The potential for bitumen and heavy oil production in Canada over the coming decade is predicted to be constrained by existing pipeline capacity, diluent availability and refinery conversion capacity. Technology for partial upgrading of bitumen to produce pipeline specification oil, reduce diluent requirements and add sales value is under aggressive development. The partially upgraded bitumen will be attractive for additional upgrading to end user products in a wider range of refineries than raw bitumen. The transportation of partially upgraded crude in existing pipelines to USA and potentially in new pipelines to new overseas customers will present new opportunities and challenges. This paper provides an overview of emerging partial upgrading technologies, the current pipeline specifications and the procedures to transport partially upgraded product, number of existing refineries to potentially accept partially upgraded product and future predictions.


Canada, mainly in the province of Alberta, holds one of the largest reserves of oil in the world. With current technology the recoverable reserves are estimated to be 335 billion barrels1a. The vast majority of these reserves are in the oil sands. In 2001 Canada was the largest import supplier of crude oil to the USA1. Saudi Arabia2 was the second largest supplier as shown in Table 1.

As shown in Figure 1, oil sands production is predicted to increase to 50% of Canada's oil by 2011. Over the coming decade conventional oil production is predicted to decline with the increased production being provided by synthetic light oil and bitumen from Alberta oil sands. The announced oil sands projects are listed in Table 2. If all projects were to proceed, the oil sands production alone would reach 3,445,000 bbl/d by 2011 as shown in Figure 2. Besides the physical and financial hurdles, there are three main challenges related to the transportation and marketing of the new production.

The first challenge is the physical capacity of the existing pipelines to deliver the oil to market. With the expansions underway, the capacity is projected to be adequate until the middle of the coming decade then the projected production will exceed the capacity as shown in Figure 2.

The second challenge is the supply of low viscosity diluent, usually natural gas condensate, to reduce the bitumen viscosity and density to meet pipeline specifications. The limit of bitumen that can be shipped by pipeline with the anticipated diluent availability is less than the projected bitumen production.

The third challenge is the projected refinery market constraint to process the bitumen and synthetic light oil into consumer fuel products. The market constraint is less than the anticipated projected bitumen and synthetic light oil production as shown in Figure 2. This is a particular concern to producers of bitumen that are not integrated oil companies.

There are a variety of ways to address the increasing bitumen production challenge. These include:

  1. refinery modifications and increased Canadian access in PADD (Petroleum Administration Defense District) II and IV,

  2. development of a regional upgrader in Alberta,

  3. production of synthetic diluent for blending with bitumen,

  4. developing new markets and

  5. adding additional pipeline capacity.

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