RE:RE:What everyone seems to be missingThanks to us2u001 on IV
Is the differential the cost of transport of the incremental barrel that does not have contracted transport? I assume at refinery gate the price is not dependent on transport cost.
The differential is just the difference between the price of WTI and WCS along with the exchange rate factored in. Here an explanation of WCS itself which is associated with the oil sands producers....
Operators market their specific blend of crude to individual customers, usually refineries or commodity trading houses, at set prices. Each marketable stream of crude has a unique specification, primarily defined by its density, viscosity and sulphur content. Every marketable crude therefore requires its own separate storage facility and pipeline access. This creates a marketing and distribution nightmare in Western Canada, where multiple crude streams are produced at varying degrees of quality.
In order to address these challenges, four heavy oil producers (Suncor, Cenovus, Canadian Natural Resources and the former Talisman Energy) came together in 2004 and developed a Western Canadian Select (WCS) blend.
WCS has become one of the largest heavy oil benchmarks in North America produced exclusively in Western Canada. Canadian Natural Resources is the largest contributor of heavy crude to WCS, estimated at 44% (Q1/2017 figures).
ANATOMY OF WESTERN CANADIAN SELECT
Western Canadian Select is comprised of:
- 20 heavy conventional oil streams produced in Western Canada
- non-upgraded bitumen produced from the Alberta oil sands
- upgraded bitumen, often referred to as light synthetic crude oil (SCO) and
- diluent or condensate, which is added to meet pipeline viscosity requirements.
The various streams are blended at a storage terminal in Hardisty, Alberta
Here some further info on the various grades/blends...