The U.S. imports almost three times as much crude from Canada than it does from the Persian Gulf
Even without the 800 MBOPD capacity of TransCanada’s Keystone XL pipeline, crude oil imports from Canada make up 45% of crude shipped into the United States. As of August, imports from Canada were almost three times as much as imports from all of the countries in the Persian Gulf combined, according to the Energy Information Administration (EIA).
The United States has been the primary destination for Canada’s crude oil exports since the early 2000s. Based on data through the first half of this year from Canada’s National Energy Board, 99% of Canada’s crude oil exports were sent to the United States. More than half of these volumes went to petroleum refineries in the Midwest (Petroleum Administration for Defense District, PADD 2).
EIA estimates only 3% of Canadian crude comes by rail, rest travels south via existing pipelines
While data from the U.S. Department of Commerce does not specify the method used to import crude from Canada, the EIA believes it is reasonable to expect that most of the imports came through pipeline systems such as Enbridge (ticker: ENB) Mainline, Kinder Morgan (ticker: KMI) Trans Mountain, Spectra (ticker: SEP) Express, and TransCanada Keystone. The EIA estimates that only about 3% of crude oil imports from Canada reach the U.S. by rail.
The United States first imported crude oil by rail from Canada in October 2010, with the first full year of shipments by rail totaling 2,000 barrels per day (b/d) in 2011. Rail shipments continued to increase through 2014, when they reached 140,000 b/d, but they have decreased in 2015. Because transporting crude oil by rail is generally more expensive than transporting it by pipeline, rail is used only when appropriate cost differentials exist or where pipeline infrastructure is insufficient.
The large quantities of crude traveling to the U.S. via pipeline presents an interesting point of perspective when looking at the Obama Administration’s recent decision to formally oppose the Keystone XL pipeline from Canada due to environmental concerns. With increasing levels of crude flowing south by pipeline, it is interesting that Keystone XL became the target of seven years of regulatory blocks and vocal outcry from environmental groups.
Tim McMillan, President and CEO of the Canadian Association of Petroleum Producers (CAPP), discussed the potential aftereffects of the Obama administration’s decision to reject TransCanada’s application to build the Keystone XL pipeline with Oil & Gas 360® in this exclusive interview.