Canadian Oil Sands Report - 303440

2017
Crude Oil Forecast, Markets and Transportation
EXECUTIVE
SUMMARY
CAPPs annual Crude Oil Forecast, Markets and Transportation
report provides a long-term outlook (2017 to 2030) for total
2017 Canadian crude oil production and western Canadian crude oil
supply, plus key information on markets both existing and
CRUDE OIL FORECAST, potential, and an updated synopsis of the transportation projects
MARKETS AND TRANSPORTATION that could connect projected supply to various markets.
The Canadian Association of Petroleum Producers (CAPP) represents companies, large and small,
that explore for, develop and produce natural gas and crude oil throughout Canada. CAPPs member Canadas crude oil supply is forecast to grow by 5 per cent per year to 2020 then
companies produce about 80 per cent of Canadas natural gas and crude oil. CAPPs associate slow to 2 per cent growth per year to 2030, due to many market uncertainties.
members provide a wide range of services that support the upstream crude oil and natural gas industry. The success of Canadas energy future relies on the ability to overcome these
Together CAPPs members and associate members are an important part of a national industry with challenges, including low commodity prices, pipeline capacity, industry competitiveness,
revenues from oil and natural gas production of about $120 billion a year. regulatory uncertainty, and access to new markets.
Disclaimer:
This publication was prepared
by the Canadian Association
CALGARY ST.JOHNS of Petroleum Producers (CAPP). WESTERN CANADIAN CRUDE OIL SUPPLY IS GROWING BY 1.5 MILLION B/D
While it is believed that the
2100, 350 - 7 Avenue SW 1004, 235 Water Street information contained herein is
Calgary, Alberta, Canada St. Johns, Newfoundland and Labrador, Canada reliable under conditions and
T2P 3N9 A1C 1B6 subject to the limitations set
out, CAPP does not guarantee
the accuracy or completeness
OTTAWA VICTORIA of the information. The use of
1.5
1000, 275 Slater Street 360B Harbour Road this report or any information
Ottawa, Ontario, Canada Victoria, British Columbia, Canada contained will be at the users
2016 2030
sole risk, regardless of any fault
K1P 5H9 V9A 3S1 or negligence of CAPP.
Material may be reproduced
for public non-commercial
use provided due diligence is
exercised in ensuring accuracy of
information reproduced; CAPP MILLION
is identified as the source; and
reproduction is not represented B/D
as an official version of the
CAPP.CA information reproduced nor has
2017-0009 any affiliation.
2017
EXECUTIVE
SUMMARY
Disclaimer:
1.5
2016 2030
3
Canadian and U.S. Crude Oil Pipelines and Refineries - 2017
ENBRIDGE NW
UPGRADERS
Syncrude (Fort McMurray)................. 465
Suncor (Fort McMurray) .................... 438
ADDITIONAL CAPACITY NEEDED PRICES AND INVESTMENT KEY COMPETITVENESS CHALLENGES FACING Shell (Scotford) ................................. 240
RAINBO
CNRL (Horizon) ................................. 210
CANADAS OIL INDUSTRY
39%
W
VANCOUVER TO: PRINCE GEORGE 2016 CANADIAN CRUDE OIL PRODUCTION
Japan - 4,300 miles Husky.............. 12 000 m3/d 000 b/d
Taiwan - 5,600 miles
Crude oil prices dropped from more S.Korea - 4,600 miles
China - 5,100 miles Key industry challenges are tempering long-term growth prospects.
EDMONTON
British Columbia
Alberta
10
457
61
3,066
FOR INFORMATION CONTACT: (403) 267-1141 / CAPP.CA
Imperial .........................191
Suncor...........................142 Saskatchewan 73 461
San Francisco - 800 miles Manitoba 6 40
EXISTING PIPELINE CAPACITY than US$100 per barrel in 2014, due
Los Angeles - 1,100 miles 1. UNCERTAINTY. Canadas policies and regulations
Shell ................................92
LLOYDMINSTER are becoming Northwest Territories 1 9
increasingly more stringent and costly, resulting in reduced
Husky asphalt plant .........29
Husky Upgrader...............82
Western Canada 578 3,637 NEWFOUNDLAND & LABRADOR
attractiveness for investment. HU
SK
Y Eastern Canada 34 213
Silver Range (Come by Chance) .......... 115
2016 2030
to a global oversupply of oil. Prices Total Canada 612 3,850
VANCOUVER
Chevron........... 55
2. CUMULATIVE IMPACTS OF GOVERNMENT REGINA
POLICY CHANGES.
SUPPLY OF WESTERN CANADIAN CRUDE OIL Developing resources responsibly to help achieve key Come by Chance
KEYSTONE
Complex ......................................135
have recovered somewhat since
WILL GROW 39 PER CENT BY 2030 TO regulatory, social and environmental outcomes,
PUGET SOUND MOOSE JAWis important and
BP (Cherry Pt) .............234 Moose Jaw asphalt plant ...............19 Hibernia White Rose
Phillips 66 (Ferndale) ...101 needs be done in a manner that does not unnecessarily burden Hebron
5.4 MILLION BARRELS PER DAY (B/D).

Shell (Anacortes)..........137 Terra Nova
Tesoro (Anacortes) .......120 industry and risk more jobs.
WA
NA
early 2016 to almost US$50 per TrailStone (Tacoma) .......42
CA
S
PIPELINE TOLLS FOR LIGHT OIL (US$ PER BARREL)
3. GREAT
POTENTIAL DIVERGENT POLICIES FROM U.S. COMPETITORS.
WA
FALLS
Calumet ......................25 SAINT JOHN Edmonton to
U.S. producers may not have to face similar policies to those in Irving ...................300 Burnaby (Trans Mountain) 1.70
barrel in May 2017. CAPP estimates Canada. BILLINGS
Additionally,
CHS (Laurel) ................56 protectionist
MT policies that may be pursued MONTRAL/QUBEC Saint John Anacortes (Trans Mountain/Puget) 2.00
Suncor.................... 137 Sarnia (Enbridge) 4.40
OR by the current U.S. administration are also a cause for concern.
Phillips 66....................60
ExxonMobil ..................60
SUPERIOR
SARNIA Valero ..................... 230 Montral (Enbridge) 6.05
ID
KEYSTONE
Dickinson ND Calumet............45
Imperial ............... 119 ME Chicago (Enbridge) 4.00
2017 producer capital spending for
PADD IV Shell ...................... 73 Montral
PRODUCTION AND SUPPLY MN Suncor................... 85

MON
TREA
L
Cushing (Enbridge) 5.15*-6.40
NANTICOKE Wood River (Enbridge/Mustang/Capwood) 5.40
SAN FRANCISCO WYOMING
NORTH DAKOTA
Tesoro (Mandan) ........74
SD Imperial ............... 113
VT USGC (Enbridge/Seaway) 6.10-10.40
Chevron................... 257 9
Western Canadian crude oil supply accounts for the bulk of ST. PAUL
PADD V
Sinclair (Casper) ............................25 Tesoro (Dickinson) .....20
oil sands will decline for the third Phillips 66................ 120 Sinclair Oil (Sinclair).......................85
BRI
D GE
L INE
NH
Hardisty to
Guernsey (Express/Platte) 3.10*
Shell ........................ 144
Tesoro ..................... 166
Canadian crude oil supply WYand is forecast to grow
DA from 3.9 million
) ..................18
KO
Flint Hills .............339 CHICAGO EN
HollyFrontier (Cheyenne) ................52 BP ..........................430 Wood River (Express/Platte) 4.80*
Valero ...................... 145 NV b/d in 2016 to 5.4 million b/d in 2030.
TA
A
Tesoro .................102
WI Westover
NY MA
KOCH Wood River

C ExxonMobil ..............236
CE
S S
Wood River (Keystone) 4.50**-5.35
consecutive year, which reflects a
PDV ........................180
KIANTONE
CA
PADD II CT RI
SALT LAKE CITY
USGC (Keystone/Gulf Coast Ext.) 7.15**-11.65
KANSAS
WESTERN CANADA HEAVY OIL SANDS NE
Big West ............. 35 SUPPLY provides 95
CHS (McPherson)....................................85 MI WARREN
PENNSYLVANIA
Chevron.............. 53 HollyFrontier (El Dorado) ......................135 IA United .......... 70 USEC to Montral (Portland/Montral) 1.40
per cent of thisDENVER/COMMERCE
HollyFrontier ....... 45 growth. CITY IL DETROIT
NJ Monroe Energy (Trainer)................ 195
SH
Coffeyville Res. (Coffeyville) ..................115
Marathon.......... 132 PA Phil. Energy Solutions (Phil.).......... 335
ELL
dramatic change to projects due Tesoro ................ 63
Suncor........................... 98 PO
NY St. James to Wood River (Capline/Capwood) 1.30
CHEVRON
EX
THE ANNUAL AVERAGE GROWTHWHIN ITE WESTERN
PRE
SS CANADA SUPPLY Flanagan
IN Newell Philadelphia
UT CLI NEWELL, WV PIPELINE TOLLS FOR HEAVY OIL (US$ PER BARREL)
is projected to be 5 per MD
FFS
CO cent from 2017 to 2020, then slow to an Ergon............ 23
DE
NEW JERSEY
Hardisty to:
to continuing uncertainty in the KS OH Phillips 66 (Bayway)........ 241
average annual growth rate OKLAHOMA
of 2 per cent through 2030. WV VA PBF (Paulsboro) .............. 168 Chicago (Enbridge) 4.20
IL
OB
BAKERSFIELD Axeon SP (Paulsboro)........ 74
PACIF
M
Phillips 66 (Ponca City) .........................203 D DELAWARE
N
Kern Oil ..................... 26 EA
XO
HollyFrontier (Tulsa) .............................125
EASTERN CANADA
San Joaquin............... 14 RH PBF (Delaware City) ........ 190 Cushing (Keystone) 6.20**-6.90
IC
is forecast to contribute up to 307,000 b/d OHIO
EX
Coffeyville Res. (Wynnewood) .................70 EA H
SP OUT
long term. NM but then decline steadily.
of production by 2024
Valero (Ardmore).....................................86 S
KY WOOD RIVER
BP-Husky (Toledo)........................160
PBF (Toledo).................................170
Wood River (Enbridge/Mustang/Capwood)
Wood River (Keystone)
6.05
5.15**-6.05
LOS ANGELES AZ MO WRB .................................314
ROBINSON
Marathon (Canton) .........................93
BORGER/MCKEE Husky (Lima)................................160 Wood River (Express/Platte) 5.35*
Alon USA .........................70 OK Marathon..........................231 Marathon (Catlettsburg) ...............273 USGC (Enbridge/Seaway) 6.95-11.10
Tesoro (Carson/Wilmington) ... 380 WRB ............................ 146
TN
MARKETS
S
OP
MT VERNON
Valero .......................... 195 SU
Chevron ................................ 291 GA USGC (Keystone/Gulf Coast Ext.) 7.80**-12.60
ETC
Diam Countrymark.......................28
Drilling by conventional crude oil PBF ...................................... 155
CENT
U RION ond PE NC
Phillips 66 ............................ 139
PADD III
MEMPHIS Notes 1) Assumed exchange rate = 0.?? US$ / 1C$ (May 2017 average)
CAPP forecasts an additional 1.5 million b/d of supplies coming from
PADD I
Valero .................................... 85 Valero ..................180
SEAWAY TWIN
2) Tolls rounded to nearest 5 cents
AR EL DORADO 3) Tolls in effect July 1, 2017
Western Canada by 2030. The combined regional opportunities in Delek.....................80
CAPITAL INVESTMENT IN THE OIL SANDS producers is expected to increase
Artesia Slaughter
TRAN
* 10-year committed toll
Canada, the U.S. and globally can reasonably
Big
Spring
be expected to absorb MISSISSIPPI SC **20-year committed toll
SCAN
First Open Season,15-year, 50,000+ b/d committed volumes
2014
Chevron (Pascagoula) ..................330
these incremental supplies.
NEW MEXICO/W. TEXAS Ergon (Vicksburg)...........................25
GA
ADA
HollyFrontier (Artesia) ...........................100 PE LOUISIANA
M R AL
by 70 per cent compared to 2016, Calumet (Shreveport) ........ 60
GULF
Alon (Big Spring). ....................................73 TYLER IA
Tesoro (Gallup)........................................25 Delek.....................75 BR
N
EX
PR EX ALABAMA
Crude Refining Capacities as at June 1, 2017
Crane XO
MS
COAS
Tesoro (El Paso)................................... .135 ID
GE
ES
S
LA
N MO Hunt (Tuscaloosa) ..........................40 MISSISSIPPI RIVER (thousand barrels per day)
$34
CRAN TE
THE COMBINED DEMAND GROWTH FROMTX
CHINA AND INDIA OFHO-HO
BIL
2017 X Shell (Saraland) .............................85
T
E ExxonMobil (Baton Rouge) ...........503
Petroleum Administration for
CA
St.
but would still be 40 per cent
PBF (Chalmette)...........................189
PADD
CT
James
10.1 MILLION B/D IS EQUAL TO MORE THAN 90 PER CENT Defense District
Marathon (Garyville).....................543
US
Port Arthur/ Lake
HOUSTON/TEXAS CITY Three
Rivers
Nederland/
Beaumont Charles FL Shell (Convent).............................235
Shell (Norco) ................................229
$15
THREE RIVERS PRSI (Pasadena) ........... 100
Marathon (Galveston).... 459 Valero (Norco) ..............................215 Major Existing Crude Oil Pipelines carrying
Valero ............................. 89
lower than in 2014. OF THE WORLD DEMAND INCREASE FROM 2015 TO 2040.
CORPUS CHRISTI Shell (Deer Park)........... 312 PORT ARTHUR/BEAUMONT
ExxonMobil ....................363
LAKE CHARLES
CITGO ............................. 425
Valero (Meraux)............................125
Phillips 66 (Belle Chasse).............247
Canadian crude oil
CITGO ........................... 157 SWEENY ExxonMobil ................... 561
BILLION
.578 Phillips 66....................... 249
Flint .............................. 300 Phillips 66..................... 247 LyondellBasell .............. 268 Alon (Krotz Springs) .......................74 Selected Other Crude Oil Pipelines
SOURCE: IEA World275
Valero ........................... Energy Outlook 2016, NewMarathon Policies Scenario
....................... 86 Valero ............................335 Calcasieu.......................... 75 Placid (Port Allen)...........................60
Total ..............................226
BILLION Valero (2) ................80+225
3
ENBRIDGE NW
UPGRADERS
RAINBO
CNRL (Horizon) ................................. 210
39%
W
EDMONTON
British Columbia
Alberta
10
457
61
3,066
Imperial .........................191
Shell ............................. 100
LLOYDMINSTER are becoming
.
Northwest Territories 1 9
SK
2016 2030
VANCOUVER
Chevron........... 55
POLICY CHANGES.
SUPPLY OF WESTERN CANADIAN CRUDE OIL Developing resources responsibly to help achieve key regulatory, Come by Chance
KEYSTONE
Complex ......................................135
WILL GROW 39 PER CENT BY 2030 TO social and environmental outcomes, is important
PUGET SOUND MOOSE JAW and needs to be
Phillips 66 (Ferndale) ...101 done in a manner that does not unnecessarily burden industry Hebron

Tesoro (Anacortes) .......120 and risk more jobs.
WA
NA
CA
S
3. GREAT
WA
FALLS
Additionally,
Phillips 66....................60
ExxonMobil ..................60
SUPERIOR
ID
KEYSTONE

MON
TREA
L
SAN FRANCISCO
Chevron (sold to Parkland Fuels) ....257 WYOMING
NORTH DAKOTA
SD Imperial ............... 113
VT USGC (Enbridge/Seaway) 6.30 - 8.85
9
PADD V
oil sands will decline for the third Phillips 66......................................120
Shell ..............................................144 Sinclair Oil (Sinclair).......................85
BRI
D GE
L INE
NH
Hardisty to
Tesoro ...........................................166 Canadian crude oil supply WYand is forecast to grow
DA from 3.9 million
) ..................18
KO
Valero ............................................145
NV b/d in 2016 to 5.4 million b/d in 2030.
TA
A
Tesoro .................102
WI Westover
NY MA
KOCH Wood River

