Western Canadian Select is one of the largest heavy crude oil streams in North America. It is a heavily blended crude oil, composed largely of bitumen mixed with synthetic sweetener and condensate and 25 existing streams of conventional and unconventional Alberta heavy crude oil at the large Husky terminal in Hardisty, Alberta. Western Canadian Select - which is a benchmark for heavy and heavy US heavy (acid) crude oil is one of many petroleum products from the Western Canadian Sedimentary Basin oil sands. WCS was launched in December 2004 as a new heavy oil stream by EnCana (now Cenovus), Canadian Natural Resources Limited, Petro-Canada (now Suncor) and Talisman Energy Inc. (now Repsol Oil & Gas Canada Inc.) -. Husky Energy has been managing WCS terminal operations since 2004 and joining WCS Founders in 2015.
Crude oil prices are usually quoted in certain locations. Unless otherwise stated, the WCS price quoted in Hardisty and West Texas Intermediate (WTI) prices is quoted in Cushing, Oklahoma. On December 14, 2015 at a price of WTI $ 35 per barrel, WCS fell "75 percent to $ 21.82," the lowest in seven years and Maya Maya's Maya gold fell "73 percent in 18 months to $ 27.74. WTI has dropped to US $ 29.85 and WCS is US $ 14.10 with a difference of $ 15.75 In June 2016, WTI was priced at US $ 46.09, Brent at MYMEX was US $ 47.39 and WCS was US $ 33.94 with a difference of US $ 12.15 On December 10, 2016 WTI has risen to US $ 51.46 and WCS is US $ 36.11 with a differential of $ 15.35 According to monthly data provided by the US Energy Information Administration (EIA), by 2015 "Canada remains the largest exporter of total petroleum to the United States exporting 3,789 thousand bpd in September and 3,401 thousand bpd in October. "This increased from 3.026 million bpd in September 2014. It represents 99% of Canada's oil exports and gives America no incentive to pay more for Canadian oil.
Bitumen is composed of all unconventional Canadian oils, and upgraded to lightly synthetic crude, processed into asphalt or mixed with other crude oil and refined into products such as diesel, gasoline, and jet fuel.
Video Western Canadian Select
Primary producer
WCS was launched in December 2004 as a new heavy oil flow by Cenovus (later EnCana), Canadian Natural Resources Limited, Suncor (later Petro-Canada) and Talisman Energy Inc.
Since coming, WCS has been integrated in Husky Hardisty terminal.
According to Argus, in 2012, the WCS mix is ​​produced by only the four companies mentioned above. "[T] he's the prospect of adding a complicated new manufacturer by an internal rule set to offset each manufacturer for his contribution to the mix."
Companies that are tied to WCS as a benchmark like MEG Energy Corp, whose output is asphalt, make a profit with an annual cash flow increase of 40% with every $ 5 increase in WCS prices. Crude oil from the Christina Lake oil sand site of 210,000 barrels per day is marketed as Access Western Blend, which competes with WCS. More like BlackPearl Resources Inc. and Northern Blizzard Resources Inc. also benefited from higher WCS prices. "Within seven weeks that heavy crude has staged its rebound, MEG shares rose 27 percent, BlackPearl's 37 percent and Northern Blizzard's 21 percent."
According to reports of real estate consultant Avison Young, in August 2015 in downtown Calgary, "firings by large oil and gas companies" is reflected in higher vacancy rates in the second quarter.
Maps Western Canadian Select
WCS price history
On March 18, 2015 the benchmark crude oil price, WTI fell to $ 43.34/bbl. from high in June 2014 with WTI priced above US $ 107/bbl and Brent above US $ 115/bbl. WCS, bituminous crude oil, is a heavy crude oil similar to California heavy crude, Mayan Mexican crude or Venezuelan heavy crude oil. As of March 15, 2015 the difference between WTI and WCS is US $ 13.8. Western Canadian Select is one of the world's cheapest crude oil at a price of US $ 29.54/bbl on March 15, 2015, its lowest price since April 2009. In mid-April 2015 WCS has risen almost fifty percent to trade at US $ 44.94. Until June 2, 2015, the difference between WTI and WCS is 7.8 US dollars, the lowest ever. On August 12, 2015 the WCS price dropped to $ 23.31 and the WTI/WCS difference had risen to $ 19.75, the lowest price in nine years when BP temporarily closed the Whiting, Indiana refinery for two weeks, the sixth largest refinery in the United States, to repairing the largest crude oil refining unit at Whiting refinery in Indiana. At the same time, Enbridge was forced to close the 55 Line Spearhead pipeline and the Flanagan South pipeline line in Missouri due to a crude oil leak. By December 2015 the WCS price was US $ 23.46, the lowest price since December 2008 and the WTI-WCS difference was US $ 13.65. In June 2016 the WCS price was US $ 33.94.
By mid-December 2015, when the Brent and WTI prices were around $ 35 per barrel and WCS was $ 21.82, light crude oil equivalent to Mexico, Maya also fell "73 percent in 18 months to $ 27.74. Mexico has somewhat protective of its economy.
"The Mexican government isolated itself from the oil slump after it managed to hedge 212 million barrels of exports planned for 2016, using option contracts to secure an average price of $ 49 per barrel.Vegional oil hedge 2015 provides it with a bonus of $ 6.3 billion. "
Characteristics
"The very viscous oils contained in the oil sands deposit are usually referred to as asphalt" (CAS 8052-42-4) At the Husky Hardisty terminal, Western Canadian Select is mixed from the conventional and unconventional synthetic diluents and condensates of the conventional and unconventional Canadian conventions. bitumen crude oil.
Western Canadian Select is a heavy crude oil with an API gravity rate between 19 and 22 (API), 20.5 Â ° (Natural Gas and Petroleum Products 2009).
