Thursday -- October 30, 2014

Active rigs:

	10/30/2014	10/30/2013	10/30/2012	10/30/2011	10/30/2010
Active Rigs	190	182	185	200	152

RBN Energy: continuation of the series on diluent by pipeline to Canada. A very, very good series.

Canadian production of diluent range light hydrocarbon materials such as natural gasoline and condensate are not currently meeting demand from the oil sands region. Diluent is used to reduce the viscosity of heavy Canadian crude so that it can flow to market in pipelines. Diluent supplies required to supplement Canada’s domestic output are nearly all imported from the U.S. via two pipelines that originate in the Midwest. Those pipelines are mostly supplied with diluent sourced from the Gulf Coast. Today we look at how imported diluent gets to Western Canada.

The first episode in this series provided an overview of current and expected demand for diluent range materials for use by oil producers in the Western Canadian Sedimentary Basin (WCSB). The diluent is blended with heavy bitumen and heavy conventional crude to reduce its viscosity enough to flow to market in pipelines. We covered the range of diluent materials used by WCSB producers including natural gasoline and synthetic crude oil. Total Canadian demand for diluent in 2014 is expected to average 380 Mb/d – meaning that with 160 Mb/d of local supply about 220 Mb/d will be imported – mostly from the U.S. By 2019 that import requirement number will more than double to 485 Mb/d (assuming that Canadian domestic production doesn’t increase dramatically – which it might.). This series details the distribution infrastructure being built out to deliver increasing quantities of diluent to production locations in the WCSB. In this episode we recap pipeline diluent routes from the U.S. to Western Canada.