The U.S. Gulf Coast will become a key market for Canadian oil-sands output, “particularly for bitumen blends,” despite the uptick in crude production in states such as Texas and North Dakota, according to an IHS CERA report. “Tight oil is reshaping opportunities for oil sands in the United States and prompting Canadian industry and governments to seek new sources of demand in the United States, offshore and elsewhere in Canada.”
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The US will continue to need hydrocarbons from the oil sands of Canada despite its rising output of light oil from tight formations, which nevertheless are reshaping markets for heavy Canadian material.
Most potential market expansion for oil sands producers lies on the US Gulf Coast, where refineries have capacity.
On the West Coast, where 90% of refining capacity is oriented toward the heavy end of the crude slate, the potential market for bitumen blends might exceed 700,000 b/d, but that market remains “largely untapped”.
The oil decline hammered Canadian energy stocks Monday. The 30-company S&P/TSX energy index plunged as much as 22 per cent, its biggest intraday decline in decades. Among the biggest decliners were Cenovus Energy Inc., which dropped as much as 49 per cent, and MEG Energy Corp., which tumbled as much as 47 per cent.
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