Western Canadian Select

Overview

Western Canadian Select (WCS) is a heavy sour blend of crude oil that is one of North America's largest heavy crude oil streams and, historically, its cheapest. It was established in December 2004 as a new heavy oil stream by EnCana (now Cenovus), Canadian Natural Resources, Petro-Canada (now Suncor) and Talisman Energy (now Repsol Oil & Gas Canada). It is composed mostly of bitumen blended with sweet synthetic and condensate diluents and 21 existing streams of both conventional and unconventional Alberta heavy crude oils at the large Husky Midstream General Partnership terminal in Hardisty, Alberta. Western Canadian Select—the benchmark for heavy, acidic (TAN <1.1) crudes—is one of many petroleum products from the Western Canadian Sedimentary Basin oil sands. Calgary-based Husky Energy, now a subsidiary of Cenovus, had joined the initial four founders in 2015. Western Canadian Select (WCS) is the benchmark price for western Canadian crude blends. The price of other Canadian crude blends produced locally are also based on the price of the benchmark. During the COVID-19 pandemic, many oil benchmarks around the world fell to record lows. WCS dropped to $3.81 U.S. dollars per barrel on April 21, 2020. In June, Cenovus increased production at its Christina Lake oil sands project reaching record volumes of 405,658 bbls/d when the price of WCS increased "almost tenfold from April" to an average of $33.97 or C$46.03 per barrel (bbl). During the 2022 Russian invasion of Ukraine, the price of WCS rose to over US$100 a barrel with the United States considering placing a ban on Russian oil imports. In June, the Western Canadian Select (WCS) benchmark price averaged $64.35 per barrel, which was closely aligned with the year-to-date (YTD) average of $63.09. During the 2025 United States trade war with Canada, the price dropped to C$52.57 per barrel (bbl) as of April 7. In 2023, Canada's total oil exports reached a "historical high" of 4.8 million bpd, with the United States purchasing 192.9 million metric tons that year. In 2023, oil sands extraction contributed over CA$38 billion (1.74% of GDP) and conventional crude oil and gas extraction contributed CA$33 billion (1.52% of GDP) to Canada's economy. In November 2024, the Canadian Association of Energy Contractors (CAOEC) forecasted that a total of 6,604 wells would be drilled in Western Canada in 2025, marking a 7.3% increase from 2023. This level of activity would be the highest in the Western Canadian oil sector since the commodity price downturn of 2014-2015, which resulted in a prolonged period of industry contraction.

Overview

Western Canadian Select is Canada's benchmark heavy crude and has historically been the cheapest crude oil heavy sour blend in North America. As of 2024, there are only three corporations—Suncor, CNRL, and Cenovus, all Canadian and all headquartered in Calgary—that produce an estimated 77% of all Canadian oilsands production. Repsol, which was the fourth main WCS producer, was one of many foreign companies and investors who exited the oilsands in 2024. Canada is the primary supplier of total petroleum to the United States. In 2024, Canada's oil exports to the United States were increased substantially partly because of the increased capacity with the completion of the Trans Mountain expansion pipeline. In July and September 2024, Canada exported over 4.3 million barrels of oil per day (b/d) to the United States. In comparison, Canada exported 3.2 million b/d of crude oil to the United States in May 2020. WCS's influence over the crude oil market extends beyond the production of these three corporate giants, as the price of other Canadian crude blends produced locally are also based on the price of the benchmark, WCS, according to NE2, a brokerage and exchange company that handles approximately 38 percent of western Canadian oil production. The calculation of the price of WCS is complex. Because WCS is a lower quality heavy crude oil and is also farther from the major oil markets in the United States, its price is calculated based on a discount to West Texas Intermediate (WTI)—a sweeter, lighter oil, which is produced in the heart of the oil markets regions. WTI is the benchmark price of oil in North America. The price of WTI changes from day to day but actual commodities trading market for crude oil is based on contract prices, not a daily price. The WCS discount on a futures contract for a two-month period is based on the average price of all WTI contracts in the most recent month prior to the WCS contract agreement.

