Wednesday, January 16, 2008

Supply Costs - Diluent Availability


The supply of Canadian condensate or pentanes plus (C5+) is inadequate to meet the growing demand as heavy crude diluent, which is needed to allow rising bitumen supplies to move by pipeline to refi ning markets. Many diluent options are potentially available, including imports, use of alternative diluents and/or upgrading to avoid diluent and possibly produce diluent. The challenges and opportunities associated with any of these options dictate short-term solutions as well as planning for longterm commitments. A particular diluent option may be positive for one stakeholder, but negative for another. Diluent issues pose a dilemma for producers, refi ners, upgraders and pipeline companies.

The projections of available supply take into account the diluent requirements for blending heavy oil and non-upgraded bitumen, recycled volumes of diluent, product losses during upgrading and volumes of condensate not available for blending. There are a number of potential solutions to deal with anticipated shortfalls of condensate for blending purposes, such as offshore imports, long haul recycle by truck or rail, diluent-return pipelines from the U.S., specifically refined diluents, and blending with light crude oil or SCO. If the proposed Mackenzie Valley Gas Pipeline is built, another 2 850 m3/d (18 Mb/d) of condensate could be available.

1 comments:

stephen said...

I understand diluent will be imported to the oil sands from Chicago via the Southern Lights pipeline. Is it possible that this diluent will be a by-product of bitument exported from the oil sands? If so, is it simply lack of refining capacity in Western Canada that has limited our ability to produce diluent from our own hydrocaron resources?

Any sources or information you could direct me to on this subject would be greatly appreciated.