C ExxonMobil ..............236
CE
S S
PDV ........................180
KIANTONE
CA
PADD II CT RI
SALT LAKE CITY
USGC (Keystone/Gulf Coast Ext.) 7.15 -11.55
KANSAS
WESTERN CANADA HEAVY OIL SANDS SUPPLY
Big West ............. 35 NE CHS (McPherson)....................................85
provides 95 MI WARREN
PENNSYLVANIA
per cent of this DENVER/COMMERCE
SH
dramatic change to projects due
ELL
Tesoro ................ 63 PO
Suncor........................... 98 NY St. James to Wood River (Capline/Capwood) 1.30
CHEVRON
EX
PRE
FFS
DE
NEW JERSEY
Hardisty to:
IL
OB
PACIF
NM
Kern Oil ..................... 26 Phillips 66 (Ponca City) .........................203 D DELAWARE
EA
XO
EASTERN CANADA
IC
EX
SP OUT
Valero (Ardmore).....................................86 S
KY WOOD RIVER
BP-Husky (Toledo)........................160
PBF (Toledo).................................170
5.85
5.05**-6.00
ROBINSON
Marathon (Canton) .........................93
Alon USA .........................70 OK Marathon..........................231 Marathon (Catlettsburg) ...............273 USGC (Enbridge/Seaway) 7.00 - 9.05
TN
MARKETS
S
OP
MT VERNON
Valero .......................... 195 SU
Chevron ................................ 291 GA USGC (Keystone/Gulf Coast Ext.) 7.80 - 12.55
ETC
CENT
U RION ond PE NC
Phillips 66 ............................ 139
PADD III
MEMPHIS Notes 1) Assumed exchange rate = 0.73 US$ / 1C$ (May 2017 average)
PADD I
Valero .................................... 85 Valero ..................180
SEAWAY TWIN
Artesia Slaughter
TRAN
Big
Spring
SCAN
2014
these incremental supplies. International Joint Tariff
GA
ADA
M R AL
GULF
N
EX
PR EX ALABAMA
Crane XO
MS
COAS
Tesoro (El Paso)................................... .135 ID
GE
ES
S
LA
$34
CRAN TE
BIL
2017 X Shell (Saraland) .............................85
T
CA
St.
PBF (Chalmette)...........................189
James PADD
CT
US
Port Arthur/ Lake
Rivers
Nederland/
Shell (Norco) ................................229
$15
Valero ............................. 89
ExxonMobil ....................363
LAKE CHARLES
CITGO ............................. 425
Valero (Meraux)............................125
Canadian crude oil
BILLION
.578 Phillips 66....................... 249
Total ..............................226
BILLION Valero (2) ................80+225
THE U.S. GULF COAST HAS AN ESTIMATED HEAVY OIL
PROCESSING CAPACITY OF MORE THAN 2 MILLION B/D,

WHICH IS IDEALLY SUITED TO REFINING FORECASTED
WESTERN CANADIAN HEAVY OIL SUPPLIES.
Pipeline Proposals
TRANSCANADA
ENERGY EAST
ADDITIONAL CAPACITY:
Edmonton 1,100,000 b/d
Hardisty
Vancouver
POTENTIAL MARKETS:
Eastern Canada, U.S. East Coast,
Europe, Africa and Asia
ENBRIDGE
STATUS:
LINE 3 REPLACEMENT
Winnipeg
NEB hearing pending. ADDITIONAL CAPACITY:
Lvis
370,000 b/d
TRANS Baker Saint John
POTENTIAL MARKETS:
MOUNTAIN Superior
Montral
Central and Eastern Canada,
EXPANSION PROJECT U.S. Midwest and Gulf Coast
ADDITIONAL CAPACITY: STATUS:
Approved November 29, 2016
590,000 b/d with 89 conditions by the
POTENTIAL MARKETS: federal government.
Asia and California Steele City
TRANSCANADA
STATUS:
Approved November 29, 2016
Patoka KEYSTONE XL
with 157 conditions by the ADDITIONAL CAPACITY:
federal government. Cushing
830,000 b/d
POTENTIAL MARKETS:
Heavy oil refineries along Gulf Coast
Trans Mountain Expansion Project
STATUS:
Existing Pipeline Infrastructure to Gulf Coast U.S. Presidential permit received
Port Arthur TransCanada Keystone XL on March 24, 2017.
TransCanada Energy East
Enbridge Line 3 Replacement
TRANSPORTATION
Connecting Western Canadas growing crude oil supplies to global markets is a priority.
The existing pipeline network originating in Western Canada can TRANSPORT 4.0 MILLION B/D.
By 2030, the annual supply of WESTERN CANADIAN OIL IS FORECAST TO BE 5.4 MILLION B/D, AN INCREASE
OF 1.5 MILLION B/D FROM TODAY.
NEW PIPELINE INFRASTRUCTURE WILL BE NEEDED to move this growing volume of Canadian oil to Canadians
and markets abroad.
Crude Oil Forecast, Markets & Transportation i

TABLE OF CONTENTS
EXECUTIVE SUMMARY IFC
LIST OF FIGURES AND TABLES iii

1 INTRODUCTION 1
2 CRUDE OIL PRODUCTION & SUPPLY FORECAST 3

2.1 Production & Supply Forecast Methodology 3
2.2 Canadian Production 4
2.3 Eastern Canada Production 5
2.4 Western Canada Production 6
2.5 Western Canada Supply 10
2.6 Crude Oil Production & Supply Summary 12
3 CRUDE OIL MARKETS 13

3.1 Canada 14
3.2 United States 16
3.3 International 22
3.4 Markets Summary 22
4 TRANSPORTATION 23
4.1 Crude Oil Pipelines Exiting Western Canada 24
4.2 Oil Pipelines to the U.S. Midwest 28
4.3 Oil Pipelines to the U.S. Gulf Coast 30
4.4 Oil Pipelines to the West Coast of Canada 33
4.5 Oil Pipelines to Eastern Canada 33
4.6 Diluent Pipelines 36
4.7 Crude Oil by Rail 37
4.8 Transportation Summary 38
GLOSSARY 39
APPENDIX A.1: CAPP Canadian Crude Oil Production Forecast 2017 2030 41
APPENDIX A.2: CAPP Western Canadian Crude Oil Supply Forecast 2017 2030 43
APPENDIX B: Acronyms, Abbreviations, Units and Conversion Factors 44
APPENDIX C: Map of Canadian and U.S. Crude Oil Pipelines and Refineries 45
ii CANADIAN ASSOCIATION OF PETROLEUM PRODUCERS

LIST OF FIGURES AND TABLES
FIGURES
Figure1.1 World Total Primary Energy Demand, 2014 1
Figure1.2 Capital Investment in Oil Sands 2
Figure2.1 Canadian Oil Sands & Conventional Production 4

Figure2.2 Newfoundland & Labrador Production 6
Figure2.3 Western Canada Conventional Production 7
Figure2.4 Oil Sands Regions 8
Figure2.5 Western Canada Oil Sands Production 9
Figure2.6 Western Canada Oil Sands & Conventional Supply 11
Figure3.1 Canada and U.S.: 2016 Crude Oil Receipts by Source 13

Figure3.2 2016 PADDI: Foreign Sourced Supply by Type and Domestic Crude Oil 16
Figure3.3 2016 PADDII: Foreign Sourced Supply by Type and Domestic Crude Oil 18
Figure3.4 2016 PADDIII: Foreign Sourced Supply by Type and Domestic Crude Oil 19
Figure3.5 2016 PADDIV: Foreign Sourced Supply by Type and Domestic Crude Oil 19
Figure3.6 2016 PADDV: Foreign Sourced Supply by Type and Domestic Crude Oil 20
Figure3.7 Global Net Oil Imports: 2015 to 2040 22
Figure4.1 Existing and Proposed Canadian & U.S. Crude Oil Pipelines 23
Figure4.2 Canadian Fuel Oil and Crude Petroleum Moved by Rail: Car Loadings & Tonnage 37
Figure4.4 Existing Takeaway Capacity from Western Canada vs. Supply Forecast 38
TABLES
Table2.1 Canadian Crude Oil Production 4
Table2.2 Atlantic Canada Projects and Recent Discoveries 5
Table2.3 Western Canada Crude Oil Production 6
Table2.4 Oil Sands Production 8
Table2.5 Western Canada Crude Oil Supply 11
Table3.1 Refineries in Western Canada by Province 14

Table3.2 Refineries in Eastern Canada by Province 15
Table3.3 Rail Offloading Terminals in Eastern Canada and PADDI 17
Table3.4 Refinery Upgrade Projects in PADDII 18
Table3.5 Rail Offloading Terminals in Western Canada & PADD V 21
Table3.6 Total Oil Demand in Major Asian Countries 22
Table4.1 Major Existing Crude Oil Pipelines Exiting Western Canada 24

Table4.2 Proposed Crude Oil Pipelines Exiting Western Canada 25
Table4.3 Enbridge Mainline System: Upstream Superior 26
Table4.4 Summary of Crude Oil Pipelines to the U.S. Midwest 29
Table4.5 Summary of Crude Oil Pipelines to the U.S. Gulf Coast 30
Table4.6 Summary of Crude Oil Pipelines to the West Coast of Canada 33
Table4.7 Summary of Crude Oil Pipelines to Eastern Canada 36
Table4.8 Summary of Diluent Pipelines 36
Table4.9 Rail Uploading Terminals in Western Canada 37
Crude Oil Forecast, Markets & Transportation iii

1
INTRODUCTION
Crude oil is the lifeblood of the modern economy. According to the International Energy
Agency (IEA), crude oil accounts for the largest share of the total world primary energy
demand (Figure1.1) and is forecasted to remain so to 2040. CAPPs annual Crude Oil
Forecast, Markets and Transportation report provides the associations latest long-term
outlook for total Canadian crude oil production and western Canadian crude oil supply. It
also contains key information on Canadian crude oil markets, both existing and potential,
as well as an updated synopsis of developments in the transportation projects that could
connect this projected supply to various markets. A primary purpose of this report is to
inform discussion and to support a fundamental understanding of oil industry issues.
The 2017 edition of this publication has been FIGURE 1.1 WORLD TOTAL PRIMARY ENERGY DEMAND, 2014
produced as challenges to industry competitiveness
continue to arise and temper growth prospects for Other Renewables
oil sands development in the long term. In addition 1%
to continuing low prices, Canadian producers will Hydro
need to contend with carbon pricing and cumulative 2% Bioenergy
Nuclear
impacts from other federal and provincial climate 5% 10%
change policies, which their competitors in the U.S. Coal
may not be facing. Protectionist policies that may be 29%
pursued by the current U.S. administration are also a
cause for concern.
Natural Gas
21%
Oil
31%
Source: IEA, World Energy Outlook 2016
1 CANADIAN ASSOCIATION OF PETROLEUM PRODUCERS

In 2014, crude oil prices dropped from over In terms of the oil sands outlook, CAPP estimates
US$100 per barrel to half that level by year-end 2017 producer capital spending for oil sands will
before reaching a low of US$26 per barrel in early decline for the third consecutive year (Figure1.2),
2016. Lower oil prices have been attributed to a which reflects a dramatic rationalization of projects
global oversupply of oil. Geopolitical events in due to the continuing uncertainty in the long
various oil producing areas, market uncertainty, term. Projects that have recently started up or
weather conditions, infrastructure constraints and are in construction are expected to proceed and
government regulations can also influence prices, so contribute to growing production through to
both regionally and globally. 2020. Oil sands will be an integral part of the global
supply in the future as well, since CAPP forecasts
More recently, prices have improved somewhat, with a steady, albeit slower growth from 2020 to the
West Texas Intermediate (WTI) spot crude prices end of the forecast period in 2030. The slower
in May 2017 hovering just under US$50 per barrel. growth is reflective of continuing uncertainty as
Conventional producers in Canada are expected companies assess the impact of impending risks
to respond with a 70percent increase in drilling to their operating environment. The economic
of conventional oil wells in 2017 compared to 2016 competitiveness of the oil sands on a global scale is
but would still be almost 40percent lower when vital in order to attract capital to build for the future.
compared to 2014.
In addition to low oil prices, Canadas oil industry
FIGURE 1.2 CAPITAL INVESTMENT IN OIL SANDS is facing a number of challenges to its ability to
compete in the global market. Canadian and U.S.
40 C$ billions regulators have offered divergent responses to
34 climate change and potential U.S. protectionist
35
31
policies threaten Canadas unfettered access
30
to its traditional export markets. These factors
25 23 continue to weigh heavily on the outlook in the
20 17
long term. On the upside, the oil sands industry is
15
15 focusing on technologies that reduce costs and
greenhouse gas (GHG) emissions for existing and
10
future operations. Although CAPPs most current
5 forecast for conventional oil production is showing
0 some recovery, the oil sands outlook is essentially
2013 2014 2015 2016 E 2017 F unchanged from its 2016 forecast. CAPP forecasts
E = estimate crude oil production from Western Canada to grow
F = forecast
1.3millionb/d by 2030. After blending and the
inclusion of imported diluent, this translates into
over 1.5millionb/d of additional crude oil supplies
requiring transport capacity to markets.
Crude Oil Forecast, Markets & Transportation 2

2 CRUDE OIL PRODUCTION &
SUPPLY FORECAST
Canada has the third largest reserves of crude oil in the world and is ranked by the Oil &
Gas Journal as the sixth largest global producer. In 2016, Canada produced 3.85millionb/d
of crude oil, including pentanes & condensates, which was equal to over 5percent of
global production. With such vast resources, there is tremendous potential for the industry
to grow, which would provide many economic and social benefits to Canadians. However,
Canadian production continues to be tempered by lower oil prices, and new federal and
provincial environmental policies that differ from the regulatory approach of other competing
jurisdictions. CAPP forecasts a growth in crude oil production of 1.3millionb/d from 2016 to
2030 in Western Canada. This translates into 1.5millionb/d of additional crude oil supply after
blending and including imported diluent volumes.
Producers were asked to respond to the survey based

2.1 PRODUCTION & SUPPLY FORECAST METHODOLOGY
on their own companys view of the price outlook as
CAPPs western Canada conventional and eastern well as recent policy developments including federal
Canadian production forecasts are both developed and provincial climate change policies. The survey
through an internal analysis of historical trends, results were then risked based on each projects
expected drilling activity, as well as discussions with stage of development while giving consideration
industry stakeholders and government agencies. to each companys past performance for previous
phases of projects relative to public announcements.
For the oil sands forecast, CAPP surveyed oil sands The reasonableness of the overall forecast was then
producers in the first quarter of 2017 for the following assessed against historical trends during a final review.
data: No direct constraints were put on the forecast due
to availability of condensate for blending purposes
Expected production for each project; or lack of transportation infrastructure although
company assessments on these issues may have
Upgraded crude oil production; and
impacted individual producer survey responses.
The
type and volume of diluent in order to
Crude oil supplies that are delivered to refining
move the heavy oil production to market.
markets are greater than production volumes because
they include imported diluent volumes.

FIGURE2.1 CANADIAN OIL SANDS & CONVENTIONAL PRODUCTION
million barrels per day
6
Actual Forecast June 2016 Forecast
Eastern Canada
3
Oil Sands
Conventional Heavy
1
Conventional Light
Pentanes/Condensate
0
2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030
2017
Total production is forecast to grow from

2.2 CANADIAN PRODUCTION
3.85millionb/d in 2016 to 5.12millionb/d by 2030
Eastern Canada is a notable source of Canadian (Figure2.1). Oil sands is the main driver for the
supply, primarily from offshore projects. However, 1.3millionb/d of production growth. Conventional
Western Canada contributes the bulk of supply from production is relatively flat at around 1.2millionb/d
both conventional drilling and oil sands projects. throughout the forecast period to 2030. Drilling of
conventional oil wells is recovering thereby slowing
Total Canadian crude oil production was almost the rate of decline until 2020 and resulting in flat
unchanged in 2016 from 2015 levels, as increased production thereafter. The near-term declines in
production from Eastern Canada was offset by conventional light and heavy crude oil production
the production losses in Western Canada due to will be partially offset by the higher production in
conventional production declines and the impact pentanes as industry continues to develop liquids-rich
of the Fort McMurray fires on oil sands production. natural gas pools.
Conventional production, including pentanes &
condensate, accounted for 32percent of total The significant investment in light tight oil (LTO)
production. Oil sands comprised 62percent whereas is expected to lead to further growth. This upside
Eastern Canada production made up the remaining potential is not fully reflected in this forecast as LTO
6percent. production is in the early stages of development.
TABLE 2.1 CANADIAN CRUDE OIL PRODUCTION
millionb/d 2016 2020 2025 2030

Eastern Canada 0.21 0.28 0.29 0.19
Western Canada 3.64 4.34 4.59 4.93
Total Canada* 3.85 4.62 4.88 5.12
*Total may not add up due to rounding.

