End of an Era?

Delegates to the Sulphur Conference in Vancouver this year could opt to take a tour of the Pacific Coast Terminal site at Port Moody, with its stunning backdrop of mountains and forests. PCT and the Kinder Morgan Terminals site 19km away together form the largest and arguably most advanced sulphur export complex in the world. Canada exported 7.6 million tonnes of sulphur in 2008, most of it through these terminals. However, the thought that struck me this year was to wonder whether we were witnessing the beginning of the end of an era that began in the 1960s when the terminals opened.

Most of Canada’s sulphur comes from the Alberta sour gas plants, now in long-term decline. Production fell to 4.2 million t/a in 2008, an 11% drop on the previous year, and a 35% drop since the start of the decade. The 2007-8 run of high sulphur prices drew down almost all of the stored inventory at the plants, and the Canadian sulphur industry has been pinning its hopes on development of the oil sands reserves in the north of the Province.

However, several million tonnes of sulphur already sits stockpiled at the tar sands sites, because the logistical costs militate against re-melting it and sending it to Vancouver. Current sulphur prices in the $30-50/t range ex-Vancouver simply do not justify moving it, and there are formidable logistical issues to be grappled with in moving large volumes of sulphur from Fort MacMurray which will require many millions of dollars to overcome in laying new rail line, even a new rail or road bridge, and developing loading and handling facilities. Unless the Canadian or Albertan government steps up with a strategic investment – not the easiest thing to justify in these straightened economic times – the sulphur will remain in its blocks.

In September, meanwhile, production began at the Puguang sour gas field in China’s Sichuan province. Sulphur production is expected to reach 2.8 million t/a next year, and gas discoveries continue to come in Sichuan; in October the discovery of a “Puguang-sized” gas field was announced at Chongqing. Chinese sulphur production from sour gas is expected to continue to ramp up over the coming years; bad news for Canada, since China is the largest customer of Canada’s sulphur exports, and China has largely supported the sulphur market this year from falling even lower by importing record amounts. But coastal inventories there are now full.

And meanwhile there is the shadow of new production in Qatar and Abu Dhabi; 2.6 million t/a from Qatar’s Common Sulphur Project, processing gas from LNG and GTL facilities, and 4.5 million t/a from Abu Dhabi’s Integrated Gas Development and Shah sour gas project, before we get to refinery expansions or other gas fields, and no long-term storage capacity so far in sight. Even if the next few years see major infrastructural developments in Alberta and British Columbia, can sulphur be brought from Fort MacMurray cheaply enough to compete with Chinese domestic tonnage, or Arabian Gulf capacity with coastal access? I am not sure that I would put my money on it.

The prospect then, of a continuing slow decline for Canadian sulphur exports? Looking at the pristine sulphur handling facilities at Vancouver, it seems a shame to think so, yet it is hard to come to other conclusions.

Welcome to Sulphur Blog!

My name is Richard Hands, and I'm the editor of Sulphur magazine at BCInsight Ltd. Over the coming months, our aim is to use this webspace to expand on some of the issues that make it into the editorial columns of our magazines, as well as to provide a platform for some guest columnists, including our redoubtable Thiophilos from Sulphur magazine.

We hope you enjoy it and find it interesting. Feedback is, of course, welcomed.

Richard Hands