On Wednesday, the Canada Energy Regulator (CER) released a report showing the economics and market dynamics for the more than 73,000 kilometres of pipelines it regulates. The report, Canada’s Pipeline System 2021: Economics of CER-Regulated Infrastructure, provides data and trends on the movement of energy between Canada, the United States and the rest of the world between 2015 and 2020.
“The pipelines we regulate moved more than four million barrels of oil and 17 billion cubic feet of natural gas per day in 2020,” said Darren Christie, Chief Economist with the CER. Christie says the report provides readers a snapshot of the trends and economics that impact Canada’s energy system over the past five years. It also shows how energy is delivered to Canadians and international customers.
Canada, the fourth largest oil producer in the world, produces for both domestic and international consumption. In 2020, 82 per cent of Canadian oil production was exported and 43 per cent of natural gas production hit international markets. Almost all of Canada’s natural gas and crude oil exports are transported to the US.
Four CER-regulated crude oil export pipelines, Enbridge Mainline, Keystone Pipeline, Trans Mountain Pipeline and Express Pipeline, make up 96 per cent of all take away capacity from Western Canada.
Pipelines transported virtually all of Canadian oil and gas production and in 2020, with 88 per cent of crude oil exports and 99 per cent of natural gas exports shipped through CER-regulated pipelines. Although no new oil pipelines came into service in Canada between 2015 and 2020, capacity on existing oil pipelines in Canada continued to expand due to a series of pipeline optimizations, and are highly utilized.
Over this same period, natural gas pipelines in Western Canada underwent a number of physical expansions to relieve regional bottlenecks. These expansions have allowed Canadian crude oil production and exports to the US to grow and natural gas production to remain steady. Net exports to the US have fallen due to rising US natural gas production.
In 2019 and 2021, Canada’s first and second propane export terminals began operating in the Prince Rupert, BC area. These terminals ship western Canadian propane to markets in Asia, Central and South America.
Canadian natural gas liquids (NGLs) production increased from 570,000 b/d in 2015 to 720,000 b/d in 2020 due to propane and butane growth.
Between 2015 and 2019, crude oil production in Canada rose by 23 per cent to 4.9 million barrels per day. The COVID-19 pandemic significantly impacted the Canadian oil industry, dropping production by almost on million b/d in May of 2020. Since then, both production and pipeline utilization have mostly recovered to pre-pandemic levels.
Natural gas production averaged 15.6 billion cubic feet per day in 2019 and 2020, down 2. 9 per cent from 2018, but still about 5 per cent higher than 2015 production.
Along with exploring how pipelines connect North American markets and the type of products being shipped, CER says the report also provides an overview of the financial integrity of oil and gas pipelines and analysis related to the CER’s economic regulation of pipelines.