Ideas for the oilsands from IHS CERA

Due to the challenging market conditions that bitumen processing facilities face, a new IHS CERA Oilsands Dialogue study has said that shipping oilsands directly to market as heavy crude may have greater economic benefits than building new upgrading facilities that process oilsands bitumen locally. The move away from building upgrading or refining facilities will enable Alberta’s limited number of workers to be deployed on projects that augment heavy bitumen production, which results in more long term jobs, government royalties and tax revenue.

The rapid growth of tight oil, a lighter form of crude, has also reduced the demand for the already upgraded bitumen or synthetic crude oil (SCO) in North America making the US market more favourable to imports in the form of heavy oilsands crudes. The vast refinery capacity along the US Gulf Coast is more attuned to those types of crudes from the oilsands rather than lighter SCO.

‘The current reality is that, in many cases, new value added upgrading and refining investments in Alberta have challenging economics and investors do not get a reasonable return on the billions the must commit for a bitumen processing facility,’ says Jackie Forrest, HIS senior director and head of the HIS CERA oilsands energy dialogue. ‘Producers would be taking additional steps and spending more money to upgrade or refine oilsands, when the strongest demand is for non-upgraded products.’

The shift away from new oilsands downstream processing facilities in Alberta has the potential benefits that labour that otherwise would be devoted to constructing those facilities are redirected towards increasing oilsands production. The economic benefits of increased oilsands production over new upgrading and refining facilities include:

• Direct long term jobs
• Government royalties
• Income taxes

By devoting additional resources to build up bitumen production now, Alberta is not closing the door to bitumen processing in the future should circumstances change.

Adapted from press release by Claira Lloyd.

Read the article online at: https://www.hydrocarbonengineering.com/gas-processing/28032013/options_for_the_oilsands_353/