments are welcome during the comment period related to feedstock quality.
Could you please explain (perhaps with an example) of what you mean by “product selection services”?
Product Selection Services provides an option for the proponent to offer to produce or allocate a different suite of products for the Crown from the Specified Volumes (Crown’s bitumen) than what it proposes for themselves from their non-Crown volumes. For example, it can offer to produce diesel from the BRIK volumes vs. synthetic crude oil from their other volumes.
Is the government proposing to “backstop” the WCS differential at these levels or within the 25%-35% range set-out in the document?
No, the Crown will not backstop the differential. The bitumen price will be set by markets.
How will quality between different dilbit streams are handled, at what price differences assumption were used i.e. WCS vs. Cold Lake Blend (CLB)?
These issues should be addressed in the proposals.
Development of a reliable cost estimate of 100,000 barrels per day (bpd) complex takes considerable engineering/estimating effort. To develop the proposal by December, 2009 with a not to EXCEED by 30% is NOT realistic. Please comment.
This question broadly covers matters relating to the RFP deadline and the quality of the capital cost estimate for purposes of the processing fee, and is under internal review.
