Market Snapshot: Appetite for Domestic Crude Oil Increasing at Canadian Refineries
Release Date: 2015-03-19
Refineries in Canada use crude oil from domestic and foreign sources, depending on their location. In recent years, some Canadian refineries have transitioned from offshore imports to western Canadian and U.S. produced oil.
According to Statistics Canada, domestic crude oil received by Canadian refineries increased 10 per cent in the first 11 months of 2014 compared to 2013, while imported crude oil fell 15 per cent. There was a seven per cent net reduction of Canadian refining capacity over that period, yet, total crude oil processed at the refineries was practically unchanged at 1.7 million b/d. Of the crude oil that Canada does import, the share from the U.S. has increased from 20 percent of the total imports in 2013 to over half of imports in 2014.
Crude oil sourced in North America has become more attractive to refiners in recent years due to discounted prices compared to crude oil produced offshore. More details on the changing sources of Canadian crude oil imports can be found in this Market Snapshot from November 2014.
Figure Source and Description
Source: Statistics Canada
Description: This bar chart depicts receipts of domestic and imported crude oil at Canadian refineries. Receipts of imported crude oil were relatively stable from 2010 to 2012 before declining at an average rate of 14 per cent per year in 2013 and 2014. Domestic crude oil used at Canadian refineries is fairly steady from 2010 to 2012 at approximately 1,000 thousand barrels per day before increasing to nearly 1,200 thousand barrels per day in 2014.
As western Canadian refineries rely mostly on domestically sourced crude oil, the displacement of imports has been in eastern Canada. In Ontario, domestic supply from western Canada shipped by pipeline fully displaced imports in early 2014.
The Atlantic Provinces and Quebec do not yet have pipeline access to western Canadian oil and still process significant amounts of imported oil. However, the development of rail offloading facilities at eastern Canadian refineries, and potential new pipeline projects, could allow more Canadian production to be delivered to these refineries.
In Quebec, western Canadian oil started to arrive by in significant quantities in late 2012, and started to displace overseas imports as well as eastern Canadian crude oil. The start-up of Enbridge’s Line 9 reversal project, which would flow from Sarnia, Ontario to Montreal, Quebec, would allow pipeline deliveries of western Canadian crude oil to Quebec.
In the Atlantic Provinces, the proportion of domestic and foreign crude oil consumed has not changed significantly. However, in 2013 and 2014, refineries in the region increasingly used western Canadian crude oil while crude oil produced in eastern Canada was shipped to other markets.
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