WCS to WTI will average $(27) in 2014 due to growing Canadian oil supply, flat demand from refining and limited takeaway capacity

Thursday, March 15, 2012

NOW AVAILABLE: Extensive analysis on existing and future Canadian crude oil transportation infrastructure, supply and flows to the U.S. as well as refinery demand

BENTEK’s Crude Awakening: Shale Boom Hits Oil reports that the health of Canada’s oil market will largely depend on transportation capacity to the U.S. over the next few years. While Canadian oil supply is expected to grow 31% through 2016, demand from refineries is expected to remain relatively flat. As a result, almost all incremental supply will be transported to the U.S. for refining. Currently, five of the six major pipeline systems that move crude across the Canadian-U.S. border are full or constrained by downstream markets and export pipeline capacity will be limited until new pipeline expansions come online starting mid-year 2015. Until then, average annual crude prices for Western Canadian Select (WCS) could fall to as much as $27 below the West Texas Intermediate (WTI) benchmark. Light Syncrude prices will also face extreme pressure.

Key takeaways from the Canadian section of BENTEK’s Crude Awakening Market Alert:

• Western Canadian crude oil production will grow more than 980,000 b/d by 2017 as oil sands production ramps up and new supplies of unconventional oil are developed.
• Domestic demand for Canadian crude is expected to remain flat at about 1.7 million b/d through 2016, so additional production will need to flow south to the U.S. for refining.
• Canadian oil exports to the U.S. are poised to grow 42% or 917,000 b/d during the 2011-16 period.
• Canadian crude oil prices will come under extreme downward pressure in 2013 and 2014 until additional pipeline capacity opens in 2015 on the northern portion of the Keystone XL project.
• With limited options to move crude to U.S. markets, average annual prices for WCS crude could weaken to as much as $27 below WTI, while Syncrude trades near parity with WTI.

The Canadian section of BENTEK’s Market Alert, Crude Awakening: Shale Boom Hits Oil, provides in-depth analysis on historical and projected Canadian crude oil supply growth, including trends in key oil sands areas and unconventional oil plays. Extensive analysis on existing and future Canadian transportation infrastructure, supply flows to the U.S. and refinery demand are also included, providing the most fundamental assessment of crude oil available in the marketplace today.


Petroleum Project Tracker – Access the essential details of all upcoming U.S. and Canadian crude oil infrastructure projects, including pipelines, rails, storage, terminals and refineries.

Crude Oil Production Monitors – Provide comprehensive U.S. and Canadian coverage of the leading oil plays, including regional production forecasts, drilling activity, transportation and refining constraints and pricing analysis.

Geospatial layer bundle – Includes many of the pipelines and related infrastructure reviewed in Crude Awakening: Shale Boom Hits Oil.

Data package – Analyze the datasets behind the graphs and charts in Crude Awakening: Shale Boom Hits Oil.

To learn more, please contact your BENTEK sales representative or call BENTEK Sales at 1-888-251-1264.