What is crude oil?

Crude oil, also known as petroleum, is an energy-rich liquid consisting mainly of hydrocarbons. In Canada, Alberta’s oil sands have the largest reserves of crude oil, but there are also large deposits off the coast of Atlantic Canada. Crude oil activities include exploration, drilling production, field processing, as well as storing and transporting oil.

Key facts Canada is the fourth largest producer and fourth largest exporter of oil in the world

producer and exporter of oil in the world 96% of Canada’s proven oil reserves are located in the oil sands

of Canada’s proven oil reserves are located in the oil sands 96% of Canada’s oil exports go to the U.S.

of Canada’s oil exports go to the U.S. GHG emissions per barrel of oil produced in the oil sands have fallen 28% since 2000

Learn more about crude oil in Canada

International context

Find out how Canada’s crude oil ranks on an international scale:

World production World production* – 98.3 MMb/d (2018) Rank Country Percentage of total 1 United States 16% 2 Saudi Arabia 12% 3 Russia 12% 4 Canada 6% 5 Iraq 5% * includes crude oil, NGL, additives and other hydrocarbons (including the receipts of additives) World exports World exports* – 47.5 MMb/d (2017) Rank Country Percentage of total 1 Saudi Arabia 15% 2 Russia 11% 3 Iraq 8% 4 Canada 8% 5 Iran 6% * includes crude oil, NGL, additives and other hydrocarbons (including the receipts of additives) World proved reserves World proved reserves – 1,672 billion barrels (at the end of 2018) Rank Country Percentage of total 1 Venezuela 18% 2 Saudi Arabia ** 16% 3 Canada

(96% of which is oil sands) 10% 4 Iran 9% 5 Iraq 9% ** Saudi Arabia and Kuwait reserves include the Saudi-Kuwaiti “neutral zone,” with total proved reserves of 5 billion barrels World shale oil resources World technically recoverable shale oil* resources – 419 billion barrels (2015) Rank Country Percentage of total 1 United States 19% 2 Russia 18% 3 China 8% 4 Argentina 6% 5 Libya 6% 13 Canada 2% * Shale formations are a subset of low permeability tight oil formations

Supply and demand

In 2018, Canadian supply and demand of crude oil slightly increased from 2017.

Canadian production *: 4.6 MMb/d

*: 4.6 MMb/d Imports : 0.8 MMb/d

: 0.8 MMb/d Exports : 3.7 MMb/d

: 3.7 MMb/d Crude oil shipped to domestic refineries: 1.7 MMb/d

* includes condensates and pentanes plus

Canadian resources

By understanding how much crude oil is available in established reserves we can begin to understand the future of oil in Canada.

The remaining established reserves* in Canada was recorded at 168.5 billion barrels of crude oil.

Text version In 2019, Canada’s proven reserves of crude oil totals 168.5 billion barrels. 164.1 billion are oil sands and 4.4 billion barrels are conventional.

* Reserves known to exist and recoverable under current technological and economic conditions

**Reserves also include proved reserves of pentanes plus (a crude-oil equivalent that is associated with oil production)

Oil sands

The oil sands accounted for 64% of Canada’s oil production in 2018 or 2.9 million barrels per day. The oil sands have an estimated $313 billion of capital investment to date, including $10.6 billion in 2018.

Extracting bitumen

There are two methods of extracting bitumen from the oil sands: the mining method and the in situ method.

The mining method

47% of current production and 19% of oil sands reserves

In 2018, seven mining projects in Alberta produced approximately 1.47 million barrels a day: Syncrude Mining Project (302 Mb/d) Suncor Base Mine (259 Mb/d) CNRL Horizon Mine (264 Mb/d) Athabasca Oil Sands Project – Muskeg River (163 Mb/d) and Jackpine Mine (132 Mb/d) Imperial’s Kearl Mine (223 Mb/d) Fort Hills (125 Mb/d)



Learn more about the open-pit mining process

Text version The mining process, which can be used in formations of 75 meters or less, represents 47% of current oil sands production and 19% of oil sand resources.

The in situ method

53% of current production and 81% of resources

More than 20 projects in Alberta – largest in 2018 were Christina Lake (Cenovus) at 201 Mb/d, Firebag and MacKay River (Suncor) at 242 Mb/d, Foster Creek (Cenovus) at 162 Mb/d and Cold Lake (Imperial Oil) at 148 Mb/d.

Learn more about the in-situ production process

Text version The in situ method, which can be used in formations that are deeper than 75 meters, represents 53% of current oil sands production and 81% of oil sand resources.

Bitumen upgrading

Upgrading is a method of processing the bitumen that is extracted from the oil sands. The crude bitumen from oil sands may be transported to upgraders for processing to make it lighter – “synthetic crude oil”.