Characteristics of the Western Canadian Pass are described as follows: Gravity, Density (kg/m3) 930.1, MCR (Wt%) 9.6, Sulfur (Wt%) 2.8-3.5%, TAN (Total Acid number) of (Mg KOH/g) 0.93.
Refiners in North America consider crude oil with a TAN value greater than 1.0 as "high TAN". A refinery should be installed to handle high TAN dirt. Thus, high TAN crude is limited in the case of refineries in North America capable of processing it. For this reason, TAN values ​​of WCS are consistently maintained below 1.0 by mixing with light, sweet crudes and condensate. Other certain bitumen mixtures, such as Access Western Blend and Seal Heavy Blend, have a higher TAN value and are considered high TAN.
WCS has an API gravity of 19-22.
"Crude oil crude oil does not flow naturally in pipes because it is too dense, a diluent is usually mixed with oil sand asphalt to allow it to flow in the pipe.To meet pipe viscosity and density specifications, the asphalt oil sand is mixed with synthetic crude oil (synbit) and/or condensate (Dilbit). "WCS can be referred to as syndilbit, as it may contain synbit and dilbit.
In a study commissioned by the US Department of State (DOS) on the Environmental Impact Statement (EIS) for the Keystone XL pipeline project, DOS assumes "that the average crude oil flowing through the pipeline will consist of approximately 50% Western Canada Select ( dilbit) and 50% of Suncor Synthetic A (SCO). "
The Canadian Society of Non-Conventional Resources (CSUR) identifies four types of oil: conventional oil, tight oil, oil shale and heavy oils such as WCS.
Volume
Until September 2014 Canada exported 3.026 thousand bpd to the United States. This increased to a peak of 3,789 thousand bpd in September, 2015 and 3,401 thousand bpd in October, 2015. It represents 99% of Canadian oil exports. "The volume of the WCS threshold in 2010 is only about 250,000 barrels per day.
The devastating fire that began on May 1, 2016, swept Fort McMurray and resulted in the largest wildfire evacuation in Albertan's history. When a fire broke out north of Fort McMurray, "oil production companies operating near Fort McMurray are fully closed or operated at low tariffs." As of June 8, 2016, the US Department of Energy estimates that "oil production disruptions averaged about 0.8 million barrels per day (b/d) in May, with a daily peak of more than 1.1 million b/d. slowly resumes, when the fire subsides, it may take several weeks for production to return to the previous level. "Fort McMurray's fires did not significantly affect the WCS price.
"According to the EIA's February Short-term Energy Outlook, oil and other liquids production in Canada, which amounts to 4.5 million barrels per day (b/d) by 2015, is estimated to average 4.6 million b/d by 2016 and 4.8 million b/d by 2017. This increase is driven by oil-fuel production growth of about 300,000 b/d by the end of 2017, partially offset by a decline in conventional oil production. "AMDAL claims that while oil sands projects may operate with losses, these projects are able to "withstand the instability of crude oil prices." It would be more costly to close the project - from $ 500 million to $ 1 billion than operating at a loss.
Comparative production cost
In this table, based on the Scotiabank Equity Research and Scotiabank Economics report published November 28, 2014, Mohr's economist compares the cost of cumulative crude oil production in the fall of 2014.
This analysis "excludes" upfront costs "(initial land acquisition, seismic and infrastructure expenses): treat 'face' fees as 'charred'. A rough estimate of 'front' costs = US $ 5-10 per barrel, although broad regional differences exist. Including royalty, which is more profitable in Alberta and Saskatchewan. "The weighted average US $ 60-61 includes Integrated Oil Sands at C $ 53 per barrel."
Lowering production costs
WCS is very expensive to produce. There are exceptions, such as Christina Cenovus Energy Lake facility that produces some of the lowest cost barrels in the industry.
In June 2012 Fairfield, Connecticut-based General Electric, with its focus on international markets, opened the Global Innovation Center in downtown Calgary with "130 scientists and private engineers," "first of its kind in North America" ​​and the second in the World. GE's first Global Innovation Center is in Chengdu, China, which also opened in June 2012. GE's Innovation Center is "trying to instill innovation directly into the architecture." James Cleland, general manager of Heavy Oil Center for Excellence, which is one-third of the Global Innovation Center, said, "Some of the toughest challenges we have today are environmental issues and cost escalation... Oil Sand will be branded as environmentally friendly oil or something like that, has basically changed the game. "
The GE thermal evaporation technology developed in the 1980s for use in desalination plants and power plant industries was diverted in 1999 to improve the Steam Assisted Gravity Drainage (SAGD) method using water used to extract asphalt from Athabasca Oil Sands. In 1999 and 2002, the MacKay River Petro-Canada facility was the first to install a GE SAGD zero-discharge system (ZLD) 1999 and 2002 using a combination of new evaporative technologies and crystallization systems in which all water is recycled and only solids are discharged from the site. The new evaporation technology is beginning to replace the older water treatment techniques used by the SAGD facility, which involves the use of soft lime softening to remove silica and magnesium and the ion exchange of weak acidic cations used to remove calcium.
Cleland explains how Suncor Energy is investigating a replication strategy in which engineers design an "ideal" small-capacity SAGD plant with a capacity of 400 to 600 bd that can be replicated through "consecutive construction phases" with a cost-effective "cake cutter, the Element" over and over ". Although the first replicable facility will not be online before 2019, Suncor hopes to eventually apply this technology to its rentals at Meadow Creek, Lewis, MacKay River, and Firebag.
