Canadian crude exports to the US Gulf Coast more than doubled in
2015 while non-US exports tumbled, according to the latest data from
Canada's National Energy Board.
Bolstered by new pipeline connectivity, Canadian exports to the US
Gulf Coast increased to about 389,600 b/d from about 186,000 b/d in
2014. Nearly 99% of that increase, or around 201,000 b/d, was heavy
crude, for which many Gulf Coast refineries have a healthy appetite.
Canada's total exports in 2015 were 3.035 million b/d, up 6.4% from
2.853 million b/d in 2014, according to NEB data. The country's
total production in 2015 was 3.871 million b/d, according to initial
data from NEB, up 3.1% from 3.753 million b/d in 2014.
While the bulk of the pipeline headlines in 2015 were focused on the
bitter political fight over and rejection of TransCanada's Keystone
XL, now tied up in the US court system, other expansions allowed
Canada's presence in the US Gulf to blossom.
NEB market analyst Melissa Merrick credited three pipeline
projects with the bulk of the boost -- Seaway, Southern Access, and
Cushing Marketlink -- which added a combined 1.85 million b/d of
throughput capacity.
"It was understood that if the pipelines would allow Canada to get
heavies into US Gulf Coast then we would see more moving into
market," Merrick said. "Crude oil is going to go where it makes most
economic sense." The US Gulf Coast market is expected to continue to
be a target for Canadian exports, but similar gains aren't expected
in 2016.
"Volumes could go up but it's not going to double again," said Beth
Lau, manager of oil supply and transportation for the Canadian
Association of Petroleum Producers. "We just don't have the pipeline
capacity there."
Non-US exports fell about 54,000 b/d to about 25,500 b/d in 2015.
Merrick said the majority of that drop was a decrease in exports of
the East Canadian offshore crudes -- Hibernia, Terra Nova and White
Rose.
Production from those maturing fields fell 44,322 b/d in 2015,
according to the Canada-Newfoundland and Labrador Offshore Petroleum
Board, but extension projects and the startup of a new field by
ExxonMobil should breathe new life into the declining region in
2016.
More of the Eastern Canadian grades were also absorbed by Canadian
and US refiners on the Atlantic coast. As the Brent-WTI spread
narrowed in 2015, less Bakken was railed eastward and that void was
filled by Eastern Canadian and West African crudes.
For example, the outright premium of Hibernia over Bakken delivered
into the US Atlantic Coast, minus transportation costs, was roughly
$10.26/b on February 27, 2015. Hibernia flipped to a discount around
September and has mostly stayed cheaper since, reaching a discount
of $4.05/b on January 21.
The only US region to receive less Canadian oil in 2015 than 2014
was the East Coast, which saw a 13,400 b/d decrease to 230,300 b/d.
Light oils, such as the Eastern Canadian grades increased but
heavies sharply fell for an overall decline.
All other regions grew, although not as much as the Gulf Coast.
Exports to the Rockies grew nearly 19,000 b/d to 259,900 b/d.
Exports to the US West Coast were up 12,500 b/d to 213,700 b/d.
The largest destination for Canadian exports continues to be the US
Midwest, which had a modest increase of 14,000 b/d to 1.9159 million
b/d. The US Midwest receives more than 67% of all Canadian exports.
--Allen Reed,
allen.reed@platts.com
--Edited by Alisdair Bowles,
alisdair.bowles@platts.com
© 2016 Platts, The McGraw-Hill Companies Inc. All rights reserved.
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