In May 2017, proponents of the West White Rose
2.3 EASTERN CANADA PRODUCTION
Extension Project announced that the project will
Crude oil from Eastern Canada is sourced primarily be proceeding. As a result, the project has been
from three oil fields located offshore of Newfoundland included in CAPPs forecast for the first time with
and Labrador. They are the Hibernia, Terra Nova startup targetted in 2022. In addition, first oil from a
and White Rose projects. However, Ontario and fourth major oil field, Hebron, is expected in late 2017.
New Brunswick also contribute some small volumes Overall production will be set to increase until 2024 as
of production. In 2016, production increased by production from these projects ramp up (Figure2.2).
38,000b/d to reach 213,000b/d, which represents After 2024 production is expected to decline steadily
a 21percent increase over 2015 production of through to the end of the outlook.
176,000b/d. The increase is attributed to higher
Future production levels could rise higher than
production from the Hibernia South Extension satellite
forecast in the outlook depending on the pace and
field. Table2.2 summarizes details of the producing,
timing of new projects and exploration. Production
in-development, and recently discovered fields.
from recent discoveries are currently not included in
Oil production is expected to decrease slightly in CAPPs Atlantic Canada production forecast due to
2017 with lower production at all three fields. High their early stages of evaluation.
upfront capital costs associated with offshore
drilling encourages the maximization of production
out of existing wells, leading to high decline rates.
However, while during the next decade production
from these fields is expected to decline quickly, the
increased reserves from associated satellite pools can
extend the lives of these projects and the associated
production from these pools will slow the overall rate
of decline.
TABLE2.2 ATLANTIC CANADA PROJECTS AND RECENT DISCOVERIES
Producing Field Year First Oil Cumulative Production Estimated

Discovered to December 31, 2016 Recoverable Reserves
(million barrels) (million barrels)
Hibernia 1979 Nov 1997 1,002 (61% of reserves) 1,644
Hibernia South Extension
Terra Nova 1984 Jan 2002 391 (77% of reserves) 506
White Rose 1984 Nov 2005 269 (56% of reserves) 479
North Amethyst May 2010
South White Rose Extension Mid 2015
North Amethyst Hibernia Sep 2015
West White Rose 2022
Hebron 1980 Late 2017 n/a 707
Recent Discoveries Year First Oil Estimated
Discovered Recoverable Reserves
(million barrels)
Mizzen 2009 no estimate 102 (heavy oil)
Harpoon Jun 2013 no estimate Under evaluation
Bay du Nord Aug 2013 2020+ 300 to 600 (light oil)
Source: Canada-Newfoundland and Labrador Offshore Petroleum Board (C-NLOPB)

FIGURE2.2 NEWFOUNDLAND AND LABRADOR PRODUCTION
thousand barrels per day

400
Actual Forecast
350
June 2016 Forecast
300 North Amethyst
White Rose
250
200 Terra Nova
150
100
Hibernia
50
0
1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030
2.4 WESTERN CANADA PRODUCTION 2.4.1 CONVENTIONAL

All of the oil sands resources and the major In 2016, there was 1.2 millionb/d of conventional
conventional oilfields are concentrated in Western production, of which 261,000b/d (21percent)
Canada. Consequently, this area provides almost was pentanes & condensate. While the crude oil
95percent of total production in Canada and component declined by 117,000b/d, this decline was
practically all the anticipated future growth. partially offset by increased production of pentanes
Conventional sources comprised 34percent of this & condensate. As a result, overall conventional
production in 2016 and are expected to continue to production declined 76,000b/d (6percent) versus
contribute around 28percent through the outlook 2015.
period. Although the Fort McMurray wildfires
noticeably impacted 2016 production, oil sands Combined production from Alberta and Saskatchewan
production will be responsible for overall growth accounts for over 90percent of conventional
of 1.3millionb/d from 3.6millionb/d in 2016 to production with the remainder coming from British
4.9millionb/d by 2030 (Figure2.1). This forecast Columbia, Manitoba and the Northwest Territories.
equates to an average growth in production in The forecast for total conventional production
Western Canada of 93,000b/d year over year. in Western Canada through to 2030 is shown in
Figure2.3. With crude oil prices rebounding from a
TABLE2.3 WESTERN CANADA CRUDE OIL PRODUCTION low of US$26 seen in early 2016, conventional crude
oil drilling is recovering in 2017. Conventional crude oil
millionb/d 2016 2020 2025 2030 production is not expected to return to the highs of
Conventional 2014 but will remain fairly stable through the outlook
(including pentanes/ 1.24 1.22 1.24 1.26 period. Increases in crude oil drilling are not expected
condensate) to be robust enough to compensate for the loss of
Oil sands production resulting from well decline rates and the
2.40 3.12 3.35 3.67 lower levels of drilling in the past two years. The
(bitumen & upgraded)
production outlook for pentanes & condensate that
Total Western Canada 3.64 4.34 4.59 4.93 is on average 90,000b/d higher than was forecast in
2016 should, however, stabilize overall conventional
production at around 1.26millionb/d in 2030.

Alberta Manitoba, British Columbia, NWT
In 2016, Alberta produced 444,000b/d of Manitoba produced 40,000b/d of crude oil in 2016,
conventional crude oil production or 46percent equal to 3percent of total conventional production
of the Western Canada total. The province also from Western Canada. Strong horizontal drilling and
produced 85percent of total pentanes & condensate, hydraulic fracturing activity also revived production
or 222,000b/d. The Alberta Energy Regulator in southwestern Manitoba where the outer extensions
(AER) estimates that Alberta has 1.6 billion barrels of the Bakken formation and Three Forks oil plays
of established conventional crude oil reserves are located. However, production is still forecast to
remaining as of December 31, 2016. Use of horizontal decline to the end of the outlook in 2030.
drilling coupled with multi-stage hydraulic fracturing
techniques are helping producers raise recovery rates Since 2005, condensate production has been steadily
for many oilfields by providing economic access to comprising a larger part of the total conventional
tight oil reserves, most notably in the Cardium, production in British Columbia. In 2016, of the
Viking, Duvernay and Montney plays in Alberta. 61,000b/d of conventional production, 38,000b/d
were pentanes & condensate. The Montney formation
Decreasing costs is also a key driver behind the higher lies in both Alberta and British Columbia. It is
drilling rates. The Petroleum Services Association of primarily a natural gas play but has promising light
Canada (PSAC) estimates drilling and completion oil potential and a significant amount of natural gas
costs in the Cardium are lower by 6percent in the liquids. Producers are expected to continue targeting
winter of 2017 compared to the previous winter. liquid-rich areas in the Montney.
Casing and cement costs have dropped by around
22percent. There is little production currently from the Northwest
Territories and no exploratory development to report.
However, the last assessment of the unconventional
oil-in-place reported 46 billion barrels for the Bluefish
Shale and 145 billion barrels for the Canol Shale.
The amount of recoverable crude oil has not been
estimated to date but this could be a significant
resource if even only 1percent of the in-place
resource can be recovered.
FIGURE2.3 WESTERN CANADA CONVENTIONAL PRODUCTION
1.6
Actual Forecast
1.4 June 2016 Forecast
1.2
1.0 Alberta
0.8
Saskatchewan
0.6
Manitoba
0.4
0.2 BC & NWT

Pentanes/Condensate
0.0
2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030
2017

Saskatchewan The AER estimates 2016 capital costs for a
100,000b/d mining project to range from $9 to
In 2016, Saskatchewan produced 459,000b/d or $11 billion and supply costs to range from US$65 to
47percent of the total Western Canada conventional US$80 WTI equivalent per barrel. In comparison, a
crude oil production. Pentanes & condensate 30,000b/d insitu steam-assisted gravity drainage
production is negligible. The combination of (SAGD) project is estimated to cost from $750million
horizontal drilling and multi-stage fracturing has to $1.35 billion with supply costs that range from
led to essentially a second phase of production of US$30 to US$50 WTI equivalent per barrel. These
light tight oil in three main formations. The Bakken supply cost estimates illustrate the challenges
formation in southeast Saskatchewan is the most of developing oil sands projects in a lower price
developed of these, followed by the Viking and Lower environment and the vulnerability such projects have
Shaunavon formations. Drilling is expected to increase to policies that increase costs and impair relative
in 2017 as resource plays for some producers become competitiveness.
more economically viable at higher prices. Companies
have also successfully reduced operating costs FIGURE2.4 OIL SANDS REGIONS
significantly. If productivity and efficiency gains can
be maintained, producers can be more competitive.
Saskatchewan production is forecast to initially Athabasca
Deposit
decline but eventually recover to 2016 production
levels, or 461,000b/d of crude oil by 2030.
Fort
McMurray
2.4.2 OIL SANDS Peace

River
This latest forecast for oil sands production is Peace River

relatively unchanged from the 2016 outlook, Deposit Cold Lake
increasing by 1.3millionb/d from 2016 to reach Deposit
3.7millionb/d by 2030 (Table 2.4). For comparison,
Edmonton
over 6millionb/d of oil sands production has been Lloydminster
approved to date (including approved projects that

have proceeded to production). However, not all of
the approved projects are expected to be operating Calgary
by the end of the forecast period. Additional projects
are also expected to proceed to the approval stage.
TABLE2.4 OIL SANDS PRODUCTION CAPPs latest oil sands forecast grows from
2.4millionb/d to 3.7millionb/d (Figure2.5). Mining
millionb/d 2016 2020 2025 2030 production grows from 1.0millionb/d in 2016 to
Mining 1.03 1.41 1.43 1.51 reach 1.5millionb/d in 2030. Insitu development
is the primary driver of growth, expanding from
Insitu 1.37 1.71 1.92 2.16
1.4millionb/d currently and reaching 2.2millionb/d
Total* 2.40 3.12 3.35 3.67 by the end of the outlook. All oil sands projects
*Total may not add up due to rounding. will need to pay out in the longer term in order to
attract investment but insitu projects require less
The oil sands resources are situated almost entirely in upfront capital than mining projects and incremental
Alberta and are delineated by three deposits. These production can be added in smaller phases. Although
regions, referred to as the Athabasca, Cold Lake and 2016 production was impacted by the Fort McMurray
Peace River deposits are shown in Figure2.4. The forest fires there was no fundamental infrastructure
AER estimated at year-end 2016 there are 165 billion damage, so 2017 production is set to rebound sharply.
barrels of established reserves, of which 32 billion Generally, the forecast has a higher rate of growth up
barrels, or 19percent is considered recoverable by to 2020 than in the latter years, which is supported
mining and 133 billion barrels or 81percent can be by projects that have recently been completed or are
recovered using insitu techniques. already under construction.

FIGURE2.5 WESTERN CANADA OIL SANDS PRODUCTION

6
Actual Forecast
5
June 2016 Forecast
4
3
In Situ
2
1 Mining
0
2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030
2017
There is slower growth anticipated further out in the Since Nexen idled the upgrader at its Long Lake
forecast due to: longer term price uncertainty; the project in July 2016, there are currently no insitu
impact of burgeoning U.S. shale supplies on the global projects with integrated upgrader facilities. Some
market; and the impact of federal and provincial insitu volumes from Suncors Firebag and MacKay
climate change policies on relative competitiveness. River projects can be upgraded at the Suncor
Canadian producers are also wary of protectionist upgrader affiliated with its Millennium mine project
policies that may emanate from the U.S. but in general, the smaller size of insitu projects are
not economically conducive for the joint location of a
Upgrading full upgrader.
The production volumes from oil sands projects are The following is a list of the existing integrated mining
shown by combining raw bitumen production and and upgrading projects:
upgraded crude production from integrated projects.
By volume, there is generally a yield loss associated Athabasca Oil Sands Project (AOSP) which
with the upgrading process that converts mined includes Muskeg River Mines and Jackpine
bitumen into upgraded crude oil. The yield losses Mine.
associated with upgrading volumes from oil sands
projects without associated upgraders is incorporated Canadian Natural Horizon Project.
in the calculation of the supply volumes discussed
Suncor Steepbank and Millennium Mine.
in the following section. Refer to Appendix A.1 for
detailed production data. Syncrude Mildred Lake Mine and Aurora Mine.

Imperials existing Kearl mine, and Suncors Fort Hills 2.5 WESTERN CANADA SUPPLY
mine, which is slated for operations by the end of
2017, are both stand-alone mines with no associated Crude oil supply refers to the crude oil that is
upgrading facilities. Partial upgrading may be delivered to the end-use market. CAPP is forecasting
employed at some stage, however this technology 1.5millionb/d of growth in Western Canada crude oil
has not been developed on a commercial scale to supplies by 2030 (Figure2.6), which is very similar
date although its potential is promising. The crude oil to last years outlook. Conventional supplies are
produced by full upgrading of bitumen is light and expected to decline by 86,000b/d from 901,000b/d
may compete with the increasing volumes of light U.S. in 2016 to 815,000b/d by 2030. Oil Sands Heavy
shale production but partial upgrading could produce supply is forecast to increase by 1.45millionb/d from
a medium or heavy crude that would not require the 2.38millionb/d in 2016, reaching 3.84millionb/d
addition of diluent for blending to transport through by 2030. Upgraded Light supply increases by
pipelines. There would be cost savings resulting from 163,000b/d from 631,000b/d to reach 794,000b/d
the removal of the diluent cost as well as a reduction in 2030.
in the pipeline capacity required to move the same
The conventional production in Appendix A.1 reports
volume of bitumen production.
domestic sources of diluent, which is included in the
Regulations heavy supply volumes reported in Appendix A.2.
On a volumetric basis, the Western Canada supply
On December 9, 2016, the federal government forecast reported in Appendix A.2 is greater than the
and all provinces except Saskatchewan signed sum of the conventional and oil sands production
the Pan-Canadian Framework to meet the federal because of the addition of imported diluent volumes
governments 2030 target of a 30percent reduction that are required for blending. Western Canada oil
in GHG emissions. The Pan-Canadian Framework supply represents the total of Conventional Light,
requires all provinces and territories to have a carbon Conventional Heavy, Upgraded Light, and Oil Sands
pricing scheme in some form by 2018. Provinces that Heavy crude oil. The Oil Sands Heavy category
fail to enact a provincial carbon pricing scheme in this includes upgraded heavy sour crude oil, SynBit and
timeframe will be subject to federal regulations. To DilBit. The Upgraded Light category includes light
date, there has been no legislation introduced on the crude oil volumes produced from both bitumen and
federal carbon pricing scheme. conventional heavy oil upgraders.
The Alberta government enacted new climate change Both conventional heavy crude oil and oil sands
regulations including a carbon tax that is applied bitumen that is not upgraded must be diluted by
across all sectors starting January 1, 2017. Natural gas blending with a lighter hydrocarbon to enable flow
produced and consumed on site by conventional oil through a pipeline.
and gas producers will be exempt from the carbon
levy until January 1, 2023. The oil sands will be subject Pentanes & condensates are the main source of
to a legislated emissions limit of 100 megatonnes (Mt) diluent, and when used, result in a heavy crude oil
per year under the Oil Sands Emissions Limit Act. mixture known as DilBit. Imports of condensate
compensate for the shortfall between demand for
In February 2017, Environment and Climate Change use in blending and domestic supply. Other bitumen
Canada (ECCC) published a discussion paper on volumes are diluted with upgraded light crude oil,
a clean fuel standard aimed at trimming annual resulting in a heavy crude oil known as SynBit.
emissions of carbon dioxide by 30 Mt by 2030 over Blending for DilBit requires approximately a 70:30
and above cuts that would be achieved through bitumen to condensate ratio while the blending ratio
existing programs. The standard would apply of SynBit is approximately 50:50. Raw bitumen and
to a broad range of fuels and cover emissions RailBit, which has a reduced diluent requirement,
by industries, homes, and buildings as well as can be transported by rail. CAPPs forecast includes
transportation. relatively small volumes of RailBit or raw bitumen
being transported under the assumption that
pipelines are being built. In the absence of new
pipelines however, the increased supply would once
again look to rail to reach markets.