Crude Oil Price
The petroleum price as quoted in the news in North America, generally refers to the WTI Cushing Crude Oil Spot Price per barrel (159 liters) of either WTI/light crude oil as traded on the New York Mercantile Exchange (NYMEX ) for delivery in Cushing, Oklahoma, or Brent as traded on the Intercontinental Exchange (ICE, where International Oil Exchange has been entered) for delivery at Sullom Voe. West Texas Intermediate (WTI), also known as Texas Light Sweet, is a type of crude oil that is used as a benchmark in the price of oil and commodities underlying the New York Mercantile Exchange oil futures contract. WTI is light crude, lighter than Brent crude. It contains about 0.24% sulfur, rating the sweet crude, sweeter than Brent. Property and production sites make it ideal for refinement in the United States, especially in the Midwest and Gulf Coast (USGC) regions. WTI has an API gravity of about 39.6 (density of about 0.827). Cushing, Oklahoma, the main oil supply center that connects oil suppliers to the Gulf Coast, has become the most significant trade center for crude oil in North America.
The National Bank of Canada's Tim Simard, argues that WCS is a benchmark for those who buy shares in Canadian oil sands companies such as Canadian Natural Resources Ltd., or Cenovus Energy Inc., Northern Blizzard Resources Inc., Pengrowth Energy Corp., or Twin Butte Energy Ltd. or any other where "most of their exposure is heavy crude oil."
The price of Western Canadian Select (WCS) crude oil per barrel suffers from differentials on West Texas Intermediate (WTI) as traded on the New York Mercantile Exchange (NYMEX) as published by Bloomberg Media, which itself has a discount against London - heavy Brent oil. This is based on price data and differences from Canadian Natural Resources Limited (TSX: CNQ) (NYSE: CNQ).
"West Texas Intermediate (WTI) crude oil is the benchmark crude oil for the North American market, and Edmonton Par and Western Canadian Select (WCS) are benchmark crude oils for the Canadian market.Either Edmonton Par and WTI are low-sulfur high-quality crude oil with the API gravity level is about 40 ° C. Conversely, WCS is a heavy crude with an API gravity of 20.5 °. "
West Texas Intermediate WTI is light sweet crude, with API gravity of about 39.6 and a specific gravity of about 0.827, which is lighter than Brent crude. It contains about 0.24% sulfur so it is rated as sweet crude (having less than 0.5% sulfur), sweeter than Brent which has 0.37% sulfur. WTI is largely enhanced in the Midwest and Gulf Coast regions of the US, as it is a high quality fuel and produced domestically.
"The WCS price is discounted for WTI because it is a low-quality crude oil (3.51Wt sulfur and 20.5 gravitational APIs) and due to transport differences.WCS prices are currently set on the US Gulf Coast.The price is about $ 10/bbl for a barrel of crude oil to be transported from Alberta to the US Gulf Coast, accounting for at least a $ 10/bbl WTI-WCS discount. The plumbing conference can also cause significantly increased transport differences.
In March 2015, at the price of Ice Brent at US $ 60.55, and WTI at US $ 51.48, up US $ 1.10 from the previous day, WCS also rose US $ 1.20 to US $ 37.23 with a difference WTI-WCS price of US $ 14.25. By June 2, 2015 with Brent at US $ 64.88/bbl, WTI at US $ 60.19/bbl and WCS at US $ 52.39/bbl.
According to the Financial Post, most Canadian investors continue to quote WTI price instead of WCS even though many Canadian oil and oil producers sell at WCS prices, as WCS "always lacks the transparency and liquidity necessary to make it a household name with investors in the country." In 2014, Auspice created the Canadian Crude Excess Return Index to measure WCS futures. Tim Simard, head of commodities at the National Bank of Canada, claims "WCS has" several different basic attributes of interest than conventional WTI barrels. "WCS has" better transparency and wider participation "than Maya, but explains that by 2015" one of the only ways to take a position in oil is to use an ETF tied to WTI. "Simard claims that when global oil prices are lower, for example," the first barrel will be turned off in a low price. environmental pricing is a heavy keg "makes WCS" closer to the floor "than WTI.
To address the issues of transparency and liquidity facing WCS, Auspice created the Canadian Crude Index (CCI), which serves as a benchmark for oil produced in Canada. CCI allows investors to track the price, risk, and volatility of Canadian commodities. CCI can be used to identify opportunities to speculate directly about Canadian crude oil prices or in conjunction with West Texas Intermediate (WTI) to conduct scattered trades that can represent the difference between the two. CCI provides a fixed price reference for Canadian Crude Oil by targeting exposures representing a three-month rolling position in crude oil. To create a representative of Canada's crude oil price, the index uses two futures contracts: The fixed price contract, representing crude oil prices in Cushing, Oklahoma, and the base differential contract, representing the difference between Cushing and Hardisty, Alberta. Both contracts are priced in dollars US per barrel. Together, this creates a fixed price for Canadian crude oil, and provides accessible and transparent indices to serve as a benchmark for building investable products, and ultimately can increase its demand to global markets.
In spring 2015, veteran journalist specializing in energy and finance, Jeffrey Jones, described how WCS prices "jumped more than 70 percent, surpassed West Texas Intermediate (WTI), Brent" and "quietly" into "the hottest commodity" in North American energy. "In April 2015, Enbridge filled the" new pipeline of 570,000 barrels per day. "The TD Securities report in May 2015 provides several factors that contribute to WCS price increases as" normal seasonal forces driven by heavy crude demand to make asphalt as road construction ", increased WCS access to US markets regardless of pipeline barriers, high five-year production rates and high demand for heavy oil in US refineries especially in the US Midwest, the main market for WCS.
By September 2015 9, the WCS price is US $ 32.52 and the WTI-WCS differential is a differential of US $ 13.35.
Difference Crude Oil and Western Canada Choose (WCS)
As of June 2015, the difference between WTI and WCS is 7.8 US dollars, the lowest ever.
