

But that's not a bad thing, according to a new study from the energy analysts at IHS CERA.

In a report released late Wednesday, the analysts conclude that there's a bigger economic boost from processing the raw bitumen harvested from Canada's oil sands on the Gulf Coast, instead of first upgrading it into lighter synthetic crude oil locally.

Building new facilities in Canada to upgrade the tarlike bitumen pulled from Alberta is a costly investment that no longer pays off, especially since many refineries in Texas and Louisiana are already capable of processing the bitumen.

“Investors do not get a reasonable return on the billions they must commit for a bitumen processing facility,” said Jackie Forrest, IHS senior director.

As hard as a hockey puck at 50 degrees, bitumen is an extra-heavy crude oil that must be processed significantly before it can be transformed into diesel, gasoline and other refined products. In the early years of Canadian oil sands development, producers upgraded the bitumen into a synthetic light crude oil before selling it to refiners.

Now, most new oil sands projects are being developed without local facilities for processing the bitumen, since the upgraded light product only nets a slight price benefit in the market.

Instead, Canadian oil sands producers are blending the harvested bitumen with condensate, allowing it to flow through pipelines to refineries capable of converting it into lighter products themselves.

That change in practice means that instead of investing in upgrades, companies can devote their capital to increasing oil sands production, leading to more permanent jobs in the region and better tax revenue for Canada, the IHS CERA report concluded.

Energy companies already are using rail and existing pipelines to transport Canadian crude to the Gulf Coast, but TransCanada Corp.'s proposed Keystone XL pipeline would allow more of the product to make it to the Southern refineries.

Environmentalists and landowners who oppose Keystone XL cite the potential for spills all along the pipeline route and say the diluted bitumen is more corrosive and harder to clean up than alternatives.

In a petition filed with the federal government Wednesday, a coalition of environmentalists and landowners asked regulators to develop new mandates for oil sands pipelines.