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Comin' to America, Part 5 - Imports Remain Key to Rockies and West Coast Refiners' Crude Slates

PADDs 4 and 5 — the Rockies and the West Coast regions, respectively — are each outliers in the U.S. refining sector. Refineries in the Rockies, for example, are generally far smaller than those in other PADDs and, due to pipeline flows, source their crude oil from either Western Canada, the Bakken, or in-region production, including the Niobrara and Utah’s Uinta Basin. West Coast refineries, in turn, have no crude oil pipeline links with U.S. points to the east, and depend on a mix of imported crude from Canada, Latin America, and the Middle East, as well as domestic oil from California, Alaska, and rail receipts. Today, we conclude a series on region-by-region crude oil imports and refinery crude slates with a look at PADDs 4 and 5.

As we said in Part 1, 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 imports 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.

Part 2 focused on PADD 1 — the East Coast — which not only produces very little 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. PADD 1’s sources of oil supply shifted 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. PADD 2 refineries for decades depended on a mix of domestic crude and imports from overseas, but since 2010 the region has nearly tripled its 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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