Canadian Oil Imports to US Gulf Rise on Pipeline Startups

The December startup of two major pipelines that move Canadian heavy crude to the United States helped increase U.S. Gulf Coast imports more than 12 percent from November, U.S. government data showed just days after President Barack Obama vetoed the Keystone XL pipeline.

 

The relatively swift uptick in Canadian oil arriving at the Gulf Coast, home to nearly half of U.S. refining capacity, follows the opening of two connecting lines that link Canada to U.S. tropical waters: Enbridge Inc's 600,000 barrels per day (bpd) Illinois-to-Oklahoma Flanagan South pipeline, and Enterprise Products Partners' 450,000 bpd Oklahoma-to-Texas Seaway Twin.

 

According to the latest available data, total Canadian shipments to the United States rose 14 percent in December to 3.32 million bpd from November.

 

More crude from Canada is expected to arrive and compete with other imports on the Gulf Coast, where one refinery has recently run more than half Canadian oil, sources said.

 

Enbridge's Mainline system, which originates in Canada, feeds Flanagan, so the new project did not need Washington's approval as neither cross the border like TransCanada Corp's proposed Keystone XL. Obama vetoed a Republican bill approving Keystone XL last week.

 

U.S. Energy Information Administration data show 8.15 million barrels - about 262,935 bpd - either arrived at, or were destined for, the Gulf Coast in December, up from 7.24 million barrels in November, or 241,333 bpd.

 

That represents about 8 percent of all Canadian imports, up from about 5 percent in mid-2014.

 

Some barrels bound for Gulf Coast refineries get counted in the Midwest when en route, according to the EIA.

 

Of the 75.9 million barrels in the Midwest in December, 6 million were bound for Gulf Coast area refineries, such as Exxon Mobil Corp's 344,600 bpd plant in Beaumont, Texas, LyondellBasell's 263,776 bpd plant in Houston or Delek U.S. Holdings' 80,000 bpd plant in El Dorado, Arkansas, the data show.

 

Flanagan started up in December after several delays. The Seaway Twin, which runs parallel to the 400,000 bpd Seaway pipeline from the U.S. crude futures hub in Cushing, Oklahoma, to the Texas Gulf Coast, was built in mid-summer and awaited Flanagan's startup to get flows.

 

Enbridge is Enterprise's partner in the Seaway system.

 

Three other major pipeline systems operated by TransCanada, Enbridge and Spectra Energy Partners also move Canadian crude to U.S. markets. Canadian crude also arrives via rail and barge.