![]() This means there are higher volumes of diluted “dilbit” crude squeezing through an export network already pumping flat out.īut several important factors have changed, including the expansion of key North American refiners that have invested billions of dollars in consuming more Canadian heavy crude. TransCanada’s Keystone XL pipeline, which was proposed more than five years ago to help relieve congestion, has been repeatedly delayed by the Obama Administration amid fierce environmental opposition.Ĭongestion can be worse during cold weather, which makes oil sands bitumen even more viscous than usual and forces producers to blend in a higher proportion per barrel of ultra-light oil known as condensate so the bitumen can be shipped through pipelines, according to traders. ![]() Seasonal discounts are exacerbated by congestion on Canadian export pipelines that can leave crude bottlenecked in Alberta, sparking wild price swings. That was the narrowest differential since July 2013. Thus far, Canadian crude is holding up well around $13.50 per barrel under WTI, which fetched about $93 a barrel on Monday. At around $79 per barrel, the absolute price in Canada is getting nearer the break-even cost for major new developments. oil tumbled to its lowest prices in nearly two years this month, a sudden slump in prices this winter would be particularly unwelcome. With oil sands production at just under 2 million barrels per day, each $1 increase in the discount equates to some $2 million a day in lost revenues for producers like Cenovus Energy and Suncor Energy, and wipes billions of dollars a year off Alberta government revenues.Īfter U.S. benchmark WTI crude, far cheaper than the typical discount of around $20 per barrel during the rest of the year. In recent winters, the price of Western Canada Select (WCS) heavy blend crude has fallen to fetch between $33 and $42 per barrel less than the U.S. But just a small volume of such shipments could help avoid the short-term supply overhangs that have burdened the market for years. Shipping crude by rail can be up to twice as expensive as by pipeline, roughly $14-$21 per barrel to the Gulf Coast.
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