I just had a realization, I had always been thinking that the Keystone extension to Alberta would be a boost to Syncrude as it would help narrow the spread between WTI and Syncrude synthetic (which is narrow compared to western Canada select (WCS)-a heavy sludge that sells for ~$65/barrel).

 

What I have just realized though, is what will actually be pumped through the Keystone pipeline if it is approved...They aren't going to mix Syncrude synthetic with WCS and fire it all down the pipe...My understanding is that Western Canada select will be pumped, therefore there is no benefit to Syncrude at all no?

 

The good news though, is that given Syncrude synthetic virtually gets WTI prices on the open market as it is, the lower portion of the Keystone pipeline that is designed to narrow the spread between Brent and WTI should benefit Syncrude and that portion is already under construction (unless the spread between Synthetic and WTI increases as well).

 

Can anyone clarify?