The invention is directed to separating a hydrocarbon feed-stock such as bitumen or heavy oil, into a de-asphalted oil component and a residue component comprising primarily asphaltenes. The asphaltenes with some added bitumen are converted by a plasma arc reactor into a controllable mixture of primarily paraffins and impurities. Natural gas liquids are separated out by refrigeration. The lighter paraffins may be used to operate a steam or gas turbine to produce electrical energy which, in turn, may be used to provide power for generating steam, for powering the plasma arc reactor and other apparatuses of an on-site processing plant or excess power may be sold to the grid.