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Not so conventional anymore

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As Alberta’s reserves of light crude oil began to decline in the 1990s, so did production: by 2005, it had fallen to just over half its 1990 total. Since 1997, Newfoundland and Labrador have offset some of that decline with the flows of light crude oil from its offshore—‘non-conventional’—oil fields.

Conventional crude oil refers to light, medium and heavy hydrocarbons. It has been the traditional source for most oil production. Conventional crude oil is produced by drilling wells and is differentiated from non‑conventional crude oil by the extraction methods. Examples are coal bed methane, offshore fields and oil sands.

Alberta’s non-conventional crude oil, known as the oil sands, is too thick to flow in its natural state and requires special extraction methods to bring it to the surface. Expensive ‘upgraders’ are then used to transform the heavy crude into light crude and synthetic oil.

Light oil flows easily through wells and pipelines. When refined, it yields a large quantity of transportation fuels such as gasoline, diesel and jet fuel. Heavy oil requires additional pumping or dilution to flow through wells and pipelines. It yields more heating oil and less transportation fuels when refined. Prices for a light oil called West Texas Intermediate (WTI) are quoted most often, but not all barrels of oil are created equal.

Canadian producers are turning out more and more heavy crude in Alberta that requires more time and energy to refine and that sell at a discount of between US$10 and US$20 a barrel compared with WTI.