In 2013, refineries in Eastern Canada imported 642 Mb/d of light crude. Today there are no pipelines connecting western Canadian crude supplies to the East Coast. By the end of 2014 the Enbridge Line 9 pipeline will link Canadian supplies from Alberta and Bakken supplies from North Dakota to refineries in Montreal. By 2018 the Energy East pipeline could be flowing 1.1 MMb/d to Canada’s Atlantic Coast and beyond. Today we begin a new series on eastern Canadian transport options by reviewing existing crude supply.

With western Canadian crude production growing rapidly and pipeline capacity to the US continuing to be constrained, the attraction to producers of an alternative route to international markets outside the US via the Pacific or Atlantic coasts is obvious. And there are plenty of projects on the drawing board to accomplish just that. But west coast pipeline plans such as the Enbridge Northern Gateway and the Kinder Morgan TransMountain Express expansion have run into permitting delays (see West Coast Pipe Dreams). A more ambitious plan to convert part of TransCanada’s Mainline natural gas pipeline to crude and extend it to the Atlantic Coast has gained shipper support and is going through the permitting process (see What Becomes of the Empty Pipelines). However, that project – known as Energy East – is unlikely to be in service before 2018. In the meantime, more modest proposals by Enbridge to expand capacity and reverse existing pipelines to increase crude flows to eastern Canada are almost complete and should be delivering oil from Alberta to Montreal by the end of the year. This blog series looks at the impact of Enbridge pipeline expansion projects to access markets in eastern Canada and the US. This first episode looks at the evolving supply situation for Eastern Canadian refineries.

There are 9 refineries in Eastern Canada with combined capacity of about 1.3 MMb/d (see Table #1 below).  Although Canada produces far more crude than it consumes, much of this output is heavy crude from Western Canada.  Eastern refineries are not configured to process this type of crude but instead mostly consume light crude supplied from a mixture of offshore Atlantic seaboard production, imports from international suppliers and increasingly – imports of light crude from the US. Offshore eastern Canadian production averaged 240 Mb/d in 2013 and East Coast refiners processed about 47 percent of that - mostly light sweet crude. Eastern refiners have also traditionally processed imports from the Atlantic basin – particularly light crudes from West Africa.  But imports of US crude into Canada – primarily used to supply Eastern Canadian refineries reached a record 268 Mb/d in April 2014, double the level a year earlier, according to the Energy Information Administration (EIA). As we described last December, eastern Canadian refiners have been importing US crude even as exports of local offshore production have increased (see The Strange Canadian Crude Export-Import Anomaly).