Revenue

Husky Energy sold 65% of their Midstream business in 2016 and formed the Husky Midstream General Partnership (HMGP) with two additional partners. HMGP exclusively blends the crude super-stream to ensure a consistent high quality heavy crude product that is demanded by refineries. Since Husky joined the conglomerate, onstream WCS has been blended at the Husky Hardisty terminal (now owned by HMGP). In October 2020, Cenovus acquired the Calgary-based company established in the 1930s—Husky—for CA$3.8 billion.

Major producers

In 2004, Suncor Energy, Cenovus Energy, Canadian Natural Resources, and Talisman Energy (later Repsol) developed the Western Canadian Select (WCS) blend. According to Argus, in 2012 the WCS blend was still produced by only four companies because of the complex set of rules regarding compensate for contributions to the WCS blend. Cenovus and Husky completed a merger by January 2021, with the company operating under Cenovus. Through the merger Cenovus became the third-largest crude oil and natural gas company and the second-largest upgrader in Canada.

Major importers

The United States imports about 99% of Canada's oil exports, According to monthly data provided by the U.S. Energy Information Administration (EIA), Canada is the "largest exporter of total petroleum" to the United States with crude oil exports to the US of 3,026,000 bpd in September 2014, 3,789,000 bpd in September 2015 and 3,401,000 bpd in October 2015. Canadian oil is much cheaper than oil from other sources. Since 2009, US refineries have increased use of Canadian crude oil, according to a March 20, 2020 report Since 2009, the US has decreased oil imports from Saudi Arabia, Mexico, and Venezuela. Of the total crude oil imports to the US, crude oil from Canada accounts for 56%, according to a 2019 EIA report. Canada's total oil exports reached a "historical high" of 4.8 million bpd in 2023, with the United States purchasing 192.9 million metric tons that year.

Historical pricing

Crude prices are typically quoted at a particular location. Unless stated otherwise, the price of WCS is quoted at Hardisty and the price of West Texas Intermediate (WTI) is quoted at Cushing, Oklahoma. Statista provides accurate current and historical records of the price of WCS. By March 18, 2015, the price of benchmark crude oils, WTI had dropped to $US 43.34/barrel (bbl). from a high in June 2014 with WTI priced above US$107/bbl and Brent above US$115/bbl. WCS, a bitumen-derived crude, is a heavy crude that is similar to Californian heavy crudes, Mexico's Maya crude or Venezuelan heavy crude oils. On March 15, 2015, the differential between WTI and WCS was US$13.8. Western Canadian Select was among the cheapest crude oils in the world with a price of US$29.54/bbl on March 15, 2015, its lowest price since April 2009. By mid-April 2015 WCS had risen almost fifty percent to trade at $US44.94. By June 2, 2015, the differential between WTI and WCS was US$7.8, the lowest it had ever been. By August 12, 2015, the WCS price dropped to $23.31 and the WTI/WCS differential had risen to $19.75, the lowest price in nine years when BP temporarily shut down its Whiting, Indiana refinery for two weeks, the sixth largest refinery in the United States, to repair the largest crude distillation unit at its Whiting, Indiana refinery. At the same time Enbridge was forced to shut down Line 55 Spearhead pipeline and Line 59 Flanagan South pipeline in Missouri because of a crude oil leak. By September 9, 2015, the price of WCS was US$32.52. By December 14, 2015, with the price of WTI at $35 a barrel, WCS fell "75 percent to $21.82," the lowest in seven years and Mexico's Maya heavy crude was down "73 percent in 18 months to $27.74". By December 2015 the price of WCS was US$23.46, the lowest price since December 2008 and The WTI-WCS differential was US$13.65. In mid-December 2015, when the price of both Brent and WTI was about $35 a barrel and WCS was $21.82. Mexico's comparable heavy sour crude, Maya dropped in price 73% but the Mexican government used an oil hedge to "somewhat protect" it. By February 2016 WTI had dropped to US$29.85 and WCS was US$14.10 with a differential of $15.75. By June 2016 WTI was priced at US$46.09, Brent at MYMEX was US$47.39 and WCS was US$33.94 with a differential of US$12.15. By June 2016 the price of WCS was US$33.94. By December 10, 2016, WTI had risen to US$51.46 and WCS was US$36.11 with a differential of $15.35. On June 28, 2018, WTI spiked to US$74, a four-year high, then dropped by 30% by the end of November. In November 2018, the price of WCS hit its record low of less than US$14 a barrel. From 2008 through 2018, WCS sold at an average discount of US$17 against WTI. In the fall of 2018, the differential increased to a record of around US$50. On December 2, Premier Rachel Notley announced a mandatory cut of 8.7% in Alberta's oil production. This represents cutting back 325,000 bpd in January 2019, and dropping to 95,000 bpd by the end of 2019. According to a December 12, 2018 article in the Financial Post, after the mandatory cuts were announced, the price of WCS rose c. 70% to c. US$41 a barrel with the WTI narrowing to c. US$11. The price difference between WCS and WTI was as wide as US$50 a barrel in October. As the international price of oil recovered from the December "sharp downturn", the price of WCS rose to US$28.60. According to CBC News, the lower global price of oil was related to declining economic growth as the China–U.S. trade war continued. The price rose as oil production was cut back by the Organization of Petroleum Exporting Countries (OPEC) and Saudi Arabia. According to the U.S. Energy Information Administration (EIA) report, oil production rose by 12% in the U.S., primarily because of shale oil. As a result, Goldman Sachs lowered its 2019 oil price forecast for 2019. In March 2019, the differential of WTI over WCS decreased to $US9.94 as the price of WTI dropped to US$58.15 a barrel, which is 7.5% lower than it was in March 2018, while the price of WCS averaged increased to US$48.21 a barrel which is 35.7% higher than in March 2018. By October 2019, WTI was averaging US$53.96 a barrel which is 23.7% lower than in October 2018. In comparison, for the same period, WCS averaged US$41.96 a barrel which is 2.0% higher than in October 2018 with a differential of US$12.00 in October 2019. By March 30, 2020, the price of WCS bitumen-blend crude was US$3.82 per barrel. In April 2020 the price briefly fell below zero, along with WTI, due to collapsing demand caused by the COVID-19 pandemic. In June, the Western Canadian Select (WCS) benchmark price averaged $64.35 per barrel, which was closely aligned with the year-to-date (YTD) average of $63.09. After President Donald Trump announced tariffs came into effect on April 3, as part of the 2025 United States trade war with Canada, the price of WCS dropped to C$52.57 per barrel (bbl), from an average of

