Canada is the top oil exporter to the United States. According to Statistics Canada, shipments of energy products are the largest component of Canada’s exports. These shipments include bitumen from Alberta’s oil sands, the world’s third-largest oil reserve.
Most Canadian imports enter the United States through the US Midwest (USMW). U.S. Energy Information Administration (or EIA) data revealed that Canadian imports fell 186,000 barrels per day (or bpd) to 2.7 million bpd the week ended December 12, 2014. This is a 2.9% drop from the same week a year ago. For the last four-week average, imports stood at 2.89 million bpd as of December 12, 2014, compared to 2.58 million bpd in the four-week average for the same period a year ago.
According to the Canadian Association of Petroleum Producers, oil production is expected to reach 3.91 million bpd next year and surge to 6.44 million bpd by 2030. The bulk of crude exports is still shipped south on Enbridge’s 2.5 million bpd Mainline export network, which is undergoing an expansion program to deal with frequent congestion as oil sand supplies outpace pipeline capacities.
Canadian crude exports look set to rise further as producers explore inventive alternatives to improve market access. Crude tanker companies such as Frontline Ltd. (FRO), Teekay Tankers Ltd. (TNK), Nordic American Tanker Ltd. (NAT), and DHT Holdings Inc. (DHT) as well as the Guggenheim Shipping ETF (SEA) may benefit with this step.