Based on the latest data from the U.S. Census Bureau, re-exports of Canadian heavy crude oil from the U.S. Gulf Coast remain near record levels as of June 2023. Over the past four months, re-exports have been above 200 Mb/d, with March 2023 marking a record high of 315 Mb/d, while the latest data for June is a strong 246 Mb/d (top chart below). While reflecting improved pipeline access for Canadian heavy crude to the Gulf Coast in the past couple of years and, more recently, attractive heavy crude oil prices, the single largest reason for the surge in re-exports of Canadian heavy oil from the Gulf is more tied to increased buying by nations that have seen a reduction in their crude oil imports from some nations as a result of production cuts by OPEC+ nations. In this context, re-exports refers to crude oil that is sourced and exported from Canada to the U.S. and then exported from the U.S. to other nations.
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Carefree Highway - Canadian Crude 'Re-Exports' from the USGC Surge on Pipeline Access, Overseas Demand
For many years now, the U.S. has been buying — and piping or railing in — virtually all of the crude oil Canada has been exporting, in part because Canadian producers have only very limited access to coastal ports. More recently, greater pipeline access from the Alberta oil sands to the U.S. Gulf Coast (USGC) has created an attractive pathway — a “Carefree Highway,” if you will — for Canadian crude oil to be “re-exported” to overseas customers. This year, much stronger international demand has sent re-export volumes to record highs — and provided Alberta producers very attractive price differentials for their oil sands crude. That overseas demand appears to be sustainable, but with the looming startup of the 590-Mb/d Trans Mountain Expansion Project (TMX), which will increase the capacity of the Trans Mountain Pipeline system to 890 Mb/d and enable much more Alberta crude to be exported from docks in British Columbia, the re-export surge from the USGC may be in for a pullback, as we discuss in today’s RBN blog.
Comments
Great article! Is there an update? Who are the sellers that are re-exporting?
Best
Jeff