2016 Continued Trend in U.S., Canada Energy Trade

tanker

By MarEx 2017-03-03 17:45:25

Based on the latest annual data from the U.S. Census Bureau, energy accounted for about five percent of the value of all U.S. exports to Canada and more than 19 percent of the value of all U.S. imports from Canada in 2016.

Canada is the largest energy trading partner of the United States. While the value of bilateral energy trade with Canada has varied over past decade, driven primarily by changes in prices of oil and natural gas, the overall structure of bilateral energy trade flows has changed relatively little, and U.S. energy imports from Canada has exceeded U.S. energy exports to Canada by a large margin.

In 2015 and 2016, the value of U.S. energy imports from Canada and the value of U.S. energy exports to Canada both fell, reflecting declining prices of key commodities such as crude oil, petroleum products, and natural gas. For 2016, the value of U.S. energy imports from Canada was $53 billion, while the value of U.S. energy exports to Canada was $14 billion.

Crude oil makes up most U.S. energy imports from Canada, averaging 3.3 million barrels per day (b/d) in 2016. Canada is by far the largest source of U.S. crude oil imports, providing 41 percent of total U.S. crude oil imports in 2016. Sales of Canadian crude oil to the U.S. reached more than $83 billion in 2014. As oil prices fell in 2015 and 2016, the value of U.S. crude oil imports from Canada fell from $47 billion in 2015 to $36 billion in 2016, despite increasing in volume.

Canada’s crude oil exports to the U.S., which are produced in Alberta and are shipped primarily to the Midwest and Gulf Coast regions of the United States, consist mainly of heavy grades.

Until 2013, virtually all U.S. crude oil exports went to Canada. However, as the U.S. has exported more crude oil to other countries, Canada has made up a smaller share of U.S. crude oil exports. In 2016, an average of 301,000 b/d of U.S. crude oil was exported to Canada and 219,000 b/d to all other countries. U.S. crude oil exports to Canada are typically light, sweet grades that are shipped to the eastern part of the country.

Bilateral petroleum products trade with Canada is relatively balanced in both volumetric and value terms. Canada was the destination for 564,000 b/d of petroleum products in 2016, or 12 percent of all petroleum products exported from the United States. These exports were valued at more than $8.2 billion. However, the mix of petroleum product flows between the U.S. and Canada varies by product and region. For example, the U.S. is a net importer of gasoline from Canada, with significant volumes flowing from refineries in Eastern Canada to serve markets in the Northeast United States.

Conversely, very little of the petroleum products exported from the U.S. to Canada are finished transportation fuels. Pentanes plus, liquefied petroleum gases, and other oils make up the majority of U.S. product exports to Canada. Some of these products are used as a diluent to enable pipeline movement of heavy crude oils produced in Canada.

On balance, the United States is a net exporter in its bilateral petroleum product trade with Canada, and U.S. petroleum product exports to Canada (and other destinations) have been gradually increasing over the past decade.

Bilateral natural gas trade between Canada and the U.S. is dominated by pipeline shipments. Natural gas imports from Canada averaged 8.0 billion cubic feet per day (Bcf/d) in 2016, or 97 percent of all U.S. natural gas imports. Total natural gas imports from Canada were valued at more than $5.9 billion in 2016.

Most of Canada’s natural gas exports to the U.S. originate in Western Canada and are shipped to U.S. markets in the West, Midwest, and Northeast. Increases in natural gas production in the Marcellus and Utica plays have made the U.S. less dependent on Western Canadian natural gas imports in northeastern markets.

U.S. natural gas exports to Canada, which averaged 1.9 Bcf/d in 2015 and 2.1 Bcf/d in 2016, mainly go from Michigan and New York into eastern provinces. Increases in pipeline capacity to carry natural gas out of the Marcellus and Utica shale formations may enable increased flows of U.S. gas into Canada over the next several years.

subscribe