Canada’s ability to export our responsibly produced heavy crude oil to international markets has long been limited by lack of pipeline capacity from the oil sands region to coastal tanker loading facilities. But that situation has changed thanks to new pipeline capacity connecting Canadian producers to the U.S. Gulf Coast.
In 2021, Canadian exports from the U.S. Gulf Coast averaged more than 180,000 barrels per day (b/d) and reached nearly 300,000 b/d in December. That’s up from an average of 70,000 b/d in 2019 and 2020. The accelerated pace of export is expected to continue in 2022 as international supplies of heavy crude remain tight.
More Canadian Oil Exported to International Markets
To date, most Canadian oil headed into the U.S. has been destined for U.S. refineries in the Midwest and Gulf Coast areas. But with completion of Enbridge’s Line 3 replacement and flow reversal on the Capline pipeline in the U.S., more Canadian oil is now being exported to international markets instead of being refined in the U.S.
Read more: How exports drive Canada’s economy
These increased Canadian oil exports are primarily going to India, China and South Korea, partially filling the gap caused by faltering oil exports from Venezuela, which is under U.S. sanctions. Low production from OPEC countries is also opening new market opportunities for Canadian oil.
Trans Mountain Offers Advantages
Although exports are proceeding via the Gulf Coast, the all-Canada Trans Mountain Expansion (TMX) pipeline offers needed capacity that ensures a secure and reliable way to move oil from Alberta to the West Coast and beyond.
TMX will better serve Asian markets. Tankers from the Gulf Coast bound for Asia must travel through the Panama Canal, whereas shipping time and distance from Canada’s West Coast to Asia-Pacific markets is much shorter – which in turn decreases emissions form marine transport.
Cost is Another Factor
Cost is another factor. Shipping oil over the distance from Alberta to the Gulf Coast is expensive, so Canadian producers ultimately get less return for their exported oil. While TMX covers a distance of about 1,200 km, that’s still vastly shorter than the long pipeline journey to Louisiana.
And there’s more good news: having more export options means Canada can trade directly with international customers and chose markets offering better prices.
Read more: Enbridge says Line 3 in-service date is near