Back in 2005, marine terminals along the Gulf Coast were importing more than 6 MMb/d of crude oil, mostly to feed refineries within PADD 3 but also to pipe or barge north to PADD 2. By 2019, with U.S. shale production finishing up a decade-long rise, imports to the Gulf Coast had declined to less than 1.7 MMb/d. In COVID-impacted 2020, imports sagged, soared, then sagged again, recently settling in at about 1.2 MMb/d, their lowest level in — wait for it — 35 years! The 80% decline in Gulf Coast oil imports since the mid-2000s was made possible in part by big changes in the crude slates at refineries in Texas, Louisiana, and other PADD 3 states, mostly involving the swapping out of light sweet crude from overseas with favorably priced light sweet crude from the Permian and other U.S. shale plays. Today, we look at imports into PADD 3, the home of more than half of the U.S.’s total refining capacity.
In this blog series, we’ve been reviewing the changing face of U.S. crude oil imports in each of the five PADDs. In Part 1, we said that the Shale Revolution, combined with the development of the oil sands and other hydrocarbon resources in Western Canada, led to a dramatic decline in U.S. oil receipts from OPEC countries in particular and, to a lesser extent, from non-OPEC countries (other than Canada), and a big increase in imports from Canada. In 2005, the U.S. imported an average of 4.8 MMb/d from OPEC, 1.6 MMb/d from Canada, and 3.7 MMb/d from other non-OPEC countries, including 1.6 MMb/d from Mexico, according to the Energy Information Administration (EIA). This situation is far different in 2020. In the first nine months of this year, imports from OPEC averaged about 930 Mb/d, while imports from Canada averaged 3.6 MMb/d, and imports from other non-OPEC countries averaged 1.5 MMb/d — Mexico’s slice of that averaged about 690 Mb/d.
In Part 2, we zeroed in on the East Coast, which not only produces no crude oil but has almost no oil pipelines. That means that nearly all of the oil refined in PADD 1 — domestic or imported — needs to be delivered by railroad tank cars or ships. We noted that East Coast refinery demand for oil averaged around 1.1 MMb/d for most of the past decade, but has plummeted by half (to less than 600 Mb/d) this year. As for PADD 1’s sources of oil supply, that jumped around through the 2010s, from almost 100% imports in 2010-12 to a mix of imports and railed-in Bakken crude in 2013-15, then back to a preponderance of imports in the latter years of the decade. In Part 3, we looked at the Midwest, whose refineries for decades depended on a mix of domestic crude and imports from overseas. Since 2010, refineries in PADD 2 have nearly tripled their imports of Canadian crude — most of it the heavy sour variety — and invested billions of dollars in cokers and other equipment so they can process that low-API, high-sulfur oil into valuable products like gasoline, low-sulfur diesel, and jet fuel.
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