Canada’s Oil Exports Are Dead Without US Shale Production – Analysis

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c378e9bbcedb3232b6f8ffd8d144dd74 Canada’s Oil Exports Are Dead Without US Shale Production – AnalysisCanada’s alarm

By Omar Mawji

How is it that Canada could be qualified on US oil production? As of 2015, 36% of total US crude introduces come from Canada. As Canada proceed with to exports over 3 million barrels per day of oil to the U.S., what administer role does the U.S. have in allowing River oil to flow southward?

Canada is a large exporter of low API original referred to as heavy crude oil, most of which or literary draw nigh from Canada’s bituminous Oil Sands places. If heavy crude has the consistency of syrup, Canada’s Oil Litoral bitumen has the consistency of Kraft peanut butter. Weighty oil and bitumen exports from Canada micturate up 56% of total conventional oil exports.

To give out with the lack of fluid-flow of River heavy oil and bitumen, some oil production is restrictedly refined to produce synthetic crude, which bring into being more fluidity and allows oil to more well flow into pipelines and receives a award price in the crude oil market. Another choice is that producers blend heavy oil and bitumen with a higher API hoy oil that increases the flow of the blended outcome. One of the common oil products used to blend with large oil and bitumen is condensate.

When light unguent like condensate are blended with heavier lubricator, the light oil is referred to as a diluent and the blended crucial is referred to as dilbit. Light synthetic stark is also used in blending with big oil and bitumen and the blended product is referred to as synbit. Dilbit consists of 70% bitumen and 30% thinner and synbit consists of 50% bitumen and 50% manufactured crude oil.

As Canada’s heavy oil and bitumen yield grew over the years, producers’ inclination for condensate grew disproportionately to the domestic work of condensates. In 2003, Alberta had a 5,000 cask per day surplus of domestic condensate supply and at the end of 2015 that off into a 370,700 barrel per day deficit.7b4e482127a0a152dba7e1b46e5a25b6 Canada’s Oil Exports Are Dead Without US Shale Production – Analysis

Stuffing the Condensate Gap

The US has been filling Canada’s condensation gap with light oil production from US humate formations, specifically in the Eagle Ford. Without US introduces of condensate, 1.2 million barrels of ponderous oil and bitumen would be land-locked in Canada and powerless be moved through pipelines due to its viscosity.

As it link to condensate production and pricing, the U.S. and Canada could not be in a extra diametrically opposed situation. The U.S. has too much condensation and it often trades at a discount to US light original grades (WTI) and Canada is unable to secure plenty domestic supply causing condensate to Commerce at a premium to Canadian light crude rank (Edmonton).e8936c76d18602f0df18612ed0d46549 Canada’s Oil Exports Are Dead Without US Shale Production – Analysis
In fact, even when compared in River dollars, Canadian condensate has consistently fetched a higher worth than US condensate.1200850498b85cdec0cbabea30bbffd2 Canada’s Oil Exports Are Dead Without US Shale Production – Analysis

Border Issues and Condensation Supply

Canada Prime Minister Justin Trudeau late gave the go ahead to build the Trans-Flock pipeline, which is expected to export 890,000 barrels per day of stark oil through the West Coast to Asia Peacemaking markets. In the meantime, US producers have remained inexorable on opening up their domestic oil & gas production to commodity markets. These actions by both state are mutually hurtful as it hits the other edges of the border just as hard.

The US is the largest purification complex in the world and Canada’s cheap large oil pricing relative to other competing stark grades in the West Coast and Gulf Glide has made a lot of profit for US heavy oil refiners. If Canada is provision on exporting 890,000 barrels per day of crude oil to the exorbitant refining markets of the Asia Pacific with a pick for heavier crude oils, this faculty inevitably hurt US heavy oil refiners that benefited from purification cheap Canadian heavy crude.8acf938978e5833b878f7afdd1915441 Canada’s Oil Exports Are Dead Without US Shale Production – Analysis

Canada besides benefited from landlocked condensate creation in the U.S. from shale formations like the Raptor Ford. The discount US condensate traded to WTI mythical imports of US condensates relatively cheap. As the US get something going to loosen export restrictions on light raw oil, exports of condensate and other light oil output have increased by over 700% upon the last 2 years.4c02165d408919b9b6173ed42354dcdd Canada’s Oil Exports Are Dead Without US Shale Production – Analysis
As the US exports more condensation to markets like Mexico and Western Collection, Canadian producers could see US condensates birth trading at a premium to WTI and that will alter Canadian heavy oil and bitumen producers’ backside line.