FIGURE2.6 WESTERN CANADA OIL SANDS & CONVENTIONAL SUPPLY
6
Actual Forecast June 2016 Forecast
Oil Sands Heavy *

3
Upgraded Light
1
Conventional Heavy
Conventional Light
0
2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030
2017
* Oil Sands Heavy includes some volumes of upgraded heavy sour crude oil and bitumen blended with diluent or ugpraded crude oil.
In 2016, roughly 440,000b/d in total of imported TABLE2.5 WESTERN CANADA CRUDE OIL SUPPLY
condensates, upgraded crude oil, as well as quantities
of butane were needed to supplement the condensate millionb/d 2016 2020 2025 2030
supply originating from natural gas wells in Western Light 1.25 1.32 1.32 1.40
Canada. CAPPs forecast is not constrained by the Heavy 2.66 3.36 3.65 4.05
availability of condensate imports as new sources
Total Supply* 3.91 4.68 4.97 5.45
of condensate are assumed to be made available to
meet market requirements. New technology such as
partial upgrading can also serve to reduce diluent
requirements.
Table 2.5 shows the projections for total western

Canadian crude oil supply. The growth will essentially
be in heavy crude oil supplies with only minor growth
in light crude oil supplies. Refer to AppendixA.2 for
more detailed data.

2.6 CRUDE OIL PRODUCTION & SUPPLY SUMMARY Long-term oil sands production growth is
being affected by:
Canadian production is forecast to grow by
1.27millionb/d by 2030, increasing from o Indications of possible U.S.
3.85millionb/d in 2016 to 5.12millionb/d in 2030. protectionist policies.
Western Canada will be the primary source of supply
and future production growth. In Eastern Canada, o Federal and provincial climate change
although the Hebron project is expected to start up policies, which impose constraints
at the end of 2017, overall production from this region on the ability to reduce capital and
will enter long-term decline within the outlook. operating costs.
Eastern Canadas contribution increases to o Divergent environmental policies

307,000b/d in 2024 but is forecast to fall to between Canada and the U.S.
186,000b/d by 2030.
Western Canada oil sands production grows

by 1.3millionb/d from 2.4millionb/d in 2016
to 3.7millionb/d in 2030.
Western Canada conventional crude oil

production, contributes 884,000b/d on
average throughout the outlook.
Pentanes & condensate production from

Western Canada have grown markedly in
recent years and the outlook reflects an
uplift in this production given gas producers
desire to continue to target liquids-rich
plays. Pentanes & condensate are forecast
to be 361,000b/d in 2030 compared to
261,000b/d in 2016.
An incremental 1.5millionb/d of crude oil

supply from Western Canada is forecast to
enter the global market by 2030, of which
over 90percent will be heavy crude oil.
From 2017 to 2020, the growth in supply is

projected to be, on average, 5percent per
annum before falling to a slower average
annual rate of growth at 2percent from 2021
through 2030.
Long-term activity and growth is significantly

lower compared to the outlook compiled in
2014 when oil prices were over US$100 per
barrel.

3 CRUDE OIL
MARKETS
Crude oil is processed in refineries where its hydrocarbons are separated and molecules
are split apart before being reassembled and blended to manufacture a variety of products
including transportation fuels like gasoline, diesel and aviation fuel. Essentially all exports of
crude oil supply from Western Canada are destined for the U.S. Figure3.1 shows the main
refinery markets in North America and their sources of crude oil in 2016.
FIGURE3.1 CANADA AND U.S.: 2016 CRUDE OIL RECEIPTS BY SOURCE
Other
Western
Canada 5
QC+ Atlantic Canada
AB, BC, SK [704]
[553]
ON
[330]
PADD V Other
[2,349] Atlantic
PADD IV Canada 36
[598]
PADD I - East Coast

PADD II [1,108]
[3,622]
[2016 total refinery receipts]

U.S. - Alaska only

U.S. (excluding Alaska)
Other Imports
PADD III - Gulf Coast Atlantic Canada
[8,527] Western Canada
Sources: CAPP, CA Energy Commission, EIA, Statistics Canada

The North American crude oil market has undergone TABLE3.1 REFINERIES IN WESTERN CANADA BY PROVINCE
a significant transformation in recent years with the Crude Oil
emergence of light crude oil production from shale Processing
plays located throughout the U.S. However, the U.S. Capacity
remains the primary destination for Canadas crude Owner Location (b/d)
oil supplies and significant opportunities are still
ALBERTA
available that would increase the volumes being sold
to this market. The growth in Canadian production is Imperial Strathcona 191,000
forecast to be mainly heavy crude oil from oil sands, Husky Lloydminster 29,000
while U.S. domestic production will be predominately
Suncor Edmonton 142,000
light crude oil. The U.S. refineries that have made the
investment in technology to process heavy crude Shell Scotford 100,000
oil will prefer to rely on this cheaper feedstock. U.S. North West Redwater Sturgeon County +50,000
domestic light crude oil supplies are no longer captive Partnership (expected in
to U.S. refineries since the removal of restrictions on late 2017)
U.S. crude oil exports in December 2015. Alberta Subtotal: 462,000
(4 refineries + 1 in construction) + 50,000
Canada will need multiple pipeline paths to tidewater
in order to reach a wider spectrum of global market BRITISH COLUMBIA
opportunities. With a pipeline connection to the East Chevron (sale to Parkland Burnaby 55,000
Coast, western Canadian crude oil could also displace Fuels announced in April to be
some foreign crude oil supplies in Eastern Canada finalized by end 2017)
and the U.S. East Coast (PADDI). Improved pipeline Husky Prince George 12,000
access to Canadas West Coast and the U.S. Gulf
Coast will be key to the ability of Canadian producers British Columbia Subtotal: (2 refineries) 67,000
to expand markets. SASKATCHEWAN
Federated Co-operatives Regina 135,000
Gibson Moose Jaw 19,000
3.1 CANADA
Saskatchewan Subtotal: (2 refineries) 154,000
Refineries located in Canada have 1.9millionb/d TOTAL 683,000
of crude oil processing capacity. In 2016, these + 50,000
refineries processed 1.6millionb/d, including
581,000b/d of imported crude oil by refineries in Proposals for three different export refineries to be
Eastern Canada. based in British Columbia (BC) are in the concept
stage. Under two of these proposals, bitumen
feedstock would be delivered by rail to the refinery
3.1.1 WESTERN CANADA and converted into refined products for export to
Asia. Kitimat Clean Ltd. proposes to build a heavy oil
The eight refineries located in Western Canada
refinery near Kitimat that would process 400,000b/d
have a combined crude oil processing capacity of
of bitumen into gasoline, aviation fuel and diesel
683,000b/d (Table3.1). In 2016, these refineries
for export, at an estimated cost of $22billion. In
processed 553,000b/d of crude oil that was sourced
October 2016, the proponent requested a temporary
exclusively from Western Canada. There will be a step
suspension of the federal environmental assessment
increase in demand after the startup of the North
of the project due to funding concerns.
West Redwater Partnership (NWR) Sturgeon refinery,
Canadas first new refinery in 30 years. At a price tag
of $8.5 billion, Phase 1 is designed to process up to
50,000b/d of blended bitumen, and is scheduled for
startup at the end of 2017. The timing and future for
the remaining two phases, which would each process
50,000b/d of blended bitumen, is uncertain.

Pacific Future Energy Corp. (PFEC) is proposing In 2016, about 264,000b/d or 80percent of total
to build a bitumen refinery between Terrace and crude oil feedstock for Ontario refineries was served
Kitimat and is working closely with local First by western Canadian crude oil. Since late 2015,
Nations. The refinery is estimated to cost between refineries in Qubec have had access to Western
$12 and $14billion and would have the capacity Canada supplies via the Enbridge Line9 pipeline. In
to process 200,000b/d of neat bitumen, which an April 2017 investor presentation, Suncor noted its
contains less than 2percent diluent. As part of the coker project at its Montral refinery as a potential
plan, PFEC anticipates building an Alberta-based opportunity for post 2019, which would lead to an
Diluent Recovery Unit (DRU) to extract the diluent increase in heavy oil demand in this market.
from delivered bitumen blends and resell it back into
the Alberta market prior to transporting NeatBit to While some of the refineries located in Atlantic
the refinery. The proponents reported production Canada have rail access to western Canadian crude
could begin in 2023 if construction was able to supplies, the higher cost of receiving light crude
start in the summer of 2019. In October 2016, it was oil by rail compared to pipeline today puts western
announced that a review panel to be appointed by the Canadian crude supplies at a disadvantage to foreign
federal government will conduct the environmental imports, as currently WTI (North American) crude
assessment for the project. prices are close to parity with Brent crude prices
(global). Imports of U.S. light oil has displaced the
A third proposal, by Eagle Spirit Energy, envisages majority of imports of offshore oil in this market.
upgrading bitumen either in northern Alberta or
northeastern BC before sending the light upgraded
crude oil through a pipeline for export from Grassy
TABLE3.2 REFINERIES IN EASTERN CANADA BY PROVINCE
Point, located just north of Prince Rupert.
On May 12, 2017, the Government of Canada Crude Oil

introduced Bill C-48, the proposed Oil Tanker Processing
Moratorium Act. This legislation prohibits oil tankers Capacity
carrying crude oil from stopping, loading and Owner Location (b/d)
unloading in northern BC. Other related petroleum ONTARIO
products included are: bitumen, bitumen blends, Imperial Nanticoke 113,000
partially upgraded bitumen, synthetic crude oil,
Imperial Sarnia 119,000
condensate, No. 4 fuel oil, No. 5 fuel oil, No. 6 fuel oil
and gas oils The area covered would extend from the Shell Sarnia 75,000
northern tip of Vancouver Island all they way to the Suncor Sarnia 85,000
BC-Alaska border, including Haida Gwaii.
Ontario Subtotal: (4 refineries) 392,000
The proposed moratorium could be an obstacle for QUBEC
Eagle Spirit as presently proposed, and potentially Suncor Montral 137,000
the other proposals depending on their final product
Ultramar Qubec City 230,000
slates.
Qubec Subtotal: (2 refineries) 367,000
3.1.2 EASTERN CANADA ATLANTIC CANADA

Irving Saint John, NB 300,000
There are eight refineries in Eastern Canada, located
North Atlantic Come by Chance, NFLD 115,000
in Ontario, Qubec and Atlantic Canada. These
Refining
refineries primarily process light crude oil and
provide a combined crude oil refining capacity of Atlantic Canada Subtotal: (2 refineries) 415,000
1.2millionb/d (Table3.2) TOTAL 1.174millionb/d

If additional pipeline infrastructure is built to the In 2016, imported crude oil included 243,000b/d
East Coast, i.e. Energy East (see section 4.5.2), there from Canada, of which 116,000b/d was primarily
would be an opportunity to capture a portion of heavy crude oil from Western Canada and
the 415,000b/d market represented by the Atlantic 126,000b/d was light crude oil from Atlantic Canada.
refineries currently served by imported crude. New pipeline infrastructure to the East Coast would
increase western Canadian producers opportunity to
serve both Atlantic Canada and PADDI. Assuming all
3.2 UNITED STATES
other imports could be displaced, this would
Canada is the largest foreign supplier of crude oil to represent an incremental market opportunity to
the U.S. and will likely remain so for the foreseeable western Canadian producers in PADDI of
future because these countries are natural trading 640,000b/d, over and above current levels. The
partners due to their geographic proximity. Essentially majority of this market, however, is comprised of light
all Canadian crude oil exports in 2016, totaling crude oil and Canadian producers must compete with
3.1millionb/d, were to the U.S. Looking ahead, U.S. growing light tight U.S. crude oil production.
domestic production is expected to continue to rise if
FIGURE3.2 2016 PADDI: FOREIGN SOURCED SUPPLY
crude prices remain at current levels or higher.
BY TYPE AND DOMESTIC CRUDE OIL
Although the growth in Western Canada supplies is
mostly heavy crude oil, as opposed to the light crude Total refining capacity = 1,300 thousand barrels per day
oil produced from U.S. shale, competition has
intensified as Canadas upgraded light crude oil is a
similar crude type to U.S. shale production.
U.S. Domestic Heavy
The U.S. Department of Energy divides the 50 states
( 227 ) ( 208 )
into five market regions termed Petroleum
Administration of Defense Districts or PADDs
(Appendix C). These PADDs were originally created in
World War II to help allocate fuels derived from Light/Medium
petroleum products. Today, this delineation continues Sour
to be used when reporting regional U.S. crude oil ( 222 )
market data. Light Sweet*
( 451 )
3.2.1 PADDI (EAST COAST)

* Includes small volumes of Medium Sweet
Source: EIA
The U.S. East Coast market consists of nine refineries
with a combined crude processing capacity of
1.3millionb/d. These refineries process primarily light
crude oil.
In 2016, of the total 1.1millionb/d crude oil feedstock,

almost 80percent was sourced from foreign
suppliers (Figure3.2). In comparison, in 2014 and
2015, foreign sources comprised only 60percent as a
higher differential between WTI and Brent crude
prices made deliveries of U.S. light production via rail
more competitive. Today U.S. crude oil delivered by
rail is less attractive compared to imports of
waterborne crude.

TABLE3.3 RAIL OFFLOADING TERMINALS IN EASTERN CANADA AND PADDI
Capacity Scheduled
Operator Location (thousandb/d) In-Service Description
Eastern Canada
Imperial (refinery) Nanticoke, ON 20 Op. since 2013
Irving (refinery) Saint John, NB 145 Expansion op. since 2014
Suncor (refinery) Montral, QC 30 Op. since Q4 2013
Valero (refinery) Qubec City, QC 60 Op. since Aug 2013
Eastern Canada Total Existing Capacity 255,000 b/d
PADD I
PBF Energy Delaware City, DE 170 Operating since Feb Both light and heavy crude oil unloading
(refinery) (130 light/40 heavy) 2013; expanded Aug capacity. Light oil double loop track for two
2014 100-car unit trains.
Axeon Specialty Savannah, GA 9* Operating since Jan Crude oil that is shipped by rail to
Partners (refinery) *16 tank cars per day of 2014 Savannah could move to Paulsboro via
heavy crude; expandable backhauls on waterborne vessels.
up to 32)
Westville EaglePoint (near 44* Operating since Jan Can unload 66 cars/day using 22 offload
Paulsboro), NJ *66 cars / day 2012 spots or a unit train every 2 days.
Axeon Specialty Paulsboro, NJ small volumes Operating since 2014 Unit train capability is being contemplated.
Partners (refinery) Unit train capable
Buckeye Partners, Perth Amboy, NJ 60-80 Operating since Light crude; possibly handle heavy in the
L.P. 104-car unit train/day Q3 2014 future.
Buckeye Partners, Albany, NY n/a Operating since Nov Multi-year agreement with Irving refinery.
L.P. 2012; converted to
product service Q4 2016
Global Partners Albany, NY 160 Operating since 2011 Light crude oil receipts; seeking permit for
(estimated to be facility to heat crude oil. Phillips 66 has a 5
operating at 100) year contract for 50,000b/d.
Eddystone Rail Philadelphia, PA 80* Operating since April A crude-by-rail-to-barge facility. First train
Company (Enbridge *one 118-car unit train; 2014 received on May 3, 2014. Exclusive long-
JV) expandable to 2 unit term contract with Bridger Logistics for
trains (160,000+ b/d) existing capacity. Transport Bakken crude.
Philadelphia Energy Philadelphia, PA 280 Operating since Oct A crude-by-rail-to-barge facility. Terminal
Solutions (refinery) 2013; expanded Oct started operation on October 23, 2013 and
four 104-car unit trains/ 2014 was expanded from 2 unit trains to 4 on
day October 28, 2014.
Plains All American Yorktown, VA 60 Operating since Dec First 98-car unit train received on
Pipeline (PAAP) 2013 December 30, 2013. Up to 800 trains per
year can be unloaded with up to 104 rail
cars per train.
PADD I Total Existing Capacity 863,000 b/d

3.2.2 PADDII (MIDWEST) FIGURE3.3 2016 PADDII: FOREIGN SOURCED SUPPLY
With 4.0millionb/d of crude oil refining capacity,
Total refining capacity = 3,992 thousand barrels per day
the Midwest accounts for 22percent of U.S. total
capacity. Since 2012, a number of refineries have
made significant investments in upgrades that
increased their ability to process heavy crude oil.
These refineries are highly reliant on Canada for
their heavy crude oil feedstock requirements and will
U.S. Domestic Heavy
remain so for the foreseeable future as the existing
( 1,415 ) ( 1,568 )
pipeline network is well connected to most of these
refineries.
The Midwest is currently Canadas largest market.

