Market Snapshot: Throughput on major oil pipeline systems falls in 2020, temporarily relieving tight capacity constraints out of western Canada
Release date: 2020-08-27
From March 2020 to June 2020, throughput on Canada’s major crude oil pipelines (Enbridge Mainline, Trans Mountain, and Keystone)Footnote 1 fell by 12%, or 441 thousand barrels per day (Mb/d), from 3.70 million barrels per day (MMb/d) to 3.26 MMb/d. As of June 2020, throughput on these three major crude export systems is 85% of the 3.81 MMb/d of available capacity.Footnote 2 The gap between throughput and available capacity widened to 547 Mb/d, the largest level since mid-2016.
Figure 1. Throughput and available capacity on major
Canadian crude export lines
Source and Description
Description: The chart displays pipeline throughput for the Enbridge Canadian Mainline, Keystone Pipeline System, and the Trans Mountain Pipeline, alongside available capacity for these 3 pipeline systems. From January 2014 to January 2020, throughput and capacity increased by 35% and 27%, respectively. From January 2020 to June 2020, throughput on these 3 pipelines decreased by 10% with available capacity holding relatively constant.
Falling pipeline throughput happened because of COVID-19 and an OPEC+ price war on Canadian and global crude oil markets. Western Canadian producers cut almost one million barrels of production by mid-May 2020 as measures to contain COVID-19 reduced travel and business activity, and higher Saudi Arabia and Russian production resulted in much lower oil prices.
Apportionment, which happens when demand for transportation service on a pipeline exceeds the pipeline’s available capacity for a given month, has also significantly decreased. In May and June 2020, the Enbridge Mainline was not under apportionment for the first time since data became available in 2016. Keystone was also not under apportionment in May and June 2020, after facing apportionment levels of 92% in January 2020. Trans Mountain apportionment dropped to 4% in June 2020, down from 26% in January 2020. No apportionment indicates that, for the first time in years, shippers can export the entire volume they request on these pipelines. The largest drop in throughput and apportionment occurred on the Enbridge Mainline, which delivers crude oil to the US Midwest and central Canada. COVID-19 significantly reduced demand for transportation fuels in these highly populated regions.Footnote 3
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