Canadian crude exports to the US Gulf Coast more than doubled in 2015 while non-US exports tumbled, according to the latest data from Canada's National Energy Board.
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Bolstered by new pipeline connectivity, Canadian exports to the US Gulf Coast increased to about 389,600 b/d from about 186,000 b/d in 2014. Nearly 99% of that increase, or around 201,000 b/d, was heavy crude, for which many Gulf Coast refineries have a healthy appetite.
Canada's total exports in 2015 were 3.035 million b/d, up 6.4% from 2.853 million b/d in 2014, according to NEB data. The country's total production in 2015 was 3.871 million b/d, according to initial data from NEB, up 3.1% from 3.753 million b/d in 2014.
While the bulk of the pipeline headlines in 2015 were focused on the bitter political fight over and rejection of TransCanada's Keystone XL, now tied up in the US court system, other expansions allowed Canada's presence in the US Gulf to blossom.
NEB market analyst Melissa Merrick credited three pipeline projects with the bulk of the boost -- Seaway, Southern Access, and Cushing Marketlink -- which added a combined 1.85 million b/d of throughput capacity.
"It was understood that if the pipelines would allow Canada to get heavies into US Gulf Coast then we would see more moving into market," Merrick said. "Crude oil is going to go where it makes most economic sense." The US Gulf Coast market is expected to continue to be a target for Canadian exports, but similar gains aren't expected in 2016.
"Volumes could go up but it's not going to double again," said Beth Lau, manager of oil supply and transportation for the Canadian Association of Petroleum Producers. "We just don't have the pipeline capacity there."
Non-US exports fell about 54,000 b/d to about 25,500 b/d in 2015. Merrick said the majority of that drop was a decrease in exports of the East Canadian offshore crudes -- Hibernia, Terra Nova and White Rose.
Production from those maturing fields fell 44,322 b/d in 2015, according to the Canada-Newfoundland and Labrador Offshore Petroleum Board, but extension projects and the startup of a new field by ExxonMobil should breathe new life into the declining region in 2016.
More of the Eastern Canadian grades were also absorbed by Canadian and US refiners on the Atlantic coast. As the Brent-WTI spread narrowed in 2015, less Bakken was railed eastward and that void was filled by Eastern Canadian and West African crudes.
For example, the outright premium of Hibernia over Bakken delivered into the US Atlantic Coast, minus transportation costs, was roughly $10.26/b on February 27, 2015. Hibernia flipped to a discount around September and has mostly stayed cheaper since, reaching a discount of $4.05/b on January 21.
The only US region to receive less Canadian oil in 2015 than 2014 was the East Coast, which saw a 13,400 b/d decrease to 230,300 b/d. Light oils, such as the Eastern Canadian grades increased but heavies sharply fell for an overall decline.
All other regions grew, although not as much as the Gulf Coast. Exports to the Rockies grew nearly 19,000 b/d to 259,900 b/d. Exports to the US West Coast were up 12,500 b/d to 213,700 b/d.
The largest destination for Canadian exports continues to be the US Midwest, which had a modest increase of 14,000 b/d to 1.9159 million b/d. The US Midwest receives more than 67% of all Canadian exports.