Tanker Demand Picks-up in Canada

Maritime Activity Reports, Inc.

May 27, 2015

Graph: Gibson tanker report

Graph: Gibson tanker report

 Canada’s role in the oil industry has changed dramatically in recent years driven by synthetic crude oil production in the oil sands of Alberta.

 
New plans for Energy East, a cross-Canada West to East pipeline with a capacity of 1,100kb/day are being put forward to allow the movement of diluted domestic oil from the West to the import dependant Eastern provinces. 
 
With a light sweet requirement in the Eastern provinces the question might be raised on why there is a need for a pipeline to transport the heavy bituminous oil sands from the West if Eastern refineries could not process them. 
 
Suncor are looking to add a coker to their Montreal refinery which would allow for oil sand processing and for East Canada, in addition to energy independence; there is potential new dynamic, crude oil export. 
 
A pipeline will not only be used to supply East Canada with domestic oil but it will also open up new trade routes from the East coast of Canada, acting as a new gateway to markets currently untouched by this unconventional oil. Canada has estimated reserves of 173 billion barrels (the third largest on the planet) of oil and opening this up to the Atlantic could add a new dimension to the oil markets.
 
In the short run the question for tankers is two-fold; 1) will the volume of crude being imported from the USGC increase further; 2) will this increase be enough to soak up enough of the tonnage to see rates rise. In the long run the question surrounding the supply of Canadian’s heavy oil to external markets remains an open one although the heavy oil from Latin American producers may have just found another competitor.  
 
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