Bitumen may also be blended with diluent (e.g. condensates), and sold directly to refineries capable of processing heavier oils.

In 2018, 41% of the raw bitumen produced was sent for upgrading in Alberta

Major companies with upgrading capacity include Syncrude, Suncor, Shell, Canadian Natural Resources, Husky and Nexen-CNOOC

Total upgrading capacity in Canada of 1.33 million barrels per day

Learn more about upgrading and petroleum products in Canada

Environmental considerations

There are numerous environmental challenges that the oil sands face to Canada’s air, water and land conservation.

Greenhouse gases

The oil sands account for 11% of Canada’s total GHG emissions and 0.1% of global emissions. From 2000 to 2017 the emission intensity of oil sands operations dropped by approximately 28% as a result of technological and efficiency improvements, fewer venting emissions and reductions in the percentage of crude bitumen being upgraded to synthetic crude oil.

Water

Water management is a key challenge of the oil sands extraction process. The mining method uses 2.5 barrels of fresh water required per barrel of bitumen and the in situ method uses an average of 0.20 barrels of fresh water required per barrel of bitumen.

Oil sands producers recycle around 80-95% of the water used in established mines and approximately 85-95% for in situ production.

Land

Oil sands development is subject to environmental standards that are among the most stringent in the world. The Government of Alberta requires that companies remediate and reclaim 100% of the land after the oil sands have been extracted.

Reclamation means that land is returned to a self-sustaining ecosystem with local vegetation and wildlife.

Text version The surface area of Canada’s oil sands resources is 142,200 squared kilometers and is largely found in Alberta. The total mineable area is 4,800 squared kilometers, and the total area being mined is 901 squared kilometers. For comparison, Canada’s total area is 10,000,000 squared kilometers, and the Canadian boreal forest is 2,700,000 squared kilometers.

Shale oil and light tight oil

Light tight oil (also called shale oil) is found in sedimentary rock characterized by very low permeability, typically shale rock. Light tight oil and shale oil are extracted by using horizontal drilling combined with multi-stage hydraulic fracturing – the same techniques used for shale gas extraction.

Resources in Canada and the U.S.

There is currently great potential for shale oil and light tight oil resources in Canada and the U.S. Tight oil resources are largely found in a belt ranging from central Alberta to southern Texas. The Permian (largely in West Texas), the Bakken (North Dakota, Montana, Saskatchewan, Manitoba) and the Eagle Ford (south Texas) tight oil formations are the largest sources of tight oil production in North America.

Prospective resources have also been identified throughout the Rocky Mountain region, the U.S. Gulf Coast and the northeastern U.S./Eastern Canada (including Anticosti Island and western Newfoundland and Labrador).

Learn more about shale and tight resources in Canada.

Production

Oil sands production has exceeded conventional oil production since 2010. In 2018, oil sands production was 2.91 million barrels per day compared to 1.64 million barrels per day of conventional oil production (including tight oil).

Text version Oil sands production has generally been increasing since 2006, peaking at 2.91 million barrels per day in 2018. Conventional crude oil production also peaked in 2018 at 1.64 million barrels per day.

The 5 largest companies (Suncor, Canadian Natural Resources Limited, Imperial Oil, Husky and Cenovus) are responsible for over half of crude oil production in Canada.

Crude oil is produced across the country from coast to coast to coast. In 2018, Alberta had the highest amount of crude oil production in Canada.

Text version In 2018, Alberta leads the provinces in crude oil production with 81.8% of Canada’s total production, Saskatchewan produced 10.8%, and Newfoundland and Labrador produced 5.1%.

Text version From 2011 to 2016 in western Canada, the number of oil wells completed has decreased from over 10,000 to less than 2,150, before rising to 4,580 in 2017 and 4,685 in 2018. The average metres drilled per well has been increasing steadily since 2003, from an average of 1,202 metres drilled in 2003 to 2,403 in 2018.

Trade

Canada produces more oil than it consumes and as a result, is a significant net exporter of crude oil.

In 2018, Canada was the largest foreign supplier of crude oil to the U.S., accounting for 48% of total U.S. crude oil imports and for 22% of U.S. refinery crude oil intake.

Canada exported 3.5 million barrels per day to the U.S. in 2018, 96% of all Canadian crude oil exports.

Text version Exports of Canadian crude oil have been increasing since 2010, reaching 3.7 million barrels per day in 2018. Imports were 0.9 million barrels per day in 2006, but this number has steadily declined between 2006 and 2014. After a slight increase in the previous two years, imports fell again in 2017 and 2018, to 0.68 and 0.63 million barrels per day respectively.

Due to the regional nature of Canadian refining markets, Canada also imports some crude oil.

Imports of crude oil and equivalents into Canada come from a wide range of countries.

