The Husky Lloydminster Upgrader, located at Lloydminster, Saskatchewan, is an important component of Husky's business. By converting heavy oil to a high-quality, low sulphur synthetic oil, the upgrader is a key link between Husky's heavy oil assets and conventional oil markets.
This process helps stabilize earnings volatility, as the upgrading margin provides a natural hedge for the effect of heavy/light oil market price differentials. In addition, the upgrader's strategic location and integration with other Downstream assets provides Husky with a seamless asset value-added chain. The upgrader is a high-performing asset that has consistently ranked in the first quartile for margin improvement and cost efficiencies.
The feedstock for the upgrader is heavy oil from deposits in northeastern Alberta and western Saskatchewan, and bitumen from Husky's Tucker oil sands project, located 30 kilometres northwest of Cold Lake, Alberta. This heavy oil and bitumen is mixed with lighter hydrocarbons (condensate or naphtha) to reduce viscosity, allowing it to flow easily through Husky and third-party pipelines to the upgrader. The valuable end product – synthetic crude oil – is used in the production of gasoline and diesel fuels in conventional refineries in Canada and the United States.
The upgrader produces a high-value diesel fuel that is sold into the wholesale and retail markets. The upgrading process produces two marketable by-products: sulphur and petroleum coke. Sulphur is sold in Canada and the U.S. to customers in the fertilizer and chemical industries, and is primarily used for manufacturing industrial sulphuric acid. Fuel-grade petroleum coke, used to fuel boilers or cement kilns, is sold to customers in North America and offshore. A portion of the petroleum coke is sold into the calcining market for use in the aluminum industry.