In 2016, Western Canada supplied this market with Light Light/
2.2millionb/d, which was equal to 98percent of all Sweet* Medium
( 277 ) Sour ( 360 )
foreign imports to this region and around 60percent
of its refineries demand. Heavy crude oil supplies
totaled almost 1.6millionb/d (Figure3.3). Although * Includes small volumes of Medium Sweet
Source: EIA
the region is already quite saturated with heavy
The EIA reports receipts into PADDII in excess of
crude supplies, deliveries from Western Canada could
those attributable to refineries in the region. This is
rise from current levels if planned refinery upgrades
because of volumes that are delivered into storage
proceed (Table3.4).
and then distributed later to other locations, including
The Midwest plays a significant role in determining refineries in PADDIII.
crude oil prices because the largest commercial tank
The primary market hubs within PADDII are located
farm in the U.S. is located in this region. As most
at Clearbrook, Minnesota; Wood River-Patoka, Illinois
recently reported in September 2016 by the EIA, over
area and Cushing, Oklahoma. See Appendix C refinery
77million barrels of working storage is located in
map for locations.
Cushing, Oklahoma. Cushing is the main trading hub
for U.S. crude oil and is also the delivery point for New
York Mercantile Exchange (NYMEX) traded futures
contracts.
TABLE3.4 REFINERY UPGRADE PROJECTS IN PADDII
Estimated
Current Capacity Scheduled Cost
Operator Location (thousandb/d) In-Service (US$ million) Description
BP/Husky Toledo, OH 160 Completed Jul Feedstock optimization project. The refinery is now able
2016 to process approximately 65,000 b/d of heavy crude oil
from the Sunrise oil sands project.
Husky Lima, OH 160 2019 300 Modifications to coker and other processing units to
(originally increase ability to process heavy crude oil by up to
2017) 40,000b/d.
CHS McPherson, 100 Completed 555 Expanded capacity to 100,000b/d from 85,000b/d and
KS Feb 2016 increased heavy crude oil processing capacity to 50%
with installation of new delayed coker.

Seaway and TransCanadas Gulf Coast extension
3.2.3 PADDIII (GULF COAST)
pipelines have allowed crude oil at Cushing, Oklahoma
There are 50 refineries located in the Gulf Coast to move south to the refineries in Louisiana and
market that have a combined crude oil processing Houston. However, constraints remain on the initial
capacity of 9.4millionb/d, which represents more pipeline segments out of Western Canada that
than half of the U.S. total. The vast majority of this connect to this trading hub. If the TransCanada
capacity is located in two coastal states, Louisiana Keystone XL project were to be constructed, it would
and Texas. represent the most direct route for western Canadian
crude oil to reach this market. The Enbridge Line3
The Gulf Coast market, with an estimated heavy replacement project would also provide valuable
oil processing capacity of over 2millionb/d that additional capacity upstream to eventually connect to
is potentially accessible over land, has long been the Seaway pipelines and to this market.
recognized as an ideal market for the growing
supplies from Western Canada with the potential to
absorb all the forecasted growth in heavy crude oil 3.2.4 PADDIV (ROCKIES)
supplies.
There are 15 refineries in PADDIV with a combined
In 2016, foreign imports of crude oil totaled crude oil processing capacity of 693,000b/d. All
3.4millionb/d, which was comprised of relatively imports into this market are sourced from Western
minimal volumes of light crude oil (Figure3.4). Canada and represented 45percent of the refining
Venezuela, supplying 693,000b/d, and Mexico, demand in this market in 2016 (Figure3.5). With
supplying 557,000b/d, were the top suppliers of no reported refining expansions on the horizon,
heavy crude oil into the region. Although Canadian this region does not provide any likely expansion
deliveries to this region have increased in recent opportunities for Western Canada crude oil supplies.
years as some additional pipeline infrastructure has
FIGURE3.5 2016 PADDIV: FOREIGN SOURCED SUPPLY
gone into service, Canada is in third place supplying
333,000b/d of the heavy crude oil demand.
Total refining capacity = 693 thousand barrels per day
FIGURE3.4 2016 PADDIII: FOREIGN SOURCED SUPPLY
Heavy
( 206 )
U.S. Domestic
Heavy ( 330 )
( 2,189 )
U.S. Domestic Light/Medium

( 5,168 ) Sour (24 )
Light/Medium
Sour ( 1,055 ) Light Sweet*
( 38 )

Light Sweet* Source: EIA
( 115 )

Source: EIA

3.2.5 PADDV (WEST COAST) Washington
The Rocky Mountains separate PADDV from the rest There are five refineries located in Washington that
of the U.S. and this geographic isolation has affected provide a combined crude oil processing capacity of
the development of crude oil supply sources to the 634,000b/d. Most of the crude feedstock arrives by
region. These refineries receive U.S. domestic crude oil tanker from Alaska and elsewhere. From its peak level
supplies from California and Alaska and also have of around 2millionb/d in 1988, Alaskan production
access to global crude oil through marine shipments. has declined to roughly a quarter of that level falling
to 489,500b/d in 2016. Washington refineries will
There is 2.9millionb/d of crude oil processing capacity continue to become increasingly dependent on
located in the region. In 2016, foreign imports foreign imports although rail provides some access
accounted for half of the crude oil feedstock demand to North Dakotas crude oil production. The Trans
(Figure3.6). This share will likely grow to replace the Mountain pipeline delivers western Canadian crude oil
declining production from Alaska. to this market.
FIGURE3.6 2016 PADDV: FOREIGN SOURCED SUPPLY BY

California
TYPE AND DOMESTIC CRUDE OIL
California dominates PADDV in both crude oil
production and refining capacity. There are
14refineries located in California that contribute a
combined refining capacity of 1.9millionb/d. Almost
Heavy
all of the refineries are located near the coast in the
U.S. Domestic -
( 394 ) Los Angeles and San Francisco Bay areas. There is no
Alaska ( 473 )
direct pipeline access to California from producing
areas outside of the state. Therefore, as Alaskan crude
oil declines, an opportunity arises to process more
Light/Medium crude oil from North Dakota and potentially from
Other Sour ( 546 )
U.S. Domestic Canada. Kinder Morgans federally approved Trans
( 712 ) Mountain pipeline expansion project would allow
Light
western Canadian crude to be better connected to
Sweet*
( 223 ) the West Coast where crude oil could then be loaded
on to tankers to serve these refineries. In 2016,
California imported 872,000b/d of which 361,000b/d
Source: EIA
was heavy crude oil imported primarily from Ecuador
and Colombia as well as smaller volumes from other
more distant suppliers. Given its proximity to
California, exports off the west coast of Canada could
Although there are refineries in four states located in conceivably displace heavy crude oil imports from
PADDV, including Alaska and Hawaii, it is Washington other existing suppliers.
and California that comprise the main current and
Table3.5 lists the rail offloading terminals for markets
future prospects for western Canadian crude oil in the
on the West Coast.
region.

TABLE3.5 RAIL OFFLOADING TERMINALS IN WESTERN CANADA & PADDV
Current Capacity Scheduled

Company Location (thousandb/d) In-Service Description
Western Canada
Chevron (refinery) - Burnaby, BC 8 Operating since 2013
pending finalization of
sale to Parkland Fuels by
end 2017
Western Canada capacity subtotal 8,000 b/d
Washington
Shell (refinery) Anacortes, WA +50 TBD Applied for permits
Tesoro (refinery) Anacortes, WA 50 Operating since 2012
BP (refinery) Cherry Point/Blaine, WA 60 Operating since Dec 2013
Phillips 66 (refinery) Ferndale, WA 30 Expansion operating since Currently receiving manifest
Dec 2014 trains; applied for permits
for expansion
US Oil (refinery) Tacoma, WA 30 Operating since 2012 Unit train capable
US Development Group Grays Harbour, WA - Gave up option on land lease Apr Applied for permits
2016
Westway Grays Harbour, WA +27 TBD Applied for permits
Tesoro/Savage Port of Vancouver, WA +120 Late 2017 Applied for permits
(expandable to 280)
Global Partners of Port Westward/ 65 Operating since Q4 2012 24 trains per month;
Massachusetts Calskanie, WA (expandable to 130) expandable to 50
Washington capacity subtotal 235,000 b/d; potential for additional 197,000 b/d
California
Alon USA Bakersfield, CA manifest; Operating Heavy and light crude oil
+Expansion to 150 2016 capacity
Plains All American Bakersfield, CA 65 Operating since Dec 2014
Valero (refinery) Benicia, CA + 70 2016 western Cdn crude + US
Phillips 66 (refinery) Santa Maria, CA + 41 2016
California capacity subtotal 65,0000 b/d; potential for additional 261,000 b/d
TOTAL 300,000 b/d; potential for additional 458,000 b/d

3.3 INTERNATIONAL FIGURE3.7 GLOBAL NET OIL IMPORTS: 2015 TO 2040
On a global scale, any claims that new technology will 14 million barrels per day 2015
render crude oil obsolete or that renewables will be 2020
12 2030
able to displace fossil fuels in the foreseeable future
2040
appear to be greatly exaggerated. Undoubtedly, the 10
energy landscape is expected to change in the longer-
8
term. However, elimination of fossil fuels from the
energy mix is unlikely as energy demand will continue 6
to grow to fuel the higher levels of economic activity
4
and improve the living standards in the worlds
emerging economies. 2
According to the International Energy Agencys (IEA) 0

China India Japan OECD United
World Energy Outlook 2016 report, global primary Europe States
energy demand will increase by 31percent from 2014 Source: Derived from IEA data.
to 2040. Fossil fuels will still comprise 74percent of IEA World Energy Outlook 2016, New Policies Scenario
global primary energy demand in 2040 with oil
expected to supply 27percent. 3.4 MARKETS SUMMARY
Growth in global oil demand is concentrated in Asian The oil market landscape for western Canadian crude
markets. Table3.6 shows forecasted oil demand in oil producers is constantly evolving. CAPP forecasts
major Asian markets. The combined demand growth an additional 1.5millionb/d of supplies coming from
from China and India of 10.1millionb/d is equal to Western Canada by 2030. The combined regional
over 90percent of the projected world demand opportunities in Canada, the U.S. and globally can
increase from 2015 to 2040. reasonably be expected to absorb these incremental
supplies.
According to the IEA, China will become the worlds
largest importer of crude oil by 2020 with India rising The U.S. Gulf Coast market represents a large and
to second by 2035. Figure3.7 shows the changing important opportunity given its overall size and
global net import needs. China and India represent the ability of the refineries in the region to process
significant growth opportunities thus market the type of heavy crude oil produced in Western
diversification will remain a priority for Canadian Canada. Eastern Canada, California and Washington,
producers. U.S. net import needs are forecast to also represent opportunities for expanded markets
shrink but significant heavy crude oil imports from in North America for Canadian crude oil. PADDII
Canada are expected to grow while U.S. domestic is essentially saturated with western Canadian and
light oil is exported. domestic U.S. supplies however, increased deliveries
to this market will be significant as market hubs in
TABLE3.6 TOTAL OIL DEMAND IN MAJOR ASIAN the region facilitate transhipment and the largest U.S.
COUNTRIES tank farm is located in Cushing, Oklahoma. If built,
proposed pipeline projects will also enable large
millionb/d 2015 2020 2030 2040 2015 to volumes to be transported to tidewater and reach
2040 additional international markets.
Growth
China 11.0 12.6 14.3 15.1 +4.1
India 3.9 5.0 7.1 9.9 +6.0
Japan 3.9 3.3 2.6 2.1 -1.8
World 92.5 95.9 99.8 103.5 +11.0
Source: IEA World Energy Outlook 2016, New Policies Scenario

4
TRANSPORTATION
Additional transportation infrastructure to tidewater needs to be developed to connect the
growing crude oil supplies originating from Western Canada to global refining markets. A
number of new major pipeline projects have been proposed that together would form a pipeline
network that would allow delivery of crude oil to Canadas West Coast, East Coast and U.S. Gulf
Coast (Figure4.1) for refining or further transport on marine tankers. Only with better market
access can Canadian crude oil resources compete globally and receive full value.
FIGURE4.1 EXISTING AND PROPOSED CANADIAN & U.S. CRUDE OIL PIPELINES
Kitimat
Trans
Mountain
Edmonton
Hardisty
Burnaby Alberta Clipper Expansion
Rangeland
iver
Anacortes Southern Access Expansion

Bow R
Bakken Expansion
Kinder Morgan TransCanada Energy East
TM Expansion Cromer
Qubec City Saint John

Express N. Dak
ota Sys Clearbrook
tem
Superior Montral
P
Min
ortla
Line 5 nd-
TransCanada
n
Mon
eso
Da
tra
Keystone XL l
ko
ta
St.
ta
Portland
Westover
Ac
Paul
ce
Enbridge
ss
Casper Guernsey Enbridge Line 9

Salt Lake City Sarnia
KOCH
Platte
Pony
Warren
Exp
res
Flanagan Chicago Spearhead North
Wh s
ite C + Spearhead North Twin
liffs Lima
TransCanada Keystone BP
Mustang
S. Access Extension
Spearhead South Wood Patoka
River Canadian and U.S. Oil Pipelines
ey
Flanagan South
all
dV
Cushing Ozark
Enbridge Pipelines and connections
Mi
line
Diamo
n d
Cap
rion us
to the U.S. Midwest
Centu sin ga
s Memphis
OP
El Paso Ba Pe Spectra Express/Platte

ETC
TransCanada Gulf Coast

Kinder Morgan Trans Mountain
Midland TransCanada Keystone
Crane
Long Proposed pipelines to the West Coast
horn
Port Arthur
Seaway & Existing / Proposed pipelines to PADD III
Shell Ho-H
o New Orleans
Seaway Twin Houston Expansion/Reversal to existing pipeline
St. James
Freeport Existing / Proposed pipelines to the E. Canada

The cost of crude oil in any region is a function 4.1 CRUDE OIL PIPELINES EXITING WESTERN
of the type of crude and the transportation costs CANADA
incurred to deliver the crude from production areas.
Pipelines are the preferred mode of transporting large Existing pipelines used for exporting crude oil from
volumes of crude oil for long distances over land, Western Canada are currently at or near capacity. The
given the inherent economies of scale associated nameplate design capacity is 4.0millionb/d. However,
with this method of transportation. However, with the estimated available capacity for Canadian crude
the current pipeline system now at capacity, use of oil exiting Western Canada on the major pipeline
rail to transport crude oil is again rising. As approved systems is only 3.3millionb/d after operational
pipelines are built, use of rail would tend to decline. downtime, downstream constraints, and the capacity
allocated to refined petroleum products (RPP) as well
as U.S. Bakken crude oil that share pipeline capacity is
considered (Table4.1).
TABLE4.1 MAJOR EXISTING CRUDE OIL PIPELINES EXITING WESTERN CANADA

Estimated* Annual
Average 2016 Annual Available Capacity
Pipeline In Service Annual Throughput for Canadian Crude
Outside Diameter Distance Capacity Oil Exiting WCSB
Size (km) (thousand b/d) (thousand b/d) (thousand b/d)
Enbridge Operating since 1950 Various pipelines - Various 2,851 2,527 2,307
Mainline See Table 4.3 pipelines - See
Table 4.3
Kinder Operating since Oct 1953 1,147 300 316 250
Morgan Trans
Mountain 24 827
36 150
30 170
Enbridge Operating since 1997 24 1,265 280 216 225
Express
TransCanada 4,700 591 524 561
Keystone
Operating since 2010 P1: 36 (converted) 864
since 2010 P1: 30 2,592
since Feb 2011 P2: 36 468
since Jan 2014 P3a: 36 700
since Aug 2016 P3b: 36 76

(Houston Lateral)
Total 4,022 3,583 3,343
*Notes for estimating available capacity for Canadian crude oil to exit Western Canada on the major pipelines:
Enbridge Mainline = design capacity x 95% for operational downtime & downstream constraints minus estimated RPP capacity as well as estimates for US Bakken moved
on this system
Trans Mountain = design capacity minus estimate of RPP moved = 300-50 = 250
Express = design capacity x 80% (adjusted for crude type moved, historical operational downtime, and downstream constraints)
Keystone = design capacity x 95% (adjusted for crude type moved and historical operational constraints)

