synbit

So far, 2020 has been another bad year for bitumen producers in Alberta’s oil sands. For the second year in a row, they have been forced to endure production curtailments, this time in response to COVID impacts on demand and the resulting record-low heavy oil prices. Still, there are at least glimmers of hope that the bitumen market will soon enter at least a modest recovery mode, and that further gains will be possible in 2021 and beyond. Moving all of that bitumen to market in pipelines and in rail cars is going to require even more diluent than the record amounts already consumed in late 2019 and early 2020. Today, we consider the outlook for bitumen production, what that outlook means for future diluent demand, and if that demand can — or cannot — be met by the various sources of diluent supply.

Producers in Alberta’s oil sands have been through good times and bad times the past few years. Sure, there’s been a lot of growth in output since 2010. But they’ve also seen wildfires that forced one-third of production offline. And pipeline takeaway constraints that sent prices tumbling and spurred government-imposed production cutbacks. And lately, they’ve been struggling through a global pandemic that slashed crude-oil demand and led to further curtailments. Despite it all, producers and the province of Alberta are hopeful about an oil sands rebound, and shippers are optimistic that they can source an increasing share of the diluent they would need to transport bitumen from Western Canada. There’s good news on that front: there appears to be plenty of diluent pipeline capacity already in place between Alberta’s diluent hubs and its oil sands production areas. Today, we continue our series by exploring the major pipeline systems that distribute diluent supply to the oil sands.

They call it oil sands.  It used to be called tar sands, but that was bad marketing.  Regardless, it looks like dirt. Oily dirt.  It is a mixture of sand, water, clay and petroleum – crude bitumen.   Pronounced bich-oo-muhn.  Even after it has been separated from the dirt and water, this bitumen is difficult to handle.