In the 2013 white paper for Bank of Canada, the authors Alquist and GuÃÆ' nett check the implications for high global oil prices for the North American market. They argue that North America is experiencing a surplus of crude oil inventories. This surplus combined with "North American crude oil market segmentation of the global market", contributes to "the difference between continental crude oils like WTI and Western Canada Select (WCS) and crude oil sailing at sea like Brent (Figure 3).11 I. "
The Finance Minister of Alberta argues that WCS "should trade on par with Mayan crude at around $ 94 per barrel." Maya crude approaches WCS quality level. However, Maya traded at US $ 108.73/bbl in February 2013, while WCS was US $ 69/bbl. In his presentation to the US Energy Information Administration (EIA) in 2013 John Foran pointed out that Maya has been trading with only a few premiums for WCS in 2010. Since then the WCS price differential has widened "with increasing oil sands and tight oil production and pipeline capacity. not enough to access global markets. "Mexico enjoys discounted locations with its proximity to high-powered oil refineries on the Gulf Coast. In addition, Mexico began strategically and successfully sought a partnership of a joint venture refinery in the 1990s to create a market for its heavy crude in the US Gulf. In 1993, (PetrÃÆ'³leos Mexicanos, state-owned Mexican oil company) and Shell Oil Company approved a $ 1 billion refinery development project that led to the construction of new coker, hydrotreating units, sulfur recovery units and other facilities in Deer Park, Texas at Houston Ship Channel to process large volumes of PEMEX heavy crude oil while meeting the requirements of the US Clean Air Act.
(Prices except Maya for 2007-February 2013) (Price for Maya) (Price 24 April 2013).
In July 2013, Western Canadian Select (WCS) "heavy oil prices rose from US $ 75 to over US $ 90 per barrel - the highest level since mid-2008, when WTI oil prices were at record (US $ 147.90) - only before the 'Great Recession' 2008-09. "WCS" heavy oil price "is expected to remain at US $ 90, which is closer to world prices for heavy crude oil and WCS 'true, inherent value'. "WCS oil prices higher than WTI are explained by" new rail deliveries reduce some export pipeline barriers - and restore WTI oil prices to international levels. "
In January 2014, there were many railways and pipelines carrying WCS along with an increase in demand from US refineries. In early 2014, there were about 150,000 barrels of heavy oil per day transported by train.
According to the June Energy Government Energy Price Report of June 2014, WCS prices rose 15% from $ 68.87 in April 2013 to $ 79.56 in April 2014 but suffered low of $ 58 and $ 91. During the same time period the West Texas benchmark price Intermediate (WTI) rose 10.9% on average $ 102.07 per barrel in April 2014.
Access to tidewater: landlocked
Heavy discounts on Albertan crude in 2012 are attributed to "landlocked" crude oil in the US Midwest. Since then, several major pipelines have been built to release the glut, including Seaway, South Keystone XL and Flanagan South.
However, significant obstacles remain in pipeline approval to export crude oil from Alberta. In April 2013, the Calgary-based Canadian West Foundation warned that Alberta "ran against the wall [pipe capacity] around 2016, when we will have an oil barrel we can not move." For now, crude oil ship deliveries have filled the gap and narrowed the price gap between Albertan and North American crude. However, additional pipes exporting crude from Alberta will be needed to support the ongoing expansion in crude oil production.
Frustrated by the delay in getting approval for Keystone XL (via the US Gulf of Mexico), the Northern Gateway Project (through Kitimat, BC) and the extension of the existing Trans Mountain line into Vancouver, British Columbia, Alberta have intensified exploration of two northern areas of the project "to assist the province get oil to tidewater, make it available for export to overseas markets. " Canadian Prime Minister Stephen Harper, spent $ 9 million in May 2012 and $ 16.5 million in May 2013 to promote Keystone XL.
In the United States, the Democratic Party is concerned that Keystone XL will only facilitate obtaining Alberta oil sands products to tidewater for export to China and other countries through the American Gulf Coast of Mexico.
On 1st August 2013, TransCanada CEO Russ Girling announces that the company is moving forward on a $ 12 billion (4,700 mile) East Energy pipeline project with a proposed completion date in 2017 or 2018. In the long run, this would mean that WCS can be delivered to Atlantic tidewater through deep water ports such as Quebec City and Saint John. Potential overseas heavy oil destinations include India, where a super refinery capable of processing large amounts of sand oil is under construction. Meanwhile, the East Energy pipeline will be used to deliver light sweet crude, such as Edmonton Par crude from Alberta to Canada east of the Montreal/Quebec City refinery, for example. East Canada Refinery, like Imperial Oil Refinery Ltd. 88,000 barrels per day in Dartmouth, NS, is currently importing crude oil from North and West Africa and Latin America, according to Mark Routt, "senior energy consultant at KBC in Houston, which has a number of clients interested in the project." Energy East Pipeline which proposed would have the potential of carrying 1.1 million barrels of oil per day from Alberta and Saskatchewan to eastern Canada.
Patricia Mohr, economic analyst and commodities analyst at Bank of Nova Scotia, in his report on the economic benefits to Energy East, argues that, Western Canada Select, a heavy oil marker in Alberta, "can get much higher prices in India than actually received" on the first half of 2013 based on Saudi Arabia's heavy crude oil prices sent to India "if the pipeline is in operation.In his report, Bohr predicted that originally the Quebec refinery, owned by Suncor Energy Inc. and Valero, for example, could access consisting of light oil or crude oil synthetic enhancement of Alberta oil sands through East Energy to replace "more expensive imports of Brent crude oil." In the long term, supertankers using the proposed Irving/Transcanada marine in Saint John terminal can deliver large quantities of Alberta mixed asphalt, such as WCS to refineries -the super-refinery in India, Mohr estimates in his report that the price WCS will increase to US $ 90 per barrel in July, 2013 to US $ 75.41 in June. "
Canada's largest refinery, capable of processing 300,000 barrels of oil per day, is owned and operated by Irving Oil, in the port of Saint John, New Brunswick, on the northeast coast. A proposed proposed 300-million-dollar sea terminal proposed to be built and operated jointly by TransCanada and Irving Oil Ltd. will be built near Irving Oil's import terminal with construction to begin in 2015.