Curtailment

In the fall of 2018, the differential between WCS and WTI—which had averaged at US$17 for the decade from 2008 to 2018—widened to a record of around US$50. By December 2018 the price of WCS had plummeted to US$5.90. In response, the NDP government under Premier Notley, set temporary production limits of 3.56 million barrels per day (b/d) that came into effect on January 1, 2019. The curtailment was deemed necessary because of chronic pipeline bottlenecks out of Western Canada which cost the "industry and governments millions of dollars a day in lost revenue". Following the December 2 announcement of mandatory oil production cutbacks in Alberta, the price of WCS rose to US$26.65 a barrel. The global price of oil dropped dramatically in December before recovering in January. The price of WCS increased to US$28.60 with WTI at US$48.69. In the fall of 2019, the UCP government under Premier Kenney "extended the curtailment program into 2020 and increased the base exemptions for companies before the quotas kick in, lowering the number of producers affected by curtailment to 16". Curtailment "supported domestic oil prices" but also "limited growth and overall industry investment as companies have been unable to expand production above their mandated quotas". Integrated producers, such as Imperial Oil and Husky Energy, oppose curtailment because when the price of WCS is low, their refineries in the United States benefit. Other oil producers in Alberta support curtailment as a way of preventing the collapse of WCS. In the summer of 2019, Suncor Energy, Cenovus Energy and Canadian Natural Resources agreed to increase production with the mandatory use of oil-by-rail as a condition for the increase. The Canadian Association of Petroleum Producers (CAPP)'s Terry Abel said that, "The whole point of curtailment was to try and match takeaway capacity with produced capacity so that we don’t create downward pressure on prices...To the extent you add incremental (rail) capacity, you should be able to make some adjustments to curtailment to accommodate that."