The available supply of western Canadian crude oil in 4.1.1 ENBRIDGE MAINLINE
2016 was 3.9 millionb/d, which exceeded the capacity
available on major pipeline systems to transport this The Enbridge Mainline is a multi-pipeline system with
crude oil. Some of this volume supplies refineries in a current capacity to transport 2.85millionb/d of
Alberta and Saskatchewan and may utilize regional refined products and crude oil from Western Canada,
pipelines or trucks. In addition, transport by rail tank Montana, and North Dakota to markets in Western
cars is reported at about 100,000b/d. So, without any Canada, the U.S., and Ontario. The Mainline connects
of the new pipeline projects proposed, rail transport to several pipelines: Line9 at Sarnia, Ontario;
would likely significantly increase in order to transport the Minnesota Pipeline at Clearbrook, Minnesota;
growing supplies. Spearhead South and Flanagan South at Flanagan,
Illinois; Chicap at Patoka Illinois; Mustang at Chicago,
An additional 2.89millionb/d of pipeline capacity Illinois and Toledo at Stockbridge, Michigan. The
would be available from four pipeline proposal Mainline has experienced significant apportionment,
projects that are being developed. This is the total whereby demand exceeded available capacity and
combined capacity from Enbridges Line3, Kinder shippers were curtailed in the volumes they could ship
Morgans Trans Mountain Expansion, TransCanadas on the Mainline. Consequently, shippers were required
Keystone XL and TransCanadas Energy East Pipeline to seek less desirable alternatives to transport some
(Table4.2). Combined, these projects would offer of their supplies.
considerable flexibility to the overall system as they
are intended to serve different markets.
The next sections describe both the existing and

proposed pipeline systems categorized by destination
market.
TABLE4.2 PROPOSED CRUDE OIL PIPELINES EXITING WESTERN CANADA

Outside Diameter Target In Capacity
Pipeline
Size Distance (km) Service (thousand b/d)
Enbridge Line 3 Restored 36 1,659 2019 +370
Kinder Morgan Trans Mountain 1,184 End 2019 +590
Expansion
36 987 (new)
30 3.6 x 2 (new)
24 193 (reactivated)
TransCanada Keystone XL 36 1,897 2020+ +830
TransCanada Energy East 42 4,516 2021+ +1,100
(new mainline, converted lines

(3,000 km) + 2 laterals
Total Proposed Additional Capacity 3,583 +2,890

Enbridge - Bakken Shippers Enbridge Mainline Expansion Projects
Crude oil production in the North Dakota Bakken There are six pipelines that comprise the Enbridge
region rose dramatically from an average of Mainline upstream of Superior, Wisconsin (Table4.3).
236,000b/d in 2010 to over 1.1millionb/d in 2015. These pipelines have a combined capacity of
The lower price environment in 2016 reduced drilling 2.85millionb/d exiting Western Canada. Line3
activity, resulting in a slight fall in production to is one of the primary pipelines that comprise
987,000b/d. However, the expectation is that higher Enbridges Mainline system but requires extensive
crude oil prices in the future will lead to increased maintenance and is currently restricted to a capacity
exploration and new production growth in the region. of 390,000b/d. The Line3 Replacement Program will
The North Dakota System and the Bakken Pipeline replace the original pipeline and restore Line3 to its
System have been developed to accommodate the original capacity of 760,000b/d.
existing and planned growth.
Beyond Superior, the Enbridge Mainline has a capacity
of 2.45millionb/d provided by Line5, Line6 and
Enbridges North Dakota System, including the
Line14 and the Southern Access Pipeline. These
Bakken Expansion Pipeline, gathers light crude oil
pipelines connect to a number of other pipelines that
from Western Canada, Montana and North Dakota for
serve as market extensions of the Enbridge Mainline
delivery to the Berthold Rail Project and the Enbridge
system. The principal markets of the Enbridge
Mainline.
Mainline are the U.S. Midwest and Central Canada.
In February 2017, Enbridge and Marathon finalized

an agreement to acquire a 49percent equity stake Enbridge Line 3 Replacement Program
in the Bakken Pipeline System, which consists of two The proposed new Line 3 replacement pipeline will be
projects the Dakota Access Pipeline (DAPL), and the able to transport 760,000 b/d, which was the original
Energy Transfer Crude Oil Pipeline (ETCOP). DAPL is design capacity of the existing pipeline. This project
a new pipeline that started service in May 14, 2017 and will be essential to ensure continued service required
delivers Bakken production to Patoka, Illinois while by refiners in Minnesota, neighboring states, Eastern
ETCOP extends from Patoka to the Sunoco Terminal in Canada and the Gulf Coast (see page 27).
Nederland, Texas.
TABLE4.3 ENBRIDGE MAINLINE SYSTEM: UPSTREAM SUPERIOR

Outside Diameter Pipe Distance Target Capacity
Enbridge Pipeline
Size (km) In Service (thousand b/d)
Line 1 18/20 1,767 Operating since 1950 237
Line 3 34 1,767 Operating since 1968 390
Line 3 Replacement 36 1,660 2019 +370
Line 65 20 504 Operating since 2010 186
Alberta Clipper (Line 67) 36 1,790 800
Operating since 2010 450
Original
Phase 1 Expansion
Phase 2 Expansion
Total Existing Capacity 2,851

ENBRIDGE LINE 3 REPLACEMENT PROGRAM (L3RP)
Nov 5 Application filed with NEB.
Apr 25 NEB recommends approval subject to 89 conditions.
Nov 29 Government of Canada approval.
Apr Minnesota Public Utilities Commission decision expected.
2014 2015 2016 2017 2018 2019
2019 Expected in service.
May 16 - Jul 10 Minnesota Dept. of Commerce initiated comment period on

Environmental Impact Statement (EIS).
Nov 30 - Dec 14 NEB oral hearings.
Jul 1 Minnesota Public Utilities Commission (MPUC) deems application complete; starts regulatory process.
Jul 20 Application to Minnesota Dept. of Commerce filed.
Apr 24 Applications to MPUC for Certificate of Need and Route Permit.
AB
ENBRIDGE LINE 3 REPLACEMENT (L3RP)
Hardisty SK
MB
COST: US$7.5 Billion (2016 estimate) Regina
CAPACITY: 760,000 b/d ON

(+370,000 b/d)
LENGTH: 1,659 kilometres

ND
Superior
DIAMETER: 36 inch replacing 34 inch
MN
WI

4.1.2 KINDER MORGAN TRANSMOUNTAIN 4.1.4 TRANSCANADA KEYSTONE
The Trans Mountain system is currently the only crude The Keystone pipeline system transports crude oil
oil pipeline serving Canadas West Coast. It originates to refining markets in the U.S. Midwest and U.S. Gulf
near Edmonton, Alberta and transports refined Coast. The Keystone pipeline system originates at
products in addition to crude oil to destinations in Hardisty, Alberta and extends to Steele City, Nebraska.
British Columbia (BC), Washington and the Westridge From this juncture, crude oil can be transported east
marine terminal in Burnaby, BC. From Burnaby, crude to terminals in Wood River and Patoka, Illinois or
oil can be loaded for exports to California or the U.S. south to Cushing, Oklahoma. At Cushing, the system
Gulf Coast or overseas to Asia. can extend further through the Gulf Coast Extension
pipeline and reach refineries at the Port Arthur and
The current capacity on the pipeline system is Houston areas in Texas.
300,000b/d (assuming 20percent of the volumes
being transported are heavy crude oil). Of this The pipeline system began operating in July 2010,
capacity, 221,000b/d is allocated to refineries that initially serving the Wood River/Patoka markets with
have connections in BC and Washington State, 435,000b/d capacity. In February 2011, the Cushing
and the remaining 79,000b/d is allocated to the extension came online and the system was expanded
Westridge Dock terminal for marine exports. With to its current capacity for Canadian crude oil of
respect to the capacity designated for the marine 591,000b/d. About 545,000b/d of this capacity is
terminal, 54,000b/d or 68percent is underpinned under contracts and thus reserved for committed
by firm contracts. Nominations for service on this shippers.
pipeline have been in apportionment since 2010,
and demand for access to this pipeline is expected
4.2 OIL PIPELINES TO THE U.S. MIDWEST
to grow as additional capacity is made available.
See section 4.4.2 for details on the Trans Mountain The U.S. Midwest is the largest market for western
Expansion project. Canadian crude oil. The key market hubs in this region
are located at Wood River and Patoka in Illinois
4.1.3 ENBRIDGE EXPRESS-PLATTE and at Cushing, Oklahoma. Table4.4 summarizes
the pipelines that deliver Canadian crude oil to the
The Express Pipeline is a 280,000b/d capacity Midwest.
pipeline that originates at Hardisty, Alberta extending
to Casper, Wyoming, where it connects to the Platte 4.2.1 SPECTRA EXPRESS-PLATTE
Pipeline. The Platte pipeline can transport up to
See Section 4.1.3.
164,000b/d from Casper to Guernsey, Wyoming and
145,000b/d from Guernsey to Wood River, Illinois. 4.2.2 TRANSCANADA KEYSTONE
The principal market for this pipeline is U.S. PADDIV
and the Midwest. See Section 4.1.4.
The pipeline was previously owned by Kinder

Morgan and was purchased by Spectra Energy in
2013. A merger agreement between Enbridge and
Spectra was announced on September 6, 2016. On
February27, 2017 the merger was finalized after
clearance by the U.S. Federal Trade Commission (US
FTC) and the Canadian Competition Bureau.

TABLE4.4 SUMMARY OF CRUDE OIL PIPELINES TO THE U.S. MIDWEST
Pipeline Originating Point Destination Status Capacity

(thousand b/d)
Enbridge Mainline Superior, WI various delivery points Operating 1,525
- Line 5 540
- Line 6 667
- Line 14/64 318
Enbridge Mainline - Southern Access Superior, WI Flanagan, IL 935
- Original Operating 400
- Phase 1 Expansion Op. since Aug 2014 160
- Phase 2 Expansion Op. since 2015 375
- Phase 3 Expansion Proposed +265
Enbridge Spearhead North Flanagan, IL Chicago, IL Operating 235
Enbridge Spearhead North Twin Flanagan, IL Chicago, IL Op. since Nov 2015 570
Enbridge Spearhead South Flanagan, IL Cushing, OK Operating 193
Enbridge Flanagan South Flanagan, IL Cushing, OK Op. since Dec 2014 585
Enbridge Southern Access Ext. Flanagan, IL Patoka, IL Op. since Jan 2016 300
Enbridge Mustang Lockport, IL Patoka, IL Operating 100
Koch Minnesota Pipeline Clearbrook, MN Minnesota refineries Operating 465
Spectra Express-Platte Guernsey, WY Wood River, IL Operating 280/145
TransCanada Keystone Hardisty, AB to Steel east to Patoka, IL / 591

City, NE Wood River, IL or P1 op. since Jul 2010
south to Cushing,OK P2 op. since Feb 2011
4.2.3 ENBRIDGE MAINLINE MARKET EXTENSIONS The MPL system is comprised of four pipelines that
together can transport about 465,000b/d. The first
The Enbridge Mainline has a number of pipeline pipeline in the MPL system was built in 1954; the
segments that connect to Chicago and Patoka second was built in the 1970s; the third in the 1980s;
in Illinois and Cushing, Oklahoma. These include: and the last pipeline MPL Line4, formerly known
Spearhead North, Spearhead North Twin, Spearhead as MinnCan, was constructed in 2008. MPL Line4
South, Flanagan South, Southern Access Extension can currently transport about 165,000b/d. The
and Mustang (Table4.4). Together, these pipelines Minnesota Pipe Line Company has proposed a project
have almost 2.0millionb/d of capacity but would to increase capacity of the pipeline by 185,000b/d
require expansion to the Mainline system upstream or to reach 350,000b/d through the addition of six
more rail transportation if there was sufficient market pump stations and upgrading two existing stations.
demand that required all these downstream segments At an estimated cost of $125million this project is
to be fully utilized. intended to give MPL the flexibility to shift volumes to
its newest pipeline in the event of an outage on other
4.2.4 MINNESOTA PIPELINE SYSTEM segments of the pipeline system. The construction is
targeted for completion in the fourth quarter of 2017.
The Minnesota Pipe Line (MPL) system transports
crude oil originating from Western Canada and North
Dakota through pipeline connections at Clearbrook,
Minnesota and is the primary supply link for
Minnesotas two refineries located in Pine Bend and
St. Paul. The MPL system is owned by Minnesota Pipe
Line Company, LLC and is operated by Koch Pipeline
Company.

4.3 OIL PIPELINES TO THE U.S. GULF COAST 4.3.2 TRANSCANADA KEYSTONE XL
The Gulf Coast represents the most significant See page 32.
opportunity for market growth in North America
for Canadian heavy crude oil supplies. Although 4.3.3 ENBRIDGE/ENTERPRISE SEAWAY
Saudi Arabia is among the top three exporters to
the region, only Venezuela and Mexico rank higher The Seaway Pipeline system is jointly owned by
than Canada in terms of the source of heavy crude Enbridge Inc. and Enterprise Products Partners L.P.
oil imports into the region. Crude oil is also sourced and is comprised of two parallel pipelines (Seaway
from other countries including Colombia, Iraq and and Seaway Twin). The total system capacity is
Brazil. Canadas ability to supply to the Gulf Coast 850,000b/d with 400,000b/d contributed by the
has increased with new connecting pipelines and Seaway pipeline between Cushing, Oklahoma and the
expansions to existing pipelines exiting Cushing that Freeport, Texas area and 450,000b/d contributed by
were completed in 2014. Additional upstream pipeline the Seaway Twin pipeline.
infrastructure out of Western Canada to connect to
U.S. Gulf Coast market access for western Canadian
Cushing would further increase Canadas ability to
crude oil has only started to emerge in recent years.
serve this market region.
The direction of flow on the Seaway pipeline was
4.3.1 TRANSCANADA GULF COAST EXTENSION OF THE reversed on May 17, 2012 in order to allow crude oil to
KEYSTONE PIPELINE SYSTEM be transported from the bottlenecked Cushing,
Oklahoma hub to the Gulf Coast refineries near
TransCanadas Gulf Coast Extension, which is part of Houston. The original capacity of the reversed
its Keystone pipeline system, started delivering crude pipeline was 150,000b/d but was increased in
oil on January 22, 2014. It is also known as the January 2013 to 400,000b/d through pump station
TransCanada Cushing Marketlink pipeline and provides modifications and additions. Seaway Twin was
capacity of 700,000b/d from Cushing, Oklahoma to brought into service on December 1, 2014.
Port Arthur, Texas. In August 2016, the Houston
Lateral pipeline was completed and came online, 4.3.4 CAPLINE REVERSAL
providing shippers with the option of a delivery point
The Capline pipeline currently transports crude oil
connected to the refining capacity in the Houston
northbound from St. James, Louisiana to Patoka,
area. The Gulf Coast Extension pipeline and the
Illinois. It is a pipeline system with 1.2millionb/d
Houston Lateral together form the southern portion of
capacity. If reversed, the pipeline could move western
the TransCanada Keystone XL pipeline (see
Canadian crude oil to refineries in Louisiana but
section4.3.2). The Keystone XL pipeline from Canada
additional infrastructure upstream of the origination
will provide an efficient option to deliver incremental
point would be required to connect their sources of
Canadian barrels to Cushing for onward delivery to
supply. Marathon operates the pipeline while Plains All
the Gulf Coast as service can be provided by a single
American Pipeline is the majority owner; the other
system.
part owner is BP P.L.C.
TABLE4.5 SUMMARY OF CRUDE OIL PIPELINES TO THE U.S. GULF COAST

(thousand b/d)
Seaway Cushing, OK Freeport, TX Expansion op. since Jan 2013 400
Seaway Twin Line Op. since Dec 2014 450
TransCanada KeystoneXL Hardisty, AB Steele City, NE Presidential Permit Granted Jan 2017 +830
Cushing extension of Keystone Steele City, NE Cushing, OK Op. since Feb 2011 (Segment 1) -
Gulf Coast extension of Keystone Cushing, OK Nederland, TX Op. since Jan 2014 (Segment 2) 700
Capline Reversal Patoka, IL St. James, LA Proposed +1,200

4.3.2 TRANSCANADA KEYSTONE XL
Mar 11 NEB recommends approval with 22 conditions.
Apr 22 Government of Canada approval.
Jan 18 President Obama denies application citing

insufficient time to review new route.
Apr 18 U.S. State Dept.

suspends regulatory
process.
2008 2009 2010 2011 2012 2013 2014 2015
Nov 6 Obama Administration

rejects application.
Nov 10 U.S. State Dept. requests reroute to avoid
ecologically sensitive area in Nebraska.
Sep 15 - Oct 2 Oral hearing at NEB.
Feb 27 Facilities application filed with the NEB.
TRANSCANADA KEYSTONE XL
COST: C$10.85 Billion (2014 estimate)

US$8 Billion (2014 estimate)
CAPACITY: 830,000 b/d
LENGTH: 526 kilometres
DIAMETER: 36 inches
CONTRACTS: 380,000 b/d

(Currently updating)

2020+ Earliest estimate for in service.
2016 2017 2018 2019 2020 2021 2022
Nov 23 Nebraska PSC decision deadline.