Portland-based Portland-Montreal Pipe Line Corporation, composed of Portland Pipe Line Corporation (in the United States) and Montreal Pipe Line Limited (in Canada), is considering ways to bring Canadian oil-sands oil to Atlantic tidewater in deep waters Portland Harbor. The proposal would mean that crude oil from oil sands would be channeled through the Great Lakes, Ontario, Quebec and New England to Portland, Maine. The pipeline is owned by ExxonMobil and Suncor.
WCS crude-by-rail -
In 2011, the output of the Bakken Shale establishment in North Dakota Crude increased faster than the pipeline that could be built. Oil producers and pipeline companies are turning to rail for transport solutions. Bakken oil competes with WCS for transport access through pipelines and trains. By the end of 2010, Bakken's oil production level has reached 458,000 barrels (72,800m 3 ) per day, thus exceeding the capacity of the pipeline to deliver oil out of Bakken. In January 2011, Bloomberg News reported that the Bakken crude producers used trains to deliver oil.
In 2013, there is a new WCS rail delivery. Since 2012, the amount of crude oil transported by trains in Canada has increased fourfold and by 2014 is expected to continue to rise.
In August 2013, then-US. CEO of Development Group (now USD Partners), Dan Borgen, a Texas-based oil-based pioneer, turned his attention from a US shale oil drill to Canadian oil sands. Borgen "helps introduce the energy market to a special terminal that can quickly load a one-mile-long oil railway to the same destination - a facility that... revolutionizes the US oil market." Since 2007, Goldman Sachs has played a major role in financing "the expansion of USD from nearly a dozen special terminals that can quickly load and unload large, long trains carrying crude and ethanol across the United States." The USD pilot project includes "large-scale transit storage" (SIT) inspired by the European model for the petrochemical industry. USD sold five from a special-to-rail US oil terminal to "Plains All American Pipeline for $ 500 million by the end of 2012, leaving the company's rich cash and light assets." According to Leff, concern has been raised about the link between Goldman Sachs and the USD.
"Understanding the trade flows through the lynchpin oil facility can provide valuable insights for oil traders, who are exploring the market for information that can help them predict how much oil is being delivered to different parts of the country.A great price discount for oil in bad locations is served by the network the pipeline has offered traders an exciting opportunity if they can figure out how to get crude oil to the market at a higher price.The crude oil delivery data by rail is very opaque, with government figures available only a few months later. "
In January 2014, there were many railways and pipelines carrying WCS along with an increase in demand from US refineries. In early 2014, there were about 150,000 barrels of heavy oil per day transported by train.
The WCS price rose in August 2014 as the anticipated expansion in rugged-to-rail capacity at Hardisty increased when Gibson Energy's HardGyGG Terminal terminal, origination terminal and loading of new crude-by-train terminal with pipeline connectivity, began operations in June 2014 with the capacity to load up to two units of 120-rail car trains per day (120,000 bbd of heavy crude oil). The Hardisty train terminals can carry up to two 120-rail railway units per day "with 30 railway loading positions on a fixed loading rack, a staging area of ​​train units and a lap trajectory capable of holding five train units simultaneously." By 2015 there are "newly built pipes connected to Hardisty Gibson Energy Inc.'s storage terminal" with "more than 5 million barrels of storage in Hardisty."
Canadian Pacific Railway
By 2014, CPR COO Keith Creel says CPR is in a position of growth in 2014 thanks to an increase in Alberta crude oil transport (WCS) which will generate one-third of the new CPR revenue gain until 2018 "aided by improvements in oil loading terminals and tracks in western Canada. "In 2014 CP was formed by CEO Hunter Harrison and shareholder of American activist Bill Ackman. America has a 73% stake in CP, while Canada and America each own 50% CN. To increase returns for their shareholders, trains reduce their workforce and reduce the number of locomotives.
Creel said in a 2014 interview that Alberta heavy crude transport would account for 60% of CP oil revenues, and light crude from the Bakken Shale region of Saskatchewan and the US state of North Dakota would reach 40%. Prior to the stricter enforcement of regulations in Canada and the United States after the Lac-MÃÆ' Â © gantic railway disaster and other oil-related rail incidents involving crude and highly sensitive Bakken crude oil, Bakken accounted for 60% of CP oil. delivery. Creel said that "It [WCS] is safer, less stable and more profitable to move and we are uniquely positioned to connect to the West Coast and the East Coast.
Railway officials claim that more Canadian-by-rail oil traffic "consists of raw and crude bituminous raw asphalt and bitumen."
CPR's high capacity North Line, which runs from Edmonton to Winnipeg, connects to "all major refining markets in North America." Chief Executive Hunter Harrison told the Wall Street Journal in 2014 that Canadian Pacific will step up along its northern route as part of a plan to send Alberta oil to the east.
WCS waterborne
On September 21, 2014, Suncor Energy Inc. loading its first heavy crude oil tanker, about 700,000 barrels WCS, to Minerva Gloria tanker at the port of Sorel near Montreal, Quebec. The Minerva Gloria is Aframax Crude Oil Tanker with a double-hull tanker with a deadweight tonnage (DWT) capacity of 115,873 tons. The goal is Sarroch, on the island of Sardinia, Italy. The Minerva Gloria measures 248.96 meters (816.8 feet) ÃÆ'â € "43.84 meters (143.8 feet).