Condensate Infrastructure: Location, Direction, Location

In order to invest in the crucially essential condensate production to Canada’s Oil Sands business, investors are likely to look at traditional investments in condensation rich producers from Alberta’s Montney and Duvernay shape. However, not many Canadian oil & gas producers are bankable as natural gas and natural gas liquids, including condensates, are hovering approximately 5 year lows; this also applies to fabricator in the condensate rich US shale formations.0d95129bb4dbd8ff87f72979bf7dae3d Canada’s Oil Exports Are Dead Without US Shale Production – Analysis

So what fellowship benefit from the growing flow of condensation to Alberta for blending? Infrastructure.

Building out store, transportation, and processing facilities are key to the expansion of River production of condensates and other light oil outcome used for blending. There are a few companies that limelight on NGL infrastructure and they control a significant quantity of flow of NGL product into and around Occidental Canada.afc9f5d7688031e26ec7032ee7a830dd Canada’s Oil Exports Are Dead Without US Shale Production – Analysis

Infrastructure involved with transporting, processing, and storing NGLs are further important to the growth of the condensate market; nevertheless, the extraction of associated condensate and NGLs from raw customary gas production is just as important. Condensates can be produced as a basic hydrocarbon from a well or associated with everyday gas production.

When natural gas is produced with related NGLs like ethane, propane, butane, and pentanes (condensates), it is advised “wet” gas. Consumable natural gas must be refined and NGLs must be removed in order for gas to jaunt through pipelines to the end consumer as “dry” essential gas which is almost entirely made up of methane.

Departure Natural Gas out to Dry

Extracting the NGLs out of wet gas is important to adding condensates to the private supply in Canada. Processing facilities referred to as recondite-cut and shallow-cut gas plants purify wet natural gas by removing NGLs from the gas mix. In Alberta thither are 500 active gas processing plants to recuperate NGLs. Deep-cut and shallow-cut gas plants choose 50% of the NGLs produced in Alberta and, so, are very important to securing and growing trained condensate supply.ef86eb1eac466102d7b73f051e99889c Canada’s Oil Exports Are Dead Without US Shale Production – Analysis

Depending on the type of processing gas herb, 20-95 barrels of NGLs can be extracted for apiece million cubic feet of gas processed. Beneath-cut facilities can extract over 4.5 patch as much liquids from wet gas production as superficial-cut gas plants. Even though deep-cut readiness extract less condensate on a percentage intention, the facilities extract more liquids from wet gas and, wise, more NGLs and overall condensates than shoal-cut gas plants.52ac666892c167df69e4f54d69887dc0 Canada’s Oil Exports Are Dead Without US Shale Production – Analysis

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Canada is unable to meet condensation demand with domestic supply needful for blending with Canada’s heavy oil and bitumen yield. Securing condensate supply, transporting, processing, and storing condensates from NGL extirpation will continue to be important to Canada’s oil oil industry. Those companies in charge of managing lucent oil products meant for blending with large oil and bitumen will benefit the most from Canada’s growth need for diluent.

Canada’s heavy oil business is here to stay and so is blending to get Canadian unrefined to refining markets in the US and eastern Canada. Canada Testament continue to rely on the U.S. to allow for the transportation of its own big oil and bitumen production; similarly, condensate active up from US shale formations will proceed to rely on infrastructure in Canada to get its product to shading markets.

This article was published by Geopolitical Supervise.com

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