U.S. crude oil import patterns have been undergoing significant shifts in recent months. While growing domestic tight oil production from the Bakken formation in North Dakota and elsewhere has helped displace imports from some countries, U.S. import volumes from the Canadian oil sands and Saudi Arabia have been on the rise. In total, U.S. crude imports fell about 94,000 bbl/d (1 percent) from the first quarter of 2011 to the first quarter of 2012. New sources of North American crude supply, adjustments in transport logistics and deep shifts in the depth of conversion and geographic distribution of U.S. refining capacity are redrawing the pattern of U.S. crude imports.
The most important development in U.S. crude oil import patterns is the continued rise in flows from Canada into the Midwest (PADD 2). Thanks to continued production growth from the oil sands of Alberta, Canadian crude now accounts for virtually all of PADD 2 crude imports. Canadian imports into PADD 2 reached an average of 1.76 million barrels per day (bbl/d) in the first quarter of 2012, a 323,000-bbl/d (22-percent) increase from a year ago, according to the latest data from the U.S. Energy Information Administration's Petroleum Supply Monthly (PSM). In the United States as a whole, first-quarter Canadian crude imports rose by 315,000 bbl/d year-over-year (Figure 1).
Along with growing domestic production, rising crude flows from Alberta to the Midwest were part of the reason behind the recent reversal of the Seaway crude pipeline, which is now sending crude oil from the Cushing Oklahoma trading and storage hub to the Houston area. The pipeline's co-owners, Enterprise Products Partners LP and Enbridge Inc., said last week they planned to expand its capacity from the current 150,000 bbl/d to 400,000 bbl/d in the first quarter of 2013, and then to 850,000 bbl/d in 2014.
At almost 2.5 million bbl/d in the first quarter of 2012, Canada is by far the United States' top crude supplier, with Saudi Arabia a distant second at 1.4 million bbl/d. But the latter, too, has sent increasing volumes of crude to the United States in recent months, with first-quarter average imports up by 294,000 bbl/d year-over-year. While the increase in Canadian crude imports represents the continuation of recent trends, the increase in Saudi crude imports marks a reversal from an earlier pattern, which had seen Saudi imports edge down in recent years. While market commentators have attributed the rebound to the startup of a 325,000 bbl/d capacity expansion at Saudi Aramco's joint-venture refinery in Port Arthur, Texas, that project, which is being officially inaugurated today, tells only part of the story. Monthly data show other Gulf Coast refiners, responding to Saudi offers of incremental volumes, have also stepped up their imports of Saudi oil, thus helping account for an average 264,000-bbl/d increase in first-quarter Saudi flows into that region.