September 10, 2008 at 12:22 pm #3431
There is an article in the OGJ on Oil Sands supplies by of Lindsay Sword/Woodmac that you should see:
[align=left]<US refinery investments align with oil sands supplies to 2015
Oil & Gas Journal August 18, 2008 Woodmackenzie – Lindsay Sword>
on Canadian Upgrade Projects but I wanted to pass on some key corrections on the comments/views that are made in the article for you to consider.
Woodmac mentioned that SCO is used in the heavy crude blends as diluent and later they state that no new capacity in the US for processing SCO. This is correct and as article mentions the existing sweet crude refineries do consume what portion is sold into the market up to their blending distillate quality limitations. But Woodmac leaves the idea that SCO use will be a function of the replacement of both foreign and domestic light crude oil in the US.
I think the most of the placement of SCO is an indirect function as a diluent Woodmac mentioned initially. Almost from the initial production by Syncrude & Suncor in the 1980’s it has been more profitable to displace the expensive diluents that were a substantial premium to the SCO value even though they were not quite as effective. In fact, one the major reasons that the cost of the upgrading dropped from $30/bbl down to the $18/Bbl range was from the displacement of Algerian Condensate that was railed from the USGC up to the Canadian Alberta upgraders for diluent. The dilbit /synbit/dil-synbit combinations all utilize a significant amount of the SCO which becomes part of the blended Bitumen crude. The difference comes out in the balance because the 1 BPD of SCO now becomes 2 BPD of Synbit blend and represents significant increase in amount of CA Bitumen crude to fill pipelines. Also several of the blended bitumen crude’s now have fairly common names (like Cold Lake crude) that have been utilized in the Padd 2 & Padd 4 states for a number of years and are often left out of these totals on CA heavy imports.
I think Woodmac may have minimized the amount of Canadian bitumen that will go to Padd 3 & 1 (more than just announced WRN Borger or MAP Cattelsburg expansions) and maximized the amount going to Padd 2 & 4 (outside WRN Woodriver & MAP Detroit – lot these refineries along with the Canadian Refineries are at limits of heavy crude utilization). There is additional 500 MB Kinder Morgan capacity going to USWC that is planned for exports to China and a second stage $7B Keystone PL to reach East Coast for export to US Gulf refiners.
Also I did not see any mention of higher level of attacks by Environmental groups against the Upgraders & their imports (ie Woodriver’s permit reversed, attack to keep all heavy crude out of US) or problems with Carbon Tax &/or increased CA crude tariffs.
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