Canada's upstream oil industry, which produces about 2.5 million barrels of oil per day, is part of the global crude oil market. Crude oil is one of the most actively traded commodities in the world. Oil prices change daily in response to fluctuating conditions that affect supply and demand.
Global demand for crude oil has been rising steadily over the past 20 years, as world demand for crude has grown from 60 million barrels per day to 84 millions barrels per day. Rapid growth in emerging economies like China and India has been accompanied by rapid growth in energy demand.
Almost 50 percent of the crude oil that Canada produces is classified as heavy oil, which is denser, thicker and, more costly to produce and refine into other products. The market price for heavy oil is only about one-half that of light crude oil, which is the price generally quoted by the media.
As well, Canada’s future oil production growth comes from oil sands bitumen, which is blended into heavy oil or upgraded into a synthetic light oil equivalent. The price for bitumen received by producers after deducting the cost of blending and transportation is significantly below the price of light oil.
Oil sands are deposits of bitumen; heavy black viscous oil that must be rigorously treated to convert it into an upgraded crude oil before it can be used by refineries tto produce gasoline and diesel fuels.
Until recently, Alberta’s bitumen deposits were known as tar sands but are now referred to as oil sands.
Bitumen is best described as a thick, sticky form of crude oil, so heavy and viscous that it will not flow unless heated or diluted with lighter hydrocarbons. At room temperature, it is much like cold molasses.
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