Report explains Oil Sands vs Shale Oil

By North American Shale magazine staff | February 09, 2018

A new oil sands reports highlights the difficulty bitumen producers have in competing with U.S.-based light, tight oil production. Due to the processing requirements linked to oil sands utilization, investors and end-users are still in favor of shale oil. According to the report entitled, “A New Look: Extracting Value from the Canadian Oil Sands,” produced by research firm IHS Markit, there are three viable options for oil sands to compete with U.S. shale.

Option 1: Utilize upgrade facilities that can convert oils sands bitumen into light, synthetic crude oil that competes for refinery space with light sweet crude.

Option 2: Convert existing refineries to handle and process bitumen from start to finished product.

Option 3: Build new refineries that can handle and process bitumen from start to be finished product.

IHS believes the best option is to convert existing refineries. The least viable option for expanded bitumen processing is to build upgrading facilities. “The abundance of so much light, tight oil will also weigh on any new significant investment in heavy oil processing in North American, the study said.

“The most attractive option for growing oil sands production continues to look like the export of heavy sour bitumen blends to U.S. Gulf Coast regions, which imported over 1.8 million barrels per day of crude oil of similar quality to the oil sands from offshore places like Venezuela, Mexico and others,” said Patrick Smith, co-author of the study.