"A second tanker, Skyros Stealth, is scheduled to load WCS crude from Montreal over the next weekend for delivery to the US Gulf Coast, someone with booking knowledge said today.The shipment would be the first waterborne delivery to the Gulf of eastern Canada for oil, which is usually carried by pipes. "
The 116,000-dwt Stealth Skyros measures 250 meters (820Ã, ft) ÃÆ'â € "44 meters (144Ã, ft). From October 2013 to October 2014 Koch holds a one-year charter on Stealth Skyros which is set for 12 months with $ 19,500 per day.
Repsol and WCS
Spanish oil company Repsol (REP.MC) is licensed by the US Department of Commerce to export 600,000 barrels of WCS from the United States. WCS is shipped via Freeport, Texas on the Gulf Coast (USGC) to the port of Bilbao on the Suezmax oil tanker, Aleksey Kosygin. This is considered to be "the first re-export of Canadian crude from USGC to non-US ports." as "the US Government strictly controls crude oil exports, including non-US values." The European Union's European Environment Agency (EEA) based in Brussels monitors trade. WCS, with API 20.6 and 3.37% sulfur content, has become controversial.
In December 2014, Repsol agreed to buy Talisman Energy (TLM.TO), Canada's fifth-largest independent oil producer, for US $ 8.3 billion estimated at about 50 percent of Talisman's value in June 2014. In December 2014, the price of WCS fell to US $ 40.38 from $ 79.56 in April 2014. Global demand for oil declined, production increased and oil prices fell in June and continued to decline until December.
Other crude oil sands products
Bull Market or Bear in Crude Oil in the US
Investors placed a bullish bet in six weeks from January to February 8, 2013, on an oil futures contract based on a US central bank bond program that "adds liquidity to financial markets." Demand, and therefore prices, commodities in general and oil in particular fall if and when such programs are reduced. Even rumors that hedge funds in trouble and liquidating positions may cause US crude prices to fall. Signs of strong crude demand from China and India in the hope of a tighter market could raise prices and even an oil rally. Investors also refer to the Energy Information Administration's report on US inventories of commercial crude. The higher the inventory of crude oil, the lower the price. US inventories of commercial crude oil reached its highest level on February 15, 2013 since July 2012. "
Derivatives Market Select Western Canada
Most Western Canadian Select is flown to Illinois for repairs and then to Cushing, Oklahoma for sale. The Western Canadian Select (WCS) futures contract is available at Chicago Mercantile Exchange (CME) while bilateral over-the-counter WCS swaps can be cleared at ClearPort Chicago Mercantile Exchange (CME) or by NGX.
Refineries
WCS is transported from Alberta to a refinery with the capacity to process heavy oil from oil sands. The Petroleum Administration for Defense Districts (Padd II), in the US Midwest, has experience running a WCS mix. Most WCS go to refineries in the Central West United where refineries are "configured to process most of the high sulfur crude oil and to produce large amounts of transportation fuels, and low amounts of heavy fuel oil." While US refiners "invest in more complex refinery configurations with higher processing capabilities" that use "cheaper raw materials" such as WCS and Maya, Canada does not. While Canadian refining capacity has increased through scale and efficiency, there are only 19 refineries in Canada compared to 148 in the United States.
WCS crude oil with a very low "gravitational API (American Petroleum Institute) and high sulfur content and residual metal levels" requires special refineries that only a few Canadian refineries have. These can only be processed in refineries modified with new metallurgy capable of running crude oil (high acid).
"The transportation costs associated with the removal of crude oil from West Canada's oil field to the eastern consumption area and the greater choice of crude oil qualities make it more economical for some refineries to use imported crude oil, so the Canadian oil economy is now a refinery- refineries in Western Canada run domestically produced crude oil, refineries in Quebec and the eastern provinces run crude oil imports, while oil refineries in Ontario run a mixture of imported and domestically produced crude oil. In recent years, refineries in the east have started running Canadian crude from offshore production. "
US refineries imported large quantities of crude from Canada, Mexico, Colombia and Venezuela, and they began in the 1990s to build up the capacity of coke and sulfur to accommodate the growth of moderate and heavy acidic crude while meeting environmental and consumer demand for transportation fuel. "While US refineries have made significant investments in complex refining hardware, which supports the processing of heavier crude oil and sourer into gasoline and distillation, similar investments outside the US have been pursued less aggressively.Small and heavy crude forms 50% of US crude input and the US continues to expand its capacity to process heavy crude oil.
The major integrated oil companies producing WCS in Canada are also beginning to invest in increasing refineries to process WCS.
BP Whiting, Indiana refinery
The BP Plc refinery in Whiting, Indiana is the sixth largest refinery in the US with a capacity of 413,500 barrels of crude oil per day (bpd). In 2012 BP began to invest in a multi-billion modernization project at Whiting refineries to refine WCS. The $ 4 billion reparation was completed in 2014 and is one of the factors contributing to WCS price increases. The center of the update is Pipestill 12, the largest refinery crude refinery unit, which came online in July 2013. The distillation unit provides raw materials for all other refinery units by refining crude oil as it enters the refinery. Whiting oil refinery is located near the border between Indiana and Illinois. This is a major buyer of CWS and WTI from Cushing, Oklahoma, the US oil reference contract shipping point.
On August 8, 2015 there was pipe damage inside Pipestill 12 that caused heavy damage and the unit was offline until 25 August. This is one of the main factors contributing to the decline in oil prices with WCS with the lowest price in nine years.
Toledo, Ohio
The Toledo refinery in northwest Ohio, where BP has invested some $ 500 million for repairs since 2010, is a joint venture with Husky Energy, which operates refineries, and processes around 160,000 barrels of crude oil per day. Since the early 2000s, the company has focused its refining business on crude oil processing from oil sands and shale.
