Markets - Access and Capacity

The primary consideration in assessing the alternative routings for new pipelines is the potential market that can be served.

Canadian crude oil has historically been consumed in five market areas: the prairie provinces, Ontario, B.C./Washington State, U.S., Rocky Mountains, and U.S. midwest. As depicted in the chart, eastern markets dominate the flow of crude. For the predicted growth in crude supply, producers will need to expand their market horizons to more distant markets.

Western Canada’s crude oil marketing is currently focused on four core markets: western Canada, Ontario, the U.S. midwest (upper PADD II) and the U.S. Rockies (PADD IV).

In 2003, these core market areas represented an aggregate demand of over 3.0 million b/d. The demand in these traditional core markets, however, has been predominantly light and heavy, reflecting the composition of the historical crude slate developed and supplied by producers.

In addition to these coremarkets, crude oil supplies are occasionally also delivered into extended markets, the lower midwest (PADD II) and Washington State (PADD V) regions. Market demand in these areas tends to be seasonal or when pricing parity shifts create competitive opportunities for Canadian crudes. The extended market represents a potential crude oil demand exceeding 2.0 million b/d.

Much of the demand in the extended markets is for light and medium sour crudes. Historically, western Canada has not produced large volumes of medium crudes. The potential demand for medium crudes in these markets offer significant opportunities related to the growing supplies of oil sands Synbit, which can be blended to resemble a medium crude.