Characteristics

"The extremely viscous oil contained in oil sands deposits is commonly referred to as bitumen." (CAS 8052-42-4) At the Husky Hardisty terminal, Western Canadian Select is blended from sweet synthetic and condensate diluents from 25 existing Canadian heavy conventional and unconventional bitumen crude oils. Western Canadian Select's characteristics are described as follows: API gravity level of between 19 and 22 (API), density (kg/m3) 930.1, MCR (Wt%) 9.6, sulphur (Wt%) 2.8-3.5%, TAN (Total Acid number) of (Mg KOH/g) 0.93. Refiners in North America consider a crude with a TAN value greater than 1.1 as "high-TAN". A refinery must be retrofitted in order to handle high TAN crudes. Thus, a high TAN crude is limited in terms of the refineries in North America that are able to process it. For this reason, the TAN value of WCS is consistently maintained under 1.1 through blending with light, sweet crudes and condensate. Certain other bitumen blends, such as Access Western Blend and Seal Heavy Blend, have higher TAN values and are considered high TAN. "Oil sands crude oil does not flow naturally in pipelines because it is too dense. A diluent is normally blended with the oil sands bitumen to allow it to flow in pipelines. For the purpose of meeting pipeline viscosity and density specifications, oil sands bitumen is blended with either synthetic crude oil (synbit) and/or condensate (Dilbit)." WCS may be referred to as a syndilbit, since it may contain both synbit and dilbit. In a study commissioned by the U.S. Department of State (DOS), regarding the Environmental Impact Statement (EIS) for the Keystone XL pipeline project, the DOS assumes "that the average crude oil flowing through the pipeline would consist of about 50% Western Canadian Select (dilbit) and 50% Suncor Synthetic A (SCO)". The Canadian Society of Unconventional Resources (CSUR) identifies four types of oil: conventional oil, tight oil, oil shale, and heavy oil like WCS.

Volumes

By September 2014 Canada was exporting 3,026,000 bpd to the United States. This increased to its peak of 3,789,000 bpd in September 2015 and 3,401,000 bpd in October 2015, which represents 99% of Canadian petroleum exports. Threshold volumes of WCS in 2010 were only approximately 250,000 b/d. On May 1, 2016, a devastating wildfire ignited and swept through Fort McMurray, resulting in the largest wildfire evacuation in Albertan history. As the fires progressed north of Fort McMurray, "oil sands production companies operating near Fort McMurray either shut down completely or operated at reduced rates". By June 8, 2016, the U.S. Department of Energy estimated that "disruptions to oil production averaged about 0.8 million b/d in May, with a daily peak of more than 1.1 million b/d. Although projects are slowly restarting as fires subside, it may take weeks for production to return to previous levels." The Fort McMurray fires did not significantly affect the price of WCS. "According to EIA's February Short-Term Energy Outlook, production of petroleum and other liquids in Canada, which totaled 4.5 million barrels per day (b/d) in 2015, is expected to average 4.6 million b/d in 2016 and 4.8 million b/d in 2017. This increase is driven by growth in oil sands production of about 300,000 b/d by the end of 2017, which is partially offset by a decline in conventional oil production." The EIA claims that while oil sands projects may be operating at a loss, these projects are able to "withstand volatility in crude oil prices". It would cost more to shut a project down—from $500 million to $1 billion than to operate at a loss.

Comparative cost of production

In their May 2019 comparison of the "cost of supply curve update" in which the Norway-based Rystad Energy—an "independent energy research and consultancy"—ranked the "world's total recoverable liquid resources by their breakeven price", Rystad reported that the average breakeven price for oil from the oil sands was US$83 in 2019, making it the most expensive to produce, compared to all other "significant oil producing regions" in the world. The International Energy Agency made similar comparisons. In 2016, the Wall Street Journal reported that the United Kingdom at US$44.33, Brazil at US$34.99, Nigeria at US$28.99, Venezuela at US$27.62, and Canada at US$26.64 had the highest production costs. Saudi Arabia at US$8.98, Iran at US$9.08, Iraq at US$10.57, had the cheapest. An earlier 2014 comparison, based on the Scotiabank Equity Research and Scotiabank Economics report that was published November 28, 2014, compared the cost of cumulative crude oil production.

