Canada imported less oil in 2020, but U.S. grew its slice of import market during pan…

Most of that oil came from the United States, which now represents about 77 per cent of Canada’s oil imports. That’s up from 72 per cent in 2019, according to an analysis from the Calgary-based agency released Wednesday.

Saudi Arabia (13 per cent), Nigeria (four per cent) and Norway (three per cent) trail behind the U.S.

A decade earlier, U.S. crude represented less than 10 per cent of Canada’s oil imports.

“The big thing that’s changed in the last 10 years is the surge in production in the U.S.,” said Darren Christie, the regulator’s chief economist, in an interview.

“As their production was doubling, we were a natural market for some of that increased crude. And similarly, our refineries that were previously importing crude from overseas had a more economic supply closer to home.“

In 2020, the only non-U.S. oil imports were in Atlantic Canada, says the analysis. 

Canada continues to export a lot more oil than it imports — 6.5 times more — with the vast majority of the 3.7 million barrels per day exported in 2020 destined for the United States.

However, the regulator said Canada still relies on oil imports to feed refineries in Ontario, Quebec and the Atlantic provinces.

Less than a third of Canadian crude oil is processed by Canadian refineries, according to the regulator, and roughly 40 per cent of the country’s refinery needs were met by imports last year.

“While Canada produces more oil than required to meet its domestic refining needs, some refineries import crude oil for a variety of reasons,” the CER’s analysis says.

Among the reasons listed by the regulator: a lack of pipeline access to domestic supplies, the specific feedstock requirements of certain refineries and economics.  

“Refineries are designed to most efficiently refine specific types of crude oil,” Christie said. 

“And then in terms of economics, it’s no surprise that depending on where exactly the refinery is, relative to where exactly the supply source is, it might be cheaper to get a similar product from one area versus another.”

The CER says the main reason for the drop in Canada’s oil imports during 2020 was related to COVID-19, with refineries requiring less crude as demand for refined petroleum products fell.

Indeed, demand for oil dropped around the world last year as pandemic-related health measures limited travel, reducing the appetite for products like gasoline and jet fuel. 

The ‘million-dollar’ question

The regulator says that when the COVID-19 pandemic hit, refineries in all regions of Canada were affected.

“Western Canadian refineries were impacted less than refineries in Ontario, Quebec and Atlantic Canada,” it says.

“These western refineries, and to a lesser extent those in Ontario, made substantial recoveries by the end of 2020. Refineries in the main importing regions of Quebec and Atlantic Canada have been slower to recover from the pandemic impacts compared to refineries in the rest of Canada.”

Christie said demand has increased in recent months, but he added it’s hard to say what exactly will happen in 2021.

“We’re not in the situation we were early in the pandemic — a lot of the demand is back,” Christie said. “But the million-dollar question now in terms of what’s going to happen with demand is really what’s going to happen with the pandemic.“