Taking action in support of our vital natural resource sector

Just how much oil does Canada import every year? The answer is shocking, considering that Canada has the third-largest proven oil reserves in the world and would be more than capable of supplying itself with all the oil it ever needs - if only it had the infrastructure to do so.

According to the Canadian International Merchandise Trade Database, Canada imported approximately $11.5 billion of crude oil in 2020, down from $18.9 billion in 2019 and $19.2 billion in 2018. Cumulative oil imports into Canada between 1998 and 2020 totalled more than $488 billion.

A more detailed look at Canada's oil imports are in this chart below:

How Much Oil Canada Has Imported

Over the past five years, Canada's major suppliers have sold us tens of billions of dollars worth of oil at prices higher than which we sell ours for due to the price discount Canadian producers are subject to. Some of those suppliers include:

> United States ($51.2 billion)

> Saudi Arabia ($12.3 billion)

> Nigeria ($3.8 billion)

> Norway ($3.2 billion)

> Colombia ($689 million)

> United Kingdom ($1.4 billion)

The dollar figures above don't even include light oils and other products/chemicals derived from petroleum. In 2018, for example, Canada imported more than $14 billion worth of this type of classification, while in 2017 that figure was approximately $11 billion.

How Much Oil Do Canadian Provinces Import?

How much oil does Canada import into different parts of the country? Or, in other words, which provinces account for most of Canada's oil imports? If you’ve guessed Ontario, Quebec and the Atlantic provinces, you’re correct.

The lack of pipeline infrastructure from the west – where the world’s third-largest oil reserves are found in the Alberta oil sands – to the eastern part of the country is apparent in the pipeline infrastructure map below.

Notice how the few pipelines heading east are sent south into the United States first before coming back into the country via the Sarnia region of Southwestern Ontario, a major refining hub of Canada.

Crude Oil & Rail Infrastructure - NRC

This lack of critical pipeline infrastructure is the reason why the eastern and Atlantic provinces rely on massive quantities of foreign oil imports for supply, despite the reversal/expansion of Enbridge’s Line 9 pipeline which has allowed Ontario and Quebec refineries to source more oil from North America in recent years.

Sea-faring oil tankers must also do their fair share to fill the supply gap. Major oil tanker routes into Canada include the St. Lawrence River, which facilitates the transportation of more than 500,000 barrels of petroleum products to refineries in Quebec each day.

Without existing pipelines like Line 5, the number of tankers seen on the St. Lawrence River and Great Lakes Region transporting oil to refineries in both Canada and the U.S. would increase dramatically.

New Brunswick's Irving Refinery also relies almost entirely on foreign oil imports via tanker and railway, although it does sometimes process offshore blends from the east coast or buy oil from the west via the Trans Mountain Pipeline. The 12,000-kilometre journey down the west coast of North America, through the Panama Canal, into the Gulf of Mexico and then back up the Atlantic Ocean made by a tanker in the summer of 2020 shows why Canada needs a pipeline connecting the petroleum-rich provinces of the west to the oil and gas hungry provinces in the east.

What happens if these routes and/or pipelines supplying oil to eastern Canada are all of a sudden shutdown or otherwise not available to use? Just look at the fiasco with the Colonial pipeline cyberattack in the U.S. or the attempted shutdown of Line 5 and its consequences for an answer.

Foreign Oil Imports Into Canadian Provinces

When discussing provinces specifically, it's critical to note that not all oil imports into Canada are the same. You might be astonished that Alberta and Saskatchewan, which together account for over 90 per cent of Canada’s crude oil production, imported more than two billion dollars worth of foreign crude between 2016 and 2020.

Alberta’s oil imports, for example, are mainly condensate or diluent sourced from the United States which is then mixed with bitumen to facilitate transportation by pipeline. Meanwhile, oil imports into the eastern and Atlantic provinces come mainly from the United States and Saudi Arabia and are used to make everything from gasoline and jet fuel to medicine and plastic products.

Note the provinces with a simple dash that got oil entirely from domestic sources, kind of like how Prince Edward Island gets most of its gas from refinery output at Irving.

Replacing Imported Foreign Oil in Eastern Canada: Should We?

