The North American bitumen market is immature and illiquid. The vast majority of bitumen is found in the Province of Alberta in Western Canada. There are no posted prices for bitumen; marketers rely on a number of pricing formulas that reference various posted crude qualities such as Edmonton light, Lloydminster blend, WTI etc. Market pricing is seasonal with lower prices in and around the calendar year-end being the norm due to lower demand for asphalt and other bitumen derived products.
By necessity, bitumen is regularly blended with diluent (typically in the form of C5+ or synthetic light crude) in order to facilitate its transportation via pipeline to North American markets. As such, the effective field price for bitumen is also directly impacted by the input cost of the diluent required, the demand and price of which is also seasonal in nature (higher in winter as colder temperatures necessitate more diluent for transportation).
Consequently, bitumen pricing is notoriously weak in and around December 31 and not reflective of the annual average realized price or the economics of the “business” overall.
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