Oil Sands & Heavy Crude Production

• Western Canadian Select (WCS) heavy crude
• Synthetic crude oil (SCO)
• Diluted bitumen (dilbit)
• Diluent condensate

1. 1

   Expand pipeline and rail egress capacity to Pacific and Atlantic tidewater

2. 2

   Invest in carbon capture and storage (CCS) to reduce per-barrel emissions intensity

3. 3

   Develop partial upgrading technology to reduce diluent dependency

4. 4

   Pursue strategic crude supply agreements with Asian and European refiners

5. 5

   Build bitumen-to-chemicals pathways for non-combustion end uses

CUSMA's energy chapter maintains free trade in crude oil and energy products, but US energy security rhetoric and domestic production growth create political risk for Canadian crude access. The proportionality clause from NAFTA was not carried forward into CUSMA, giving Canada more flexibility to restrict exports but also removing the guaranteed US market access floor. Executive orders on pipeline infrastructure (Keystone XL cancellation) demonstrate that non-tariff measures can be equally disruptive.

Near-total dependence on US refinery demand for heavy crude creates catastrophic trade concentration risk. Pipeline capacity constraints (despite Trans Mountain Expansion) limit egress options and depress Canadian crude prices relative to WTI. Diluent supply from the US for bitumen transportation creates a circular dependency that amplifies any bilateral disruption.

Canadian oil sands compete with US shale, Venezuelan heavy crude, and Middle Eastern producers in a global market increasingly scrutinizing carbon intensity. Higher per-barrel carbon emissions relative to conventional crude create ESG-driven capital flight risk. However, oil sands' massive reserves and long-asset-life profile provide supply security that shorter-cycle production cannot match.