Text version Source countries of imports of crude oil to Canada in 2017 were: United States, 65%; Saudi Arabia, 18%; Azerbaijan, 5%; Norway, 3%; Nigeria, 2%.

Prices

There are many different types of crude oil around the world, each with their own price:

West Texas Intermediate (WTI): Reference price for light crude oil delivered at Cushing, Oklahoma (a major pipeline hub) and used as the benchmark price for North American crudes.

Reference price for light crude oil delivered at Cushing, Oklahoma (a major pipeline hub) and used as the benchmark price for North American crudes. Brent: Reference price for light crude oil delivered at the Sullom Voe terminal in the U.K. and used as a benchmark price for North Sea crudes, and for light crude traded around the world in coastal markets.

Reference price for light crude oil delivered at the Sullom Voe terminal in the U.K. and used as a benchmark price for North Sea crudes, and for light crude traded around the world in coastal markets. Canadian Light Sweet: Reference price for light crude oil (similar quality to WTI) delivered at Edmonton.

Reference price for light crude oil (similar quality to WTI) delivered at Edmonton. Western Canada Select (WCS): Reference price for heavy crude oil (e.g. blended bitumen) delivered at Hardisty, Alta. WCS is representative of the price of oil from the oil sands. It takes more energy to produce refined products (e.g. gasoline) from heavy crudes, therefore WCS trades at a discount to lighter crudes.

Reference price for heavy crude oil (e.g. blended bitumen) delivered at Hardisty, Alta. WCS is representative of the price of oil from the oil sands. It takes more energy to produce refined products (e.g. gasoline) from heavy crudes, therefore WCS trades at a discount to lighter crudes. Maya: Reference price for heavy oil produced in Mexico (similar quality to WCS).

Explore crude oil pricing in Canada.

Text version The monthly average prices of Brent and West Texas Intermediate crude oil, showing the differential between them. Between 2008 and 2018, the monthly average price of Brent had a range of 30.7 dollars to 132.7 dollars. Similarly, the monthly average price of West Texas Intermediate had a range of 30.3 dollars to 133.8 dollars. Text version The prices of Maya and Western Canada Select crude oil, showing the differential between them. Between 2008 and 2018, the monthly average price of Maya had a range of 24.2 dollars to 121.4 dollar whereas the monthly average price of Western Canada Select had a range of 11.0 dollars to 114.9 dollars.

Moving crude oil in Canada

Oil pipelines, as well as trucks, tanker ships and railways, transport crude oil between production areas, refineries, and export/import border points.

By pipeline

Canada has an extensive network of 840,000 kilometres of pipelines carrying crude oil to domestic and U.S. refineries. The current crude oil pipeline capacity exiting Western Canada is estimated at 3.9 million barrels per day.

Learn more about pipelines across Canada.

Key existing pipelines in Canada

Text version Map showing some of the major crude oil pipelines across Canada. Source: National Energy Board

Enbridge Mainline: Alberta to the U.S. Midwest and Ontario. The world’s largest pipeline system for crude oil and petroleum products, serving Canada and the U.S. with an estimated capacity of 2,850,000b/d

Norman Wells Pipeline: from the Northwest Territories to Alberta

Line 9: from Sarnia to Montréal, returned to eastward flow and capacity expanded to 300,000b/d in 2015

Southern Lights: diluent from Chicago to Edmonton

Express-Platte: capacity to transport 280,000 b/d from Hardisty, Alta. to the U.S. Midwest

Kinder Morgan North America’s largest pipeline company and largest transporter of refined products Trans Mountain Line: capacity to transport 300,000b/d from Edmonton to British Columbia (crude oil and petroleum products) Puget Sound System: via the Trans Mountain Line ships crude oil from Abbotsford, BC to Washington State with a capacity of 180,000b/d Cochin Pipeline: transports diluents from Illinois to Fort Saskatchewan with a capacity of 95,000b/d



Pembina Second-largest oil pipeline system in western Canada 9 pipelines for conventional and unconventional oil Bitumen Line: from Fort McMurray to Edmonton



Portland-Montreal Pipe Line Crude oil ships from Portland, Maine to Montréal

TransCanada Pipeline Keystone Pipeline (2010): capacity to transport 591,000b/d of oil from Hardisty, Alta. to the U.S. Midwest

By rail

As production increases in Western Canada have outpaced increases in pipeline capacity, shipments of crude oil by rail have increased to fill the gap. Exports of crude oil by rail have more than doubled since the start of 2018, from 146 Mb/d in January 2018, to 354 Mb/d in December 2018.

As oil production limits in Alberta have eased over 2019, rail exports are trending back up following the drop in the first quarter.

The estimated rail loading capacity out of western Canada in 2018 was approximately 2.8 million barrels per day.