Why Canadian crude exports to the US are on a high

Canadian crude exports to the U.S.

According to Statistics Canada, energy product shipments—including bitumen from Alberta’s oil sands, the world’s third-largest oil reserve—are the largest component of Canada’s exports. Canada’s largest pipeline company—Enbridge Inc.—is also undertaking a multi billion-dollar expansion program across all of its export network. The program will boost capacity.

Latest weekly reported statistics

According to the U.S. Energy Information Administration (or EIA), for the week ending September 12, 2014, U.S. crude oil imports from Canada hit a record high of 2.99 million barrels per day (or bpd). This was a 20% increase from the same period last year. Meanwhile, the four-week average on September 12 was 2.93 million bpd.

Canada has been able to ship more crude to the U.S. Production in the Alberta oil sands is increasing despite the tight capacity on export pipelines. This is partially due to crude-by-rail. For 2Q14, Canada’s National Energy Board said crude exports by rail averaged 163,000 bpd.

Exports to rise

Industry players expect that number to rise sharply. Gibson Energy Inc. started shipping crude on mile-long unit trains from its Hardisty, Alberta, terminal in June. Canexus Corp. reopened its Bruderheim, Alberta, unit-train terminal in September. It had been shutdown during the summer.

With exports rising, crude tanker companies like Frontline Ltd. (FRO), Teekay Tankers Ltd. (TNK), Nordic American Tanker Ltd. (NAT), and Tsakos Energy Navigation Ltd. (TNP) will likely trade positive. The Guggenheim Shipping ETF (SEA) will also likely trade positive.

We’ll discuss Newbuilds in the next part of the series.

Visit the Market Realist Marine Shipping page to learn more about the shipping industry.