Aug 7 - 11 Nebraska PSC scheduled hearing.
Mar 24 Presidential permit received from U.S. State Dept.
Feb 16 Application filed with Nebraska Public Service Commission (PSC).

Jan 26 Reapplication for U.S. Presidential permit.
AB
Hardisty
Keystone Pipeline: Hardisty to
SK Steele City, Wood River & Patoka
MB
Gulf Coast Project: Cushing to
Nederland/Houston
Proposed Keystone XL:

MT Hardisty to Steele City
ND
Baker
SD
NB
Steele City
IL
MI
KS Patoka
Wood River
Cushing
OK
TX
Nederland
Houston

TABLE4.6 SUMMARY OF CRUDE OIL PIPELINES TO THE WEST COAST OF CANADA

(thousand b/d)
Kinder Morgan Trans Mountain Edmonton, AB Burnaby, BC Operating 300
Kinder Morgan Trans Mountain Expansion Approved by Gov of Canada - +590
End 2019 target in service
4.4 OIL PIPELINES TO THE WEST COAST OF CANADA 4.5.1 ENBRIDGE LINE9
The Kinder Morgan Trans Mountain pipeline is The Line9 pipeline extends the Enbridge Mainline
currently the only pipeline transporting crude oil system from Sarnia, Ontario to Montral, Qubec.
from Alberta to the West Coast. There is significant This pipeline was recently reversed allowing western
interest in building new pipeline capacity to the West Canadian producers to serve more eastern markets. In
Coast where it can be offloaded for marine transport August, 2013, the portion from Sarnia, Ontario to North
to reach a variety of markets including California, the Westover, Ontario started flowing east with an initial
U.S. Gulf Coast and Asia (Table 4.6). capacity of 152,000b/d. The second portion from
North Westover, Ontario to Montral, Qubec started
4.4.1 ENBRIDGE NORTHERN GATEWAY flowing oil in December 2015. The fully operating
pipeline currently has a capacity of 300,000b/d.
Northern Gateway was a proposed pipeline project
with an initial capacity of 525,000b/d that would
4.5.2 TRANSCANADA ENERGY EAST
have extended from Bruderheim, Alberta to Kitimat,
BC. In June 2014, the project was approved by the TransCanada Energy East is a proposed pipeline
Governor in Council subject to 209 conditions. In system that could provide western Canadian crude oil
July 2016, the Federal Court of Appeal overturned access to markets in Eastern Canada, U.S. East Coast,
the approval of the project with the finding that U.S. Gulf Coast and other international destinations
the government had failed in its duty to adequately via a marine terminal in New Brunswick. About
consult with Aboriginal groups. On November 29, 995,000b/d is underpinned by firm contracts for an
2016, the federal government officially rejected the average term of 19 years (see page 35).
project and directed the National Energy Board (NEB)
to dismiss the application for the project.
4.4.2 TRANS MOUNTAIN EXPANSION

See page 34.
4.5 OIL PIPELINES TO EASTERN CANADA

The size of the refinery market in Eastern Canada
is almost double that of Western Canada. In 2016,
refineries in Eastern Canada processed over
1millionb/d of crude oil of which 581,000b/d
originated from foreign sources. The current pipeline
capacity to this market is 300,000b/d, while the
proposed Energy East project would add 1.1millionb/d
of pipeline connnectivity for western Canadian
producers to supply Atlantic refineries and for exports
off the East Coast and overseas (Table 4.7).

4.4.2 TRANS MOUNTAIN EXPANSION
Dec 16 Facilities application filed with NEB.
Aug 21 Steven Kelly evidence struck from record.

Sep 17 - Jan 8 Excluded period to allow hearing panel to acquire information that was stricken from record.
Jan 11 B.C. Environmental Assessment Office (EAO) grants EA certification

subject to 37 conditions.
May 30 Final investment decision (FID) made. Successful IPO announced.

Sep Planned construction start.
Dec Proposed start date.
2013 2014 2015 2016 2017 2018 2019 2020
Nov 29 Government of Canada approval.
May 17 Ministerial panel assigned to engage communities and Aboriginal groups.

May 19 NEB recommends approval subject to 157 conditions.
Apr 2 NEB determined application complete.
Existing Active Pipeline

TRANS MOUNTAIN EXPANSION New Pipeline
Reactivated Pipeline
Trans Mountain Puget Sound
BC
AB
COST: C$7.4 Billion (March 2017 estimate)
Hargreaves Hinton Line 2 (540,000 b/d: Heavy Crude)
CAPACITY: 890,000 b/d Edson
(350,000 b/d existing + 540,000 b/d additional) Darfield
Edmonton
Black Pines Jasper
LENGTH: 1,183 kilometres Kamloops
Burnaby Line 1 (350,000 b/d: Light Crude + RPP)
(987 new + 193 reactivated + 2 x 3.6 km) Hope
Ferndale Abbotsford
DIAMETER: 36 inches Anacortes
CONTRACTS: 707,500 b/d WA

(15 shippers: 15/20 yr terms)

4.5.2 TRANSCANADA ENERGY EAST
Oct 30 Application filed with NEB.
Feb 3 NEB direction to consolidate application.

May 17 Consolidated application filed.
Q3 Originally proposed construction start.
2014 2015 2016 2017 2018 2019 2020 2021
Q4 Earliest estimate for

in service.
May 10 - 31 NEB seeking comments on list of issues.
Jan 9 New NEB panel assigned (Don Ferguson, Carole Malo, Marc Paquin).
Jan 27 New panel ruling all decisions by previous panel voided.
Dec 17 Revised application filed. Qubec port removed.
Existing (Converted) Pipeline Segments

TRANSCANADA ENERGY EAST AB
New Pipeline Segments
Hardisty SK Tank Terminal
MB
ON
Moosomin QC
COST: C$19.3 Billion (May 2016 estimate) Cacouna
Lvis NB Saint John
CAPACITY: 1.1 Million b/d
Trois Rivires
LENGTH: 4,521 kilometres Montral
(1,427 new + 92 new laterals + 3,002 converted)
DIAMETER: 42 inches
CONTRACTS: 995,000 b/d

(845,000 b/d Qubec/Saint John, 150,000 b/d
subject to ongoing discussion on delivery point options)

TABLE4.7 SUMMARY OF CRUDE OIL PIPELINES TO EASTERN CANADA

(thousand b/d)
Enbridge Line9 Sarnia, ON Montral, QC Operating 300
9A Sarnia, ON North Westover, ON Op. since Aug 2013
9B North Westover, ON Montral, QC Op. since Dec 2015
TransCanada Energy East Hardisty, AB Qubec City, QC / Proposed - 2021+ +1,100
St. John, NB
4.6 DILUENT PIPELINES Rapids Pipeline Limited Partnership, an affiliate of

TransCanada PipeLines Limited and Brion Energy
Table4.7 provides a summary of projects that aim to Corporation. The pipeline will extend from Keyeras
bring diluent supply in order to satisfy the blending Edmonton Terminal (KET) to TransCanadas Heartland
component needed to transport the growing supply Terminal near Fort Saskatchewan, Alberta as part of
of heavy crude oil produced in Western Canada by TransCanadas previously announced Grand Rapids
pipelines. In comparison, rail has minimal diluent pipeline project. In connection with this agreement,
requirements. Keyera will be constructing a pump station at KET
where the pipeline will connect.
4.6.1 ENBRIDGE SOUTHERN LIGHTS
4.6.4 KINDER MORGAN COCHIN SYSTEM
The Southern Lights pipeline runs from Manhattan,
Illinois to Edmonton, Alberta and has been operating Kinder Morgans Cochin system is a multi-product
since July 2010. The capacity of the pipeline is pipeline. In April 2014, the pipeline was removed from
180,000b/d, of which 162,000b/d is secured by long- ethane-propane service. Since July 2014, the pipeline
term contracts. has been shipping condensate from Kankakee County,
Illinois to Fort Saskatchewan, Alberta. The pipelines
4.6.3 TRANSCANADA GRAND RAPIDS DILUENT estimated capacity is 95,000b/d.
TransCanada plans to build a new diluent line from

the Heartland region, near Edmonton, to Fort
Saskatchewan, Alberta. The diluent pipeline would
have a capacity of 330,000b/d and is expected to be
operating in late 2017.
Keyera Corp. has agreed to acquire a 50percent

interest in the southernmost portion of the 20inch
diameter Grand Rapids diluent pipeline. The
45-kilometre pipeline will be constructed by Grand
TABLE4.8 SUMMARY OF DILUENT PIPELINES

(thousand b/d)
Enbridge Southern Lights Flanagan, IL Edmonton, AB Operating 180
Kinder Morgan Cochin Kankakee County, IL Fort Saskatchewan, AB Operating since July 2014 95
Conversion
TransCanada Grand Rapids Heartland, AB Fort Saskatchewan, AB in Construction - late 2017 +330

4.7 CRUDE OIL BY RAIL FIGURE4.2 CANADIAN FUEL OIL AND CRUDE PETROLEUM
MOVED BY RAIL: CAR LOADINGS & TONNAGE
Rail offers an alternative mode of transportation
for crude oil. In May 2016, when the Fort McMurray thousand tonnes thousand rail cars
wildfires impacted production, the number of rail car 1,600 24

loadings of crude oil and petroleum products reached 1,400 21
its lowest level since 2012. Transportation by rail has 1,200 18
since been rebounding, reaching 11,899carloads in 1,000 15
February 2017 (Figure4.2).
800 12
tonnes
Industry data reported almost 100,000b/d of western 600 9
Canadian crude oil was transported to market by 400 6
rail in 2016, compared to over 180,000b/d that was 200 3
transported in 2014. In the first quarter 2017 almost rail cars
0 0
140,000b/d were transported by rail. 2010 2011 2012 2013 2014 2015 2016 2017
Source: Statistics Canada; CANSIM table 404-0002.
The current rail loading capacity originating in Western
Canada is 754,000b/d. Table4.9 lists the rail terminals
for uploading crude in Western Canada.
TABLE4.9 RAIL UPLOADING TERMINALS IN WESTERN CANADA

Operator Location Capacity* Scheduled Startup
(thousand b/d)
ALBERTA
Keyera/Enbridge Cheecham 32 Operating since Oct 2013
Cenovus (Ex Canexus) Bruderheim (near Edmonton) 70 Expansion operating since Sep 2014; expandable
Gibson Edmonton 20 Operating since Q3 2015
Keyera/Kinder Morgan Edmonton 40 Operating since Sep 2014
Gibson/USDG Hardisty 120 Operating since Jul 2014
Altex Lynton (Ft. McMurray) 15 Operating
Kinder Morgan/Imperial Sherwood Park (Strathcona County) 210 Operating since Apr 2015; can be expanded to 250
SASKATCHEWAN
TORQ Transloading Bromhead 20 Operating
Plains Kerrobert (70) Startup Nov 2015. As of May 2016, operations temporarily
closed
Altex Lashburn 60 Expansion operating
TORQ Transloading Lloydminster 25 Operating;
Crescent Point Stoughton 45 Operating since Feb 2012
Altex Unity 15 Operating
TORQ Transloading Unity 22 Operating
MANITOBA
Tundra Cromer 60 Expansion operating since Q4 2014
TOTAL 754,000 b/d + potential expansions
Note: Facilities with less than 15,000 b/d are not shown
*Estimated capacities based on assumptions for operating hours, available car spots, type of crude oil transported, and contracts in place (if known).

4.8 TRANSPORTATION SUMMARY Rail provides the means of transportation
for supplies that exceed the major pipeline
Takeaway capacity currently remains tight for capacity exiting Western Canada and the
oil producers in Western Canada. Both physical demand of Alberta and Saskatchewan
and economic market access is key to the long- refineries.
term prosperity of the industry and has important
implications for the economic health of Canada as a Additional pipeline capacity is urgently needed
whole. and a variety of pipeline options will: provide
producers with market diversification; ensure
Available crude oil supplies to all markets was continued service required by existing shippers;
3.9 million b/d in 2016. and improve operational flexibility.
The estimated available pipeline capacity New crude oil pipeline projects are being
for Canadian crude oil on the major pipeline developed at a very slow pace given the long
systems originating in Alberta and exiting approval process they face.
Western Canada is 3.3millionb/d.
The Canadian federal governments approval of
Western Canadian crude oil also supplies the Trans Mountain Expansion and Enbridge Line 3
refineries in Alberta and Saskatchewan using projects, as well as a Presidential permit from the
regional pipelines and trucks. U.S. Department of State for KeystoneXL, have been
encouraging steps forward. Construction, and the
placement of these projects into service is urgently
needed.
FIGURE4.4 EXISTING TAKEAWAY CAPACITY FROM WESTERN CANADA VS. SUPPLY FORECAST
6.0
2017 Western Canadian supply
5.0
4.0
3.0 Enbridge Mainline
2.0
Keystone
Express
1.0
Trans Mountain
Rangeland & Milk River
Western Canadian Refineries

0
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Capacity shown can be reduced by any extraordinary and temporary operating and physical constraints.
Notes:
1) Enbridge capacity adjusted by operational downtime and capacity for RPP and U.S. Bakken crude oil.
2) Keystone: adjustment to 95% of nameplate capacity for maintenance downtime.
3) Express: contract capacity only due to downstream Platte pipeline constraints.
4) Trans Mountain: RPP capacity requirements subtracted from nameplate capacity.
5) Rangeland & Milk River: throughput estimated @ 107,000 b/d, which is the maximum realized annual crude oil throughput since 2010.
6) Western Canadian refineries: Refinery intake in Alberta and Saskatchewan; excludes BC (85% of 616,000 b/d capacity).

GLOSSARY
Asphalt plant A facility that processes crude oil into various types and grades of asphalt, ranging from
dust-abatement road oils to highway-grade asphalt, to roofing tar.
API Gravity A specific gravity scale developed by the American Petroleum Institute (API) for
measuring the relative density or viscosity of various petroleum liquids.
Barrel A standard oil barrel is approximately equal to 35 Imperial gallons (42 U.S. gallons) or
approximately 159 litres.
Bitumen A heavy, viscous oil that must be processed extensively to convert it into a crude oil
before it can be used by refineries to produce gasoline and other petroleum products.
Coker The processing unit in which bitumen is cracked into lighter fractions and withdrawn to
start the conversion of bitumen into upgraded crude oil.
Condensate A mixture of mainly pentanes and heavier hydrocarbons. U.S. condensate is divided into
two broad categories. The first is lease condensate produced at or near the wellhead
(either natural gas or crude oil). The second category is plant condensate, also known
as NGLs, natural gasoline, pentanes plus or C5+, that remain suspended in natural gas at
the wellhead and is removed at a gas processing plant. For purposes of this report, both
categories are included in the term condensate. Both categories of condensate are
substantially similar in composition but the U.S. EIA arbitrarily defines lease condensate
as crude oil and plant condensate as an NGL (pentanes plus). Furthermore, Department
of Commerce - Bureau of Industry and Security (BIS) regulations also define lease
condensate as crude oil.
Crude oil (conventional) A mixture of pentanes and heavier hydrocarbons that is recovered or is recoverable at a
well from an underground reservoir. It is liquid at the conditions under which its volumes
is measured or estimated and includes all other hydrocarbon mixtures so recovered or
recoverable except raw gas, condensate, or bitumen.
Crude oil (heavy) Crude oil is deemed, in this report, to be heavy crude oil if it has an API of 27 or less.
No differentiation is made between sweet and sour crude oil that falls in the heavy
category because heavy crude oil is generally sour.
Crude oil (medium) Crude oil is deemed, in this report, to be medium crude oil if it has an API greater than
27 but less than 30. No differentiation is made between sweet and sour crude oil that
falls in the medium category because medium crude oil is generally sour.
Crude oil (synthetic) A mixture of hydrocarbons, similar to crude oil, derived by upgrading bitumen from the
oil sands.
Density The mass of matter per unit volume.
DilBit Bitumen that has been reduced in viscosity through addition of a diluent (or solvent)
such as condensate or naphtha.
Diluent Lighter viscosity petroleum products that are used to dilute bitumen for transportation
in pipelines.
Extraction A process unique to the oil sands industry, in which bitumen is separated from its source
(oil sands).

