CO2 emissions from bitumen upgrading represent a major source of greenhouse gas emission in the oil sands industry of Canada. In this paper, optimal design of bitumen upgrading plant was studied with the aim of CO2 reduction. Various CO2 capture techniques including oxyfuel combustion, precombustion and postcombustion are modeled and incorporated into an integrated optimization model for simultaneous design of bitumen upgrading plant and the associated utility plant. To solve the resulting large-scale mixed integer nonlinear programming (MINLP) problem, augmented Lagrangian decomposition method is used. Optimal configurations under different scenarios (including plant capacity, natural gas, electricity and crude oil prices, and carbon tax) are discussed. The key findings of this study include: (i) hydrocracking for bitumen upgrading is favored, (ii) producing extra power and highquality duty with a gas turbine burning natural gas is beneficial, and (iii) carbon capture with precombustion technology is suggested. (C) 2017 Elsevier Ltd. All rights reserved.