Markets - Western Canadian Future Oil Supply

Western Canada’s crude slate has been dominated by light and heavy crudes over the last 15 years. The next decade will see a marked shift in this trend.


Heavy crude oil production, including bitumen from oil sands, traditionally has relied on condensate as the source of diluent to reduce the viscosity and meet pipeline specifications for transport. The primary source of condensate has been pentanes from western Canada’s growing natural gas production. Heavy crude oil and bitumen blended with condensate are generally referred to as Dilbit blends.


In recent years, slower natural gas growth, a shift to producing drier gas with less pentanes and competing demands for natural gas liquids have constrained available supplies of condensate. Escalating prices and insufficient condensate supplies combined with growing supplies of heavy/bitumen crude that need a source of diluent have forced producers to examine other options. As a replacement for condensate, producers of oil sands bitumen are starting to use light synthetic crude oil as an alternative source of diluent for blending to pipeline viscosity requirements. This trend to use synthetic crude has led to the evolution of a synthetic-bitumen blend referred to as Synbit.


Whereas traditional Dilbit blends approximate a 25:75 percent diluent-to-crude oil ratio, Synbit blends are closer to a 50:50 mix. The higher proportion of light products has changed the composition of the resulting crude oil blend. From a refining perspective, Dilbit blends are predominantly heavy. Synbit blends, however, look more like medium sour crudes to a refinery.


As a consequence of this emerging trend in blending, western Canada crude supplies will no longer be predominantly light and heavy. The growth in medium-like crudes is forecast to become an important component of the overall crude slate available to refiners.