So, the question remains: how much of the oil imported by the eastern and Atlantic provinces could be replaced by Canadian oil if a pipeline were built, such as the now defunct Energy East project?

The Canadian Energy Research Institute (CERI) perhaps answers this question best with its 2018 report: Study #167 – An Economic and Environmental Assessment of Eastern Canadian Crude Oil Imports.

The study found that by replacing foreign oil imports with domestic supply, some eastern refineries could turn a higher profit and reduce greenhouse gas (GHG) emissions while also allowing Canada to export its sustainably produced oil to the world and obtain more market share as global demand continues to grow.

Given Canada's record on Environmental, Social, and Governance (ESG) metrics, shouldn't we be a global oil supplier of choice anyways? And especially so for buyers in our own country?!

CERI's findings are based on four scenarios:

Made in Canada – where all foreign oil imported into Canada is replaced with domestic oil regardless of the cost. This scenario considers the effect of expanded pipeline infrastructure in Eastern Canada.

Expanded Access – where less expensive Canadian crude is substituted for imported foreign oil, with a new pipeline connecting the eastern and western parts of the country for new domestic supply.

Current Reality – where existing pipeline infrastructure is used but Canadian crude replaces foreign oil in central and eastern Canadian refineries, but not the full amount relative to commodity prices and the associated economic feasibility of doing so.

International Social Concerns – where Canadian crude is substituted for imported oil from nations that have serious social concerns i.e. poor living standards, low food security, tarnished human rights, non-existent environmental protection, etc.

This study considers costs and how GHGs would be affected if Canadian crude were to replace foreign oil under these given scenarios. Please note that CERI’s study is quite complex and for further understanding of the scenarios mentioned above, it’s recommended you read the report.

CERI's Four Scenarios – Replacing Foreign Oil with Canadian Oil

Key Conclusions under the Four Scenarios - CERI

Three of the four given scenarios above show positive economic results ranging from savings of $23 million to $317 million and a reduction of CO2 equivalent between 2 to 2.2 million tonnes per annum.

Two of the three positive scenarios call for a new pipeline, while the third (without new infrastructure) takes into account Canadian crude supplies that are cheaper than imported counterparts.

We should all be enlightened by the fact that if we did replace foreign oil entering eastern and Atlantic Canada with that from the western provinces, we would be doing a huge favour for our economy and the global environment.

We'd be helping Canada decrease emissions and gain energy security while also benefiting our economy if we were to replace foreign supply with domestically sourced oil and gas from the west. So why aren't we?

Canada Needs Energy Security

After studying CERI’s report, the questions we should all be asking are:

Q: How much oil does Canada import from domestic sources?

Q: What economic benefits does more domestic oil being used in the eastern parts of the country bring?

It’s important to point out that the added employment opportunities and economic contribution of doing so are not evaluated in CERI’s report. That would include billions in government revenues which could pay for schools, doctors and social programs across the country.

Two more questions we should ask ourselves as Canadians isn't only “how much oil does Canada import,” but rather:

Q: How much oil does Canada export?

Q: What are the socio-economic benefits of expanded export capacity to international markets other than the U.S.?

How Much Oil Does Canada Import? Way Too Much!

Comparing the price of Canadian heavy oil to Mexican heavy oil on 03/27/2020.

The big difference? Mexico has adequate pipeline infrastructure.#TMX and #KeystoneXL are critical projects of national importance to maximize the value of our resources. pic.twitter.com/8PC80pvjfr

— Oil Sands Action (@OilsandsAction) April 1, 2020

Polls show that across the country a majority of Canadians are more supportive of sourcing oil and gas domestically rather than from abroad. Even in Quebec where it’s been said in recent years that there is “no social license” for a new oil pipeline, more than 70 per cent of Quebecers support using oil and gas from Western Canada versus having it imported from countries like Saudi Arabia or elsewhere.

Another poll by Nanos Research shows that more than 80 per cent of Canadians support the natural resource sectors and see them as an opportunity to help the economy recover quickly from the fallout brought on by the COVID-19 pandemic.

Given that Canada has the reserves to supply itself with all the oil it will ever need and that doing so would also be in the best interests of both our country and the global environment, why then are we still importing oil into the eastern and Atlantic provinces? It just doesn't make a whole lot of sense.

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