Sarnia-Lambton $ 10-billion sand project oil asphalt enhancement
Since September 2013 WCS has been processed at Imperial Oil Sarnia, Ontario, Refineries and ExxonMobil Corporation (XOM) has 238,000 barrels (37,800 m 3 ) Joliet, Illinois and Baton Rouge, Louisiana.
In April 2013, 120,000 barrels of Imperial Oil (19,200 m 3 ) Sarnia, the Ontario refinery is the only coke facility installed in eastern Canada that can process raw asphalt.
In July 2014, the Canadian Academy of Engineering identified a $ 10 billion Sarnia-Lambton asphalt enhancement project to produce a ready-to-use refinery as a national high-priority project.
Co-op Refinery Complex
Lloydminster heavy oil, a component in Western Canadian Select heavy oil blend (WCS), is processed at CCRL Refinery Complex heavy oil processor which has a fire in coker from the heavy oil upgrade section of the plant, on February 11, 2013 It was the third major incident in 16 months, at the Regina factory. The price of Western Canadian Select weakened against the benchmark US West Texas Intermediate (WTI) oil.
Pine Bend Refinery
The Pine Bend Refinery, Minnesota's largest refiner, located in the Twin Cities gets 80% of the heavy crude oil coming in from the Athabasca oil sands. Crude oil is channeled from the northwest to the facility via Lakehead and Minnesota pipes also owned by Koch Industries. Most of the petroleum comes in and out of the plant through Koch's 537-mile pipeline system, which runs across Minnesota and Wisconsin. The US Energy Information Agency (EIA) ranked it 14th in the country by 2013 on the basis of production. In 2013, the company's name plate capacity increased to 330,000 barrels (52,000 m 3 ) per day.
Repsol
Repsol responded to enforcement in January 2009 from reducing the EU sulfur content in gasoline and automotive diesel from 50 to 10 parts per million, with huge investments in upgrading their refineries. They raise three of the five refineries in Spain (Cartagena, A CoruÃÆ' Â ± a, Bilbao, Puertollano and Tarragona) with cokers that have the capacity to purify the heavy oil of Western Canadian Select. Many other European refineries were closed due to a decrease in margins. Repsol tested the first batch of WCS at a Spanish refinery in May 2014.
Cartagena Refinery
In 2012 Repsol completed an upgrade worth EUR3.15 billion and an expansion of the Cartagena refinery in Murcia, Spain which included a new coke unit capable of purifying heavy crude oil such as WCS.
Petronor
Repsol 2013 completed the upgrade, which included new coke units and highly efficient cogeneration units at their Petronor refinery at Muskiz near Bilbao, costing more than 1 billion euros and representing "the largest industrial investment in Basque Country history." This new coke unit will produce "higher demand products such as propane, butane, gasoline, and diesel" and "eliminate fuel oil production." The cogeneration unit will reduce CO2 emissions and help achieve Kyoto protocol targets in Spain. These refineries are quite self-sufficient in electricity and are able to distribute electricity to the power grid.
Blender: ANS, WCS, Bakken Oil
In their 2013 article published in Oil & amp; Gas Journal, Auers and Mayes stated that "recent price cuts have created opportunities for intelligent crude oil blenders and refiners to make their own substitutes for waterborne grade (such as Alaska North Slope (ANS)) at greatly discounted prices A "pseudo" Alaska Substitute for North Slope, for example, can be made with a 55% Bakken and 45% Western Canadian Select mixture at a cost that is potentially much lower than the market price of ANS. "They argue that there is a financial opportunity for capable refineries combine, transmit, and purify cheaper "derelict" crude oil mixtures, such as Western Canadian Select (WCS). In contrast to the light, sweet oil produced "from start playing flakes in North Dakota (Bakken) and Texas (Eagle Ford) as well as the revival of drilling in older, existing fields, such as the Permian basin", Alberta oil sands "is very heavy."
Impact of Bakken's tight oil on WCS
CIBC reports that the oil industry continues to produce large amounts of oil regardless of the stagnant market of crude oil. Oil production from the Bakken formation alone is forecast to grow by 600,000 barrels a year by 2016. By 2012, Canada's rigid oil and oil sands production has also soared.
By the end of 2014, as demand for global oil consumption continues to decline, the growth of oil output is very rapid in 'light, tight' oil production in North Dakota Bakken, Permian and Eagle Ford Basins in Texas, while rejuvenating economic growth in "US refineries, petrochemical and related transportation industries, railways & pipelines ", [it also]" destabilizes the international oil market. "
Since 2000, the use of wider oil extraction technologies such as hydraulic fracturing and horizontal drilling, has led to a production boom in the formation of the Bakken located below the northwestern part of North Dakota. WSC and Bakken compete for pipelines and railways. By the end of 2010, the level of oil production had reached 458,000 barrels (72,800m 3 ) per day, thus exceeding the capacity of the pipeline to deliver oil out of Bakken. This oil competes with WCS for transportation access through pipelines and trains. Bakken production has also increased in Canada, albeit to a lesser extent than in the US, since the discovery of the 2004 Viewfield Oil Field in Saskatchewan. Similar horizontal drilling techniques and large multi-stage hydraulic fractures are used. As of December 2012, 2,357 Bakken wells in Saskatchewan produced a record high of 71,000 barrels per day (11,000 m 3 /d). The Bakken Formation also produces in Manitoba, but the result is small, averaging less than 2,000 barrels per day (300 m 3 /d) by 2012.
"More than 21% of GDP in 2013 of North Dakota of $ 49.77 billion comes from natural resources and mining."