This analysis "excludes" 'up-front' costs (initial land acquisition, seismic and infrastructure costs): treats 'up-front' costs as 'sunk'. Rough estimate of 'up-front' costs = US$5–10 per barrel, though wide regional differences exist. Includes royalties, which are more advantageous in Alberta and Saskatchewan." The Weighted average of US$60-61 includes existing Integrated Oil Sands at C$53 per barrel."

Lowering production costs

WCS is very expensive to produce. There are exceptions, such as Cenovus Energy's Christina Lake facility which produces some of the lowest-cost barrels in the industry. In June 2012 Fairfield, Connecticut-based General Electric (GE), with its focus on international markets, opened its Global Innovation Centre in downtown Calgary with "130 privately employed scientists and engineers", the "first of its kind in North America", and the second in the world. GE's first Global Innovation centre is in Chengdu, China, which also opened in June 2012. GE's Innovation Centre is "attempting to embed innovation directly into the architecture". James Cleland, general manager of the Heavy Oil Centre for Excellence, which makes up one-third of the Global Innovation Centre, said, "Some of the toughest challenges we have today are around environmental issues and cost escalations... The oil sands would be rebranded as eco-friendly oil or something like that; basically to have changed the game." GE's thermal evaporation technology developed in the 1980s for use in desalination plants and the power generation industry was repurposed in 1999 to improve on the water-intensive Steam Assisted Gravity Drainage (SAGD) method used to extract bitumen from the Athabasca Oil Sands. In 1999 and 2002 Petro-Canada's MacKay River facility was the first to install 1999 and 2002 GE SAGD zero-liquid discharge (ZLD) systems using a combination of the new evaporative technology and crystallizer system in which all the water was recycled and only solids were discharged off site. This new evaporative technology began to replace older water treatment techniques employed by SAGD facilities, which involved the use of warm lime softening to remove silica and magnesium and weak acid cation ion exchange used to remove calcium. Cleland describes how Suncor Energy is investigating the strategy of replication where engineers design an "ideal" small-capacity SAGD plant with a 400 to 600 b/d capacity that can be replicated through "successive phases of construction" with cost-saving "cookie cutter", "repeatable" elements.

