Sour crude

After a long decline, crude oil production on Alaska’s North Slope is poised to increase, and it’s possible that by the early 2030s production could return to levels not seen since the turn of the century. It’s an exciting development for the 49th state, but where will all that oil go? With refining capacity on the decline in California, which has typically handled a lot of Alaska North Slope (ANS) crude, it’s not an easy answer. In today’s RBN blog, we’ll discuss the locations where ANS oil production could land — one of the many essential topics covered in our upcoming Future of Fuels report. 

Western Canadian Select (WCS) – the benchmark for Canadian crude sold at Hardisty in Alberta fetched just $32.29/Bbl on Friday (July 24, 2015) down 60% from $81.34/Bbl a year ago in July 2014. That year has seen big changes in the U.S. oil market with drilling rig cutbacks and declining new production rates. The challenges for Canadian producers have not changed much in the short term – with transport capacity to market still top of the list. Trouble is that every time transport congestion occurs it pushes price discounts higher and lowers producer returns. Today we discuss the relationship between Western Canadian crude production and prices.

The Houston crude oil distribution system is gearing up to handle a flood of new supplies from over 1.7 MMb/d of pipeline capacity delivering into the region by the end of Q2 2014. A trading market is also developing for producers and shippers selling that crude to Gulf Coast refiners. New grades of both light and heavy crude are showing up – principally from the Eagle Ford, the Permian Basin, North Dakota and Western Canada. Will a new crude trading market develop in Houston to rival those at Cushing, OK and St. James, LA? Today we look at the evolving Houston crude market.