"The state imposes a 5% production tax on the gross value of the well heads of all oil produced in the state, with a few exceptions.The state also imposes taxes on oil extraction (excise) on manufactured oils.In 2012, the state raised $ 1.68 billion. in oil revenues, up 71.4% compared to the 2011 collection. The oil taxes provide 42.3% of the total net income of the country, nearly four times the income tax of individuals and more than eight times the revenue received from corporate income tax. state and local governments.The state treasurer takes 20% which then allocates them to the cities and to the impact grant program The remaining 80% is shared between state and local governments based on mandated formulas. "
"The state creates an inheritance fund in 2010 - similar to a state fund of wealth in foreign countries - to eliminate a portion of the country's revenues from oil and gas production.Under 30% of the country's oil and gas taxes (after some mandated distributions) are kept in inheritance fund, resulting in a $ 446.3 million oil and gas tax collection for fiscal year 2012, $ 824.7 million for fiscal year 2013 and $ 926.6 million for fiscal year 2014. "
Royalties
The royalty rate in Alberta is based on the WTI price. The royalty rate is applied to the project's net income if the project has reached the payment or Gross Earnings if the project has not reached the payment. The income of a project is a direct function of the price it can sell. Since WCS is the benchmark for crude oil, income in the oil sands is discounted when the price of WCS is discounted. The price discount goes to royalty payments.
The Province of Alberta receives part of the benefits of developing energy resources in the form of royalties that fund some programs such as health, education and infrastructure.
In 2006-7, oil royalty revenues were $ 2.411 billion. In 2007/08, it rose to $ 2,913 billion and continued to increase in 2008/09 to $ 2,973 billion. After the Revised Alberta Royalty Revision, it fell in 2009/10 to $ 1.008 billion. That year, Alberta's total resource revenues "fell below $ 7 billion... when the world economy was in the grip of recession."
In February 2012, the Alberta Province "forecast revenue of $ 13.4 billion from non-renewable resources in 2013-14.In January 2013, the province is only anticipating $ 7.4 billion." 30 percent of Alberta's budget of about $ 40 billion is funded through oil and gas revenues. The bitumen royalty represents about half of that total. "In 2009/10, royalties from oil sands were $ 1.008 billion (Budget 2009 cited in Energy Alberta 2009.
In order to accelerate the development of oil sands, the federal and provincial governments more closely align the taxation of oil sands with other surface mining so as to "charge one percent of the project's gross revenues until the project's investment costs are fully paid in which the rate points increase to 25 percent of net income. this and higher oil prices after 2003 have the desired effect to accelerate the development of the oil sands industry. "The revised Alberta Royalty Regime was implemented on January 1, 2009 through which each oil sands project pays a 1% gross revenue royalty (Oil Fiscal Rules and Gas 2011: 30). The 2011 Oil and Gas Fiscal Regime summarizes the petroleum fiscal regime for the western provinces and regions. The Oil and Gas Fiscal Regulations illustrate how royalty payments are calculated:
"Once the oil sand royalty project reaches the payment, the royalties paid to Crown equal to the greater: (a) gross revenue royalty (1% - 9%) for the period, and (b) the percentage of royalties (25% - 40%) of net income for the period Effective January 1, 2009, the percentage of royalties from net income is also indexed to the Canadian dollar price of WTI, ie 25% when the WTI price is less than or equal to $ 55/bbl, up linearly up to a maximum of 40% when the price reaches $ 120/bbl For royalty purposes, net income equals project revenue minus permitted fees. "
When the oil price per barrel is less than or equal to $ 55/bbl indexed against West Texas Intermediate (WTI) (Oil and Gas Fiscal Regimes 2011: 30) (Indexed into West Texas Intermediate (WTI) Canadian Dollar (Oil and Fiscal Regime Gas 2011: 30) up to a maximum of 9%). When oil price per barrel is less than or equal to $ 120/bbl indexed against West Texas Intermediate (WTI) "payment."
Payout refers "the first time when the developer has recovered all the permitted costs of the project, including returning the allowance at the same cost as the Canadian Government's long-term bond rate [" LTBR "].
To promote growth and prosperity and due to the high cost of exploration, research and development, oil sands and mining operations do not pay corporate, federal, provincial or government royalty taxes other than personal income taxes because firms often remain in a loss position for tax purposes and royalties for years. Defining the loss position becomes more complex when the vertically integrated multinational energy company is involved. Suncor claims that the losses they are aware of are legitimate and the Canadian Income Agency (CRA) unfairly claims "$ 1.2 billion" in taxes that endanger their operations.
Royal Sands Royalty Tariff
"Bitumen Valuation Methodology (BVM) is a method for determining for value royalty purposes for asphalt produced in oil sands projects and either upgraded on-site or sold or transferred to affiliates.BVM ensures that Alberta receives market value for its bitumen production, taken in cash or royal-in-kind bits, through a royalty formula Western Canadian Select (WCS), a grade or mixture of Alberta bitumen, diluents (products such as naphtha or condensate added to enhance the ability of oil to flow through pipes) and conventional heavy oils developed by the Alberta manufacturer and stored and valued at Hardisty, AB is determined to be the best reference crude oil price in BVM development. "
Bubble Bitumen
In January 2013, Premier City Alberta, Alison Redford, used the term bitumin bubble to explain the dramatic and unexpected drop in taxes and revenues from oil sands associated with deep discount prices from Western Canadian Select on WTI and Mayan crude, sharp cuts in the provincial budget 2013. In 2012 oil prices rise and fall throughout the year. Premier Redford describes "bitumen bubbles" as differential or "spread between different prices and lower prices for Alberta's Western Canadian Select (WCS)." In 2013 alone, the effect of "asphalt bubbles" will generate about six billion dollars less in provincial revenue.
See also
- Petroleum classification
- List of crude oil products
- Canada Energy Information Center
- The history of the petroleum industry in Canada (oil sands and heavy oils)
- Syncrude
- Suncor
- CNRL
Quote
References
External links
Source of the article : Wikipedia
0 Comments