Market Snapshot: Crude oil imports decreased in 2020, and so did the cost

Release date: 2021-04-14

Imports of crude oil decreased by 20% in 2020, from 693 thousand barrels per day (Mb/d) in 2019 to 555 Mb/d. The United States (U.S.) continues to be the largest source of Canada’s imported crude oil. In 2020, 77% of Canada’s oil imports came from the U.S. compared to 72% in 2019. An increasing proportion of Canada’s imported oil is coming from the U.S. relative to the rest of the world, and in 2020 the only non-U.S. imports were in Atlantic Canada.

Canada is a net exporter of crude oil, meaning it exports more than it imports each year. While Canada produces more oil than required to meet its domestic refining needs, some refineries import crude oil for a variety of reasons, such as lack of pipeline access to domestic supplies, specific feedstock requirements for their refinery, or for economic reasons. In 2020, while Canada’s oil exports were about 6.5 times higher than imports, approximately 40% of Canada’s refinery needs were met by imports.

Figure 1. Countries Canada Imports Crude Oil From

Imports by region

In 2020, all of the eastern Canadian importing provinces imported less oil compared to 2019. The primary reason for the drop in imports during 2020 was related to COVID-19, as refineries processed less crude oil due to lower demand for refined petroleum products (e.g. gasoline and jet fuel) during the COVID-19 pandemic. Additionally, Newfoundland and Labrador’s crude oil imports dropped by more than 70% because of the idling of the Come by Chance Refinery in March 2020. The Come by Chance Refinery remained idle for the remainder of 2020.

Western provinces also import some volumes of crude oil. In 2020, Saskatchewan and Manitoba imports increased to 56 Mb/d and 25 Mb/d, compared to 5 Mb/d and 3 Mb/d in 2019, respectively. These imported volumes may have ultimately been consumed in other Canadian provinces.

Not every province with a refinery imports oil. Generally, provinces that are located near domestic crude oil production and have a direct pipeline connection to domestic supplies do not need to import crude oil. Refining provinces located further from the major production sources in western Canada, namely Ontario, Quebec, New Brunswick, and Newfoundland and Labrador, consistently rely on some imported crude oil. The two Atlantic Provinces with refineries also do not have pipeline access to crude oil, which further increases their reliance on imports.

Most of the oil Canada imports is transported by marine tanker and pipeline, with smaller volumes being imported by rail. The mode of transportation for crude imports varies across provinces, with Atlantic Provinces and Quebec oil imports being transported via marine tanker. Quebec also imports oil by pipeline, as does Ontario. Refineries in New Brunswick, Quebec, and Ontario can receive crude oil by rail, although only 1 Mb/d was imported from the U.S. via rail in 2020^Footnote 1.

Figure 2. Origin and Cost of Crude Oil Imported to Eastern Provinces

Cost of imported oil

Generally, imported oil is more costly than Canadian crude oil transported by pipeline. The total cost of all imported crude oil was $11.5 billion in 2020, a drop of 40% from 2019 when the cost was $18.9 billion^Footnote 2. This is due to both the 20% decline in imported volumes, and the decline in global crude prices due to OPEC+ actions and COVID-19 market impacts.

Newfoundland and Labrador had the highest import cost per barrel of crude oil in 2020 and throughout recent years. Newfoundland and Labrador is not connected by pipeline to a crude oil supply, meaning it must rely on supplies from more costly marine tanker transportation, and is the importing province located furthest from the U.S. Additionally, the province’s sole refiner only operated at the beginning of 2020 when crude oil prices were higher.

Quebec, Ontario, and western Canadian provinces had the lowest import cost per barrel of crude in 2020 because most of their crude oil imports come from the U.S. by pipeline, which is less expensive than marine transportation.

Recovery of refinery utilizations

When the COVID-19 pandemic hit, refineries in all regions of Canada were materially impacted. Western Canadian refineries were impacted less than refineries in Ontario, Quebec, and Atlantic Canada. 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. As a result, there has been lower demand for imports throughout 2020. Quebec and Atlantic Canada have generally faced tighter COVID-19 travel restrictions than western provinces, impacting their local refinery demand. Atlantic Canadian refineries were also more heavily impacted by the pandemic because more of their refined petroleum products are exported to other countries where global demand for these products remained weak. By contrast, western Canadian markets generally consume most of their refineries’ products rather than export.

Figure 3. Weekly Refinery Crude Utilization by Region

Cost of imported oil

In 2020, Canada reduced its reliance on imports, especially non-U.S. imports. Overall, Canada imported less crude oil in 2020 than 2019 largely due to the impacts of the COVID-19 pandemic in reducing refinery demand. The cost of the total oil imported also declined substantially, as not only were import volumes lower, but global prices dropped early in the pandemic. Newfoundland and Labrador has been impacted most with the idling of the Come by Chance refinery, leaving the province without a local supply of refined petroleum products. Refinery demand has improved in most regions, however, it still remains well below pre-COVID levels, particularly in Quebec and Atlantic Canada.

Date modified:

2023-11-28