Price of crude oil

The price of petroleum as quoted in news in North America, generally refers to the WTI Cushing Crude Oil Spot Price per barrel (159 liters) of either WTI/light crude as traded on the New York Mercantile Exchange (NYMEX) for delivery at Cushing, Oklahoma, or of Brent as traded on the Intercontinental Exchange (ICE, into which the International Petroleum Exchange has been incorporated) for delivery at Sullom Voe. West Texas Intermediate (WTI), also known as Texas Light Sweet, is a type of crude oil used as a benchmark in oil pricing and the underlying commodity of New York Mercantile Exchange's oil futures contracts. WTI is a light crude oil, lighter than Brent Crude oil. It contains approximately 0.24% sulphur, rating it a sweet crude, sweeter than Brent. Its properties and production site make it ideal for being refined in the United States, primarily in the Midwest and Gulf Coast (USGC) regions. WTI has an API gravity of around 39.6 (specific gravity approx. 0.827). Cushing, Oklahoma, a major oil supply hub connecting oil suppliers to the Gulf Coast, has become the most significant trading hub for crude oil in North America. The National Bank of Canada's Tim Simard, argued that WCS is the benchmark for those buying shares in Canadian oil sands companies, such as Canadian Natural Resources, Cenovus Energy Northern Blizzard Resources, Pengrowth Energy, or Twin Butte Energy or others where a "big part of their exposure will be to heavy crude”. The price of Western Canadian Select (WCS) crude oil (petroleum) per barrel suffers a differential against West Texas Intermediate (WTI) as traded on the New York Mercantile Exchange (NYMEX) as published by Bloomberg Media, which itself has a discount versus London-traded Brent oil. This is based on data on prices and differentials from Canadian Natural Resources (TSX:CNQ)(NYSE:CNQ). "West Texas Intermediate Crude oil (WTI) is a benchmark crude oil for the North American market, and Edmonton Par and Western Canadian Select (WCS) are benchmarks crude oils for the Canadian market. Both Edmonton Par and WTI are high-quality low sulphur crude oils with API gravity levels of around 40°. In contrast, WCS is a heavy crude oil with an API gravity level of 20.5°." West Texas Intermediate WTI is a sweet, light crude oil, with an API gravity of around 39.6 and a specific gravity of about 0.827, which is lighter than Brent crude. It contains about 0.24% sulphur thus is rated as a sweet crude oil (having less than 0.5% sulphur), sweeter than Brent which has 0.37% sulphur. WTI is refined mostly in the Midwest and Gulf Coast regions in the U.S., since it is high-quality fuel and is produced within the country. "WCS prices at a discount to WTI because it is a lower quality crude (3.51Wt. percent sulphur and 20.5 API gravity) and because of a transportation differential. The price of WCS is currently set at the U.S. Gulf Coast. It costs approximately $10/bbl for a barrel of crude to be transported from Alberta to the U.S. Gulf Coast, accounting for at least $10/bbl of the WTI-WCS discount. Pipeline constraints can also cause the transportation differential to rise significantly. By March 2015, with the price of Ice Brent at US$60.55, and WTI at US$51.48, up US$1.10 from the previous day, WCS also rose US$1.20 to US$37.23 with a WTI-WCS price differential of US$14.25. By June 2, 2015, with Brent at US$64.88/bbl, WTI at US$60.19/bbl and WCS at US$52.39/bbl. According to the Financial Post, most Canadian investors continued to quote the price of WTI and not WCS even though many Canadian oil sands producers sell at WCS prices, because WCS "has always lacked the transparency and liquidity necessary to make it a household name with investors in the country". In 2014 Auspice created the Canadian Crude Excess Return Index to gauge WCS futures. Tim Simard, head of commodities at the National Bank of Canada, claims "WCS has "some interesting different fundamental attributes than the conventional WTI barrel." WCS has "better transparency and broader participation" than Maya. However, he explained that in 2015 "one of the only ways to take a position in oil is to use an ETF that is tied to WTI." Simard claims that when the global price of oil is lower, for example, "the first barrels to be turned off in a low-price environment are heavy barrels" making WCS "closer to the floor" than WTI. In order to address the transparency and liquidity issues facing WCS, Auspice created the Canadian Crude Index (CCI), which serves as a benchmark for oil produced in Canada. The CCI allows investors to track the price, risk and volatility of the Canadian commodity. The CCI can be used to identify opportunities to speculate outright on the price of Canadian crude oil or in conjunction with West Texas Intermediate (WTI) to put on a spread trade which could represent the differential between the two. The CCI provides a fixed price reference for Canadian crude oil by targeting an exposure that represents a three-month rolling position in crude oil. To create a price representative of Canadian crude the index uses two futures contracts: A fixed-price contract, which represents the price of crude oil at Cushing, Oklahoma, and a basis differential contract, which represents the difference in price between Cushing and Hardisty, Alberta. Both contracts are priced in U.S. dollars per barrel. Together, these create a fixed price for Canadian crude oil, and provide an accessible and transparent index to serve as a benchmark to build investable products upon, and could ultimately increase its demand to global markets. In the spring of 2015, a veteran journalist specializing in energy and finance, Jeffrey Jones, described how the price of WCS was briefly the "hottest commodity" with its price surging over 70% "outpacing West Texas intermediate (WTI), Brent" and "quietly" became the "hottest commodity in North American energy". In April 2015, Enbridge filled a "new 570,000-barrel-a-day pipeline". A May 2015 TD Securities report provides some of the factors contributing the WCS price gains as "normal seasonal strength driven by demand for the thick crude to make asphalt as road paving", improvements to WCS access to various U.S. markets in spite of pipeline impediments, five-year high production levels and high heavy oil demand in U.S. refineries particularly in the US Midwest, a key market for WCS. By September 9, 2015, the price of WCS was US$32.52 and the WTI-WCS differential was differential US$13.35. It plunged to US$14 a barrel, a record low, in November 2018 but rose to US$28 by December 24. On March 30, 2020, the combination of the COVID-19 pandemic and the 2020 Russia–Saudi Arabia oil price war, caused the price of oil to drop to below $30 a barrel.