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Top of the World - Is 2023 the Peak for Re-Exports of Canadian Heavy Crude Oil from the Gulf Coast?

Thanks to expanding heavy crude oil production in Western Canada’s oil sands in recent years and increased pipeline access from the region to the U.S. Gulf Coast, re-exports of Canadian heavy crude from Gulf Coast terminals set a record in 2023. With additional production gains on tap in the oil sands, it might seem natural to think that another re-export record is in the works for 2024. However, assuming the much-delayed Trans Mountain Expansion Project (TMX) does indeed start up this year — offering a vastly expanded West Coast outlet for oil sands production — last year’s re-export high might end up being a peak, at least for the number of years it takes for growth in Western Canadian heavy crude production to exceed the capacity of the TMX expansion. In today’s RBN blog, we take a closer look at TMX’s likely impact on Gulf Coast re-exports. 

Western Canada’s heavy crude oil production, primarily from the oil sands of Alberta, has long sought — and in recent years found — access to tidewater in much larger volumes for shipment to countries other than the U.S. These re-exports — moved from Canada to the U.S., then exported again to other nations — have become an integral part of the Canadian crude oil export picture.

It’s not that Canada has never been able to directly export crude oil from its own shores, as this has been the case for Canada’s East Coast offshore production (see I Am a Rock) since the 1990s in the form of medium and light crude oil to Europe, and modest amounts of light and heavy crude oil from its West Coast for several decades, utilizing the existing (but soon to be greatly expanded) Trans Mountain Pipeline. The problem was that with Alberta’s oil sands-related heavy crude oil production steadily increasing in recent years and no ready incremental access to export capacity from the West Coast, that heavy crude oil had to go somewhere.

With refineries in the Midwest effectively saturated with Canadian heavy barrels, more crude has found its way to the Gulf Coast over the past few years for use by refineries in the region and, eventually, for rising exports from the Gulf Coast. This came about from a combination of increased pipeline connections from Alberta to the U.S. Midwest (see We’re Here for a Good Time) and more connections from the Midwest to the Gulf Coast and within the Gulf Coast region (see Carefree Highway and Oil From the North Country for more details).

Re-Exports of Canadian Heavy Crude Oil by Destination from the U.S. Gulf Coast

Figure 1: Re-Exports of Canadian Heavy Crude Oil by Destination from the U.S. Gulf Coast.

Source: U.S. Census Bureau 

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