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Updated May 2022

 

Figure S1.4 shows historical and forecast prices for Western Canadian Select (WCS).

Summary

The average annual price of WCS in 2021 was US$54.90 per barrel (bbl), an increase of 105 per cent from 2020.

The base-case price for WCS is projected to increase to US$81.00/bbl in 2022, dropping to US$69.00/bbl in 2023 and US$63.00/bbl in 2024. From 2025 onwards, the price is projected to increase, reaching US$70.45/bbl by 2031.

Under the WCS low- and high-price cases, similar factors affecting the West Texas Intermediate (WTI) forecast are expected to influence the WCS forecast.

The low-price case forecast for WCS is US$44.09/bbl in 2022, US$37.11/bbl in 2023, and US$34.06/bbl by 2031.
The high-price case forecast for WCS is US$148.80/bbl in 2022, US$128.31/bbl in 2023, and US$145.72/bbl by 2031.

The WCS price is expected to follow WTI trend but remain lower due to quality differences and transportation costs.

In 2021

Price differentials: The WTI-WCS price differential increased slightly from US$12.60/bbl in 2020 to US$12.78/bbl in 2021. The differential remained relatively stable throughout 2021 compared with 2020.

Crude-by-rail: The volume of crude oil moved by rail decreased by 16 per cent from 63 million barrels in 2020 to 53 million barrels in 2021.

Forecast for 2022 to 2031

Price differentials and market access: In 2022, the WTI-WCS price differential is projected to average US$14.00/bbl. From 2022 until 2028, it is expected that factors that widen the differential (competition on pipeline export capacity and an increased supply of crude oil globally) will balance the factors that narrow the differential (less heavy oil output from Mexico and Venezuela) keeping the differential at US$14.00/bbl. The WTI-WCS price differential is expected to begin increasing in 2029 reaching US$18.00/bbl in 2031 as production approaches the pipeline takeaway capacity.

U.S. Gulf Coast demand: U.S.-imposed trade sanctions on Venezuela are still in effect, and Mexico announced plans to stop exporting crude oil in 2023. Alberta's producers will continue to take advantage of strengthening demand for WCS crude from U.S. Gulf Coast refineries designed for heavy crude oil feedstock.

Low- and High-Price Cases

The low- and high-price cases reflect near- and long-term volatility in the price of WCS. Both cases were estimated using the 90 per cent confidence interval. Similar factors that have been captured in the WTI forecast are expected to influence the WCS low- and high-price cases. The following additional factors affect the WTI-WCS price differential:

Low-price case:

  • Production of WCS vastly exceeds storage and takeaway capacity.
  • Global production of competing heavy crude oils increases.

High-price case:

  • Pipeline and rail capacity restrictions are alleviated.
  • Complex refineries increase their demand for WCS.

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