Feedstock In this report, feedstock refers to the raw material supplied to a refinery or oil sands
upgrader.
Integrated mining A combined mining and upgrading operation where oil sands are mined from open pits.
project The bitumen is then separated from the sand and upgraded by a refining process.
Insitu recovery The process of recovering crude bitumen from oil sands by drilling.
Merchant upgrader Processing facilities that are not linked to any specific extraction project but is designed
to accept raw bitumen on a contract basis from producers.
Oil Condensate, crude oil, or a constituent of raw gas, condensate, or crude oil that is
recovered in processing and is liquid at the conditions under which its volume is
measured or estimated.
Oil sands Refers to a mixture of sand and other rock materials containing crude bitumen or the
crude bitumen contained in those sands.
Oil sands deposit A natural reservoir containing or appearing to contain an accumulation of oil sands
separated or appearing to be separated from any other such accumulation. The AER
has designated three areas in Alberta as oil sands areas.
Oil Sands Heavy In this report, Oil Sands Heavy includes upgraded heavy sour crude oil, and bitumen to
which light oil fractions (i.e. diluent or upgraded crude oil) have been added in order to
reduce its viscosity and density to meet pipeline specifications.
Open season A period of time designated by a pipeline company to determine shipper interest on a
proposed project. Potential customers can indicate their interest/support by signing a
transportation services agreement for capacity on the pipeline.
Pentanes plus A mixture mainly of pentanes and heavier hydrocarbons that ordinarily may contain
some butanes and is obtained from the processing of raw gas, condensate or crude oil.
PADD Petroleum Administration for Defense District that defines a market area for crude oil in
the U.S.
Refined petroleum End products in the refining process (e.g., gasoline).

Products
Specification Defined properties of a crude oil or refined petroleum product.
SynBit A blend of bitumen and synthetic crude oil that has similar properties to medium sour
crude oil.
Train (manifest) Manifest trains carry multiple cargoes and make multiple stops. These are small group
or single car load.
Train (unit) Unit trains carry a single cargo and deliver a single shipment to one destination,
lowering the cost and shortening the trip.
Upgrading The process that converts bitumen or heavy crude oil into a product with a lower
density and viscosity.
West Texas Intermediate WTI is a light sweet crude oil, produced in the United States, which is the benchmark
grade of crude oil for North American price quotations.

APPENDIX A.1
CAPP CANADIAN CRUDE OIL PRODUCTION FORECAST 2017 2030
thousand barrels per day Actual Forecast

EASTERN CANADA 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Ontario 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1
Atlantic Provinces1 212 194 231 264 278 267 279 297 306 286 252 227 211 197 185
E. CANADA CONVENTIONAL 213 195 232 265 279 268 280 298 307 287 253 228 212 198 186

WESTERN CANADA 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
CONVENTIONAL
Light & Medium
Alberta 327 311 297 291 294 303 313 317 318 312 315 318 322 326 332
British Columbia 23 22 21 20 19 18 17 16 15 15 14 13 13 12 11
Saskatchewan 1,2 226 212 194 195 197 200 201 203 207 212 218 224 230 236 238
Manitoba 40 35 33 31 30 29 28 28 27 27 26 25 25 24 24
Northwest Territories. 9 6 6 6 5 5 5 5 4 4 4 4 4 4 4
Light & Medium 625 585 551 543 545 555 564 568 572 569 576 585 593 603 609
Heavy
Alberta 118 114 113 111 105 100 95 90 86 90 85 81 77 73 70
Saskatchewan2, 233 235 229 225 219 214 212 213 214 215 215 216 218 220 223
Heavy 350 349 342 336 324 314 307 303 300 305 300 297 295 293 293
PENTANES/CONDENSATE 261 298 325 340 352 356 360 364 363 364 365 362 362 363 361
W. CANADA CONVENTIONAL 1,237 1,232 1,219 1,219 1,221 1,226 1,231 1,234 1,235 1,238 1,241 1,244 1,250 1,259 1,262
(incl. condensates)
Notes:
1. Atlantic Canada production includes Newfoundland & Labrador production and negligible volumes from New Brunswick. Condensates/pentanes from Nova Scotia and New Brunswick are also added.
2. CAPP allocates Saskatchewan Area III Medium crude as heavy crude. Also 17% of Area IV is > 900 kg/m3.
WESTERN CANADA
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
OIL SANDS (BITUMEN &
UPGRADED CRUDE OIL)
Mining 1,028 1,176 1,365 1,392 1,406 1,417 1,420 1,424 1,427 1,428 1,428 1,407 1,409 1,455 1,506
Insitu 1,372 1,514 1,619 1,668 1,715 1,746 1,778 1,830 1,869 1,925 1,992 2,026 2,060 2,120 2,164
TOTAL OIL SANDS 2,400 2,690 2,984 3,060 3,122 3,164 3,199 3,254 3,296 3,353 3,420 3,433 3,469 3,575 3,669
W. Canada Oil Production 3,637 3,923 4,203 4,278 4,343 4,389 4,430 4,488 4,531 4,591 4,662 4,677 4,719 4,834 4,932
E. Canada Oil Production 213 195 232 265 279 268 280 298 307 287 253 228 212 198 186
TOTAL CANADIAN OIL 3,850 4,118 4,435 4,543 4,622 4,657 4,710 4,786 4,838 4,878 4,915 4,905 4,931 5,032 5,118
PRODUCTION
OIL SANDS RAW BITUMEN** 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Mining 1,147 1,338 1,526 1,555 1,570 1,582 1,586 1,590 1,595 1,595 1,595 1,581 1,597 1,644 1,698
Insitu 1,391 1,540 1,640 1,688 1,735 1,766 1,796 1,848 1,885 1,941 2,009 2,049 2,084 2,145 2,188
TOTAL OIL SANDS RAW BITUMEN 2,538 2,878 3,166 3,243 3,305 3,347 3,382 3,438 3,480 3,537 3,604 3,631 3,681 3,790 3,886
Totals may not add up due to rounding.

Notes:
** Raw bitumen numbers are provided at the bottom of the table and do not reflect upgrading. The oil sands production numbers at the top of the table (as historically published) are a combination of upgraded crude oil and
bitumen and therefore incorporate yield losses from integrated upgrader projects. Production from off-site upgrading projects are included in the production numbers as bitumen.

APPENDIX A.2
CAPP WESTERN CANADIAN CRUDE OIL SUPPLY FORECAST 2017-2030
Blended Supply to Trunk Pipelines and Markets

Actual Forecast
CONVENTIONAL 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Total Light and Medium 621 581 547 539 541 551 560 564 568 565 572 581 589 599 605
Net Heavy to Market 280 273 265 258 245 234 227 222 219 224 218 215 212 211 210
TOTAL CONVENTIONAL 901 855 812 797 786 785 786 785 786 789 791 795 802 810 815

OIL SANDS
Upgraded Light (Synthetic)1 631 719 785 787 777 777 773 769 765 759 751 754 802 798 794
Oil Sands Heavy 2 2,383 2,628 2,924 3,022 3,111 3,167 3,216 3,293 3,350 3,428 3,520 3,525 3,543 3,696 3,836
TOTAL OIL SANDS AND UPGRADERS 3,014 3,347 3,710 3,809 3,889 3,943 3,989 4,061 4,116 4,186 4,270 4,279 4,345 4,494 4,630
Total Light Supply 1,253 1,300 1,333 1,326 1,318 1,328 1,333 1,332 1,333 1,324 1,323 1,335 1,391 1,397 1,399
Total Heavy Supply 2,662 2,902 3,190 3,280 3,356 3,401 3,443 3,514 3,569 3,651 3,738 3,740 3,755 3,907 4,046
WESTERN CANADA OIL SUPPLY 3,915 4,202 4,522 4,606 4,675 4,728 4,776 4,847 4,902 4,975 5,061 5,074 5,147 5,304 5,445
Notes:
1. Includes upgraded conventional.
2. Includes: a) imported condensate b) manufactured diluent from upgraders and c) upgraded heavy volumes coming from upgraders.
.
APPENDIX B
ACRONYMS, ABBREVIATIONS, UNITS AND CONVERSION FACTORS
Acronyms Canadian Provincial Abbreviations

API American Petroleum Institute AB Alberta
AER Alberta Energy Regulator BC British Columbia
CAPP Canadian Association of Petroleum Producers MB Manitoba
EIA Energy Information Administration NB New Brunswick
FERC Federal Energy Regulatory Commission NL Newfoundland & Labrador
IEA International Energy Agency NWT Northwest Territories
NEB National Energy Board ON Ontario
PADD Petroleum Administration for Defense District QC Qubec
RPP refined petroleum products SK Saskatchewan
U.S. United States
WTI West Texas Intermediate
Units
b/d barrels per day
Conversion Factor
1 cubic metre = 6.293 barrels (oil)
U.S. State Abbreviations

AL Alabama ME Maine OK Oklahoma
AK Alaska MD Maryland OR Oregon
AZ Arizona MA Massachusetts PA Pennsylvania
AR Arkansas MI Michigan SC South Carolina
CA California MN Minnesota SD South Dakota
CO Colorado MS Mississippi TN Tennessee
CT Connecticut MO Missouri TX Texas
DE Delaware MT Montana UT Utah
FL Florida NE Nebraska VT Vermont
GA Georgia NV Nevada VA Virginia
ID Idaho NH New Hampshire VI Virgin Islands
IL Illinois NJ New Jersey WA Washington
IN Indiana NM New Mexico WV West Virginia
IA Iowa NY New York WI Wisconsin
KS Kansas NC North Carolina WY Wyoming
KY Kentucky ND North Dakota
LA Louisiana OH Ohio

APPENDIX
Canadian and U.S.CCrudeCANADIAN ANDand
Oil Pipelines U.S.Refineries
CRUDE OIL -PIPELINES
2017 AND REFINERIES
ENBRIDGE NW
UPGRADERS
Shell (Scotford) ................................. 240
RAINBO
CNRL (Horizon) ................................. 210
W
VANCOUVER TO: PRINCE GEORGE
Japan - 4,300 miles Husky.............. 12
S.Korea - 4,600 miles
China - 5,100 miles EDMONTON
Imperial .........................191
San Francisco - 800 miles Suncor...........................142
Shell ............................. 100
.
Los Angeles - 1,100 miles
LLOYDMINSTER
HU
SK
Y
VANCOUVER
Chevron (sold to Parkland Fuels) ......55 REGINA
KEYSTONE
Complex ......................................135
PUGET SOUND MOOSE JAW
BP (Cherry Pt) .............234 Moose Jaw asphalt plant ...............19
Phillips 66 (Ferndale) ...101
Shell (Anacortes)..........137
Tesoro (Anacortes) .......120 WA
NAA
TrailStone (Tacoma) .......42
SC
WA
GREAT FALLS
Calumet ......................25
BILLINGS
CHS (Laurel) ................56 MT
Phillips 66....................60
OR SUP
KEYSTONE
ExxonMobil ..................60
ID Dickinson ND Calu
PADD IV NORTH DAKOTA

MN
SAN FRANCISCO
Chevron ........................................257 WYOMING Tesoro (Mandan) ........74
SD
Phillips 66......................................120 Sinclair (Casper) ............................25 Tesoro (Dickinson) .....20
Shell ..............................................144
Tesoro ...........................................166
PADD V Sinclair Oil (Sinclair).......................85
) ..................18
HollyFrontier (Cheyenne) ................52
WY DA
KO
ST. PAUL
Flint Hills .............339
Valero ............................................145 TA Tesoro .................102
NV
KOCH Wood River

AC
CE
SS
CA SALT LAKE CITY
Big West ............. 35
Chevron.............. 53
NE KANSAS
CHS (McPherson)....................................85 PA
HollyFrontier (El Dorado) ......................135 IA
SH
HollyFrontier ....... 45 Coffeyville Res. (Coffeyville) ..................115

ELL
Tesoro ................ 63 DENVER/COMMERCE CITY

PO
CHEVRON
Suncor........................... 98 NY
EXP
WH RE SS
ITE
UT CLI
FFS
CO KS
IL
OB
BAKERSFIELD OKLAHOMA
PACIF
NM
Kern Oil ..................... 26 Phillips 66 (Ponca City) .........................203 D

XO
HollyFrontier (Tulsa) .............................125 EA

RH
IC
EX
San Joaquin............... 14
SP OUT
Valero (Ardmore).....................................86 S
NM M
LOS ANGELES AZ BORGER/MCKEE
Alon USA .........................70
Tesoro (Carson/Wilmington) ... 380 WRB ............................ 146 OK
Chevron ................................ 291 Valero .......................... 195 S
Diam GA
PBF ...................................... 155 URION ond PE
CENT
Phillips 66 ............................ 139
Valero .................................... 85
PADD III
SEAWAY TWIN
AR
Artesia Slaughter
TRAN
Big
SCAN
Spring
ADA
NEW MEXICO/W. TEXAS

MR
GULF
Alon (Big Spring). ....................................73 TYLER IA Calumet (Shreve

N
Tesoro (Gallup)........................................25 EX EX
Delek.....................75 BR PR
COAS
Crane XO
Tesoro (El Paso)................................... .135 ID ES N
GE S MO
CRAN TE LA B
T
E X
TX HO-HO
CA
CT
US
Port Arthur/ Lake

HOUSTON/TEXAS CITY Three Nederland/
Rivers Beaumont Charles
Valero ............................. 89 Marathon (Galveston).... 459
Shell (Deer Park)........... 312 PORT ARTHUR/BEA
CORPUS CHRISTI
ExxonMobil ................... 561 ExxonMobil ............
CITGO ........................... 157 SWEENY
Flint .............................. 300 Phillips 66..................... 247 LyondellBasell .............. 268
Marathon ....................... 86 Valero ....................
Valero ........................... 275
Valero (2) ................80+225 Total ......................

3
ENBRIDGE NW
UPGRADERS
RAINBO
CNRL (Horizon) ................................. 210
39%
W
EDMONTON
British Columbia
Alberta
10
457
61
3,066
Imperial .........................191
Shell ............................. 100
LLOYDMINSTER are becoming
.
Northwest Territories 1 9
SK
2016 2030
VANCOUVER
Chevron........... 55
POLICY CHANGES.
SUPPLY OF WESTERN CANADIAN CRUDE OIL Developing resources responsibly to help achieve key Come by Chance
KEYSTONE
Complex ......................................135
WILL GROW 39 PER CENT BY 2030 TO regulatory, social and environmental outcomes,
PUGET SOUND MOOSE JAWis important and
Phillips 66 (Ferndale) ...101 needs be done in a manner that does not unnecessarily burden Hebron

Tesoro (Anacortes) .......120 industry and risk more jobs.
WA
NA
CA
S
3. GREAT
WA
FALLS
Additionally,
Phillips 66....................60
ExxonMobil ..................60
SUPERIOR
ID
KEYSTONE

MON
TREA
L
SAN FRANCISCO
Chevron (sold to Parkland Fuels) ....257 WYOMING
NORTH DAKOTA
SD Imperial ............... 113
VT USGC (Enbridge/Seaway) 6.30 - 8.85
9
PADD V
oil sands will decline for the third Phillips 66......................................120
Shell ..............................................144 Sinclair Oil (Sinclair).......................85
BRI
D GE
L INE
NH
Hardisty to
Tesoro ...........................................166 Canadian crude oil supply WYand is forecast to grow
DA from 3.9 million
) ..................18
KO
Valero ............................................145
NV b/d in 2016 to 5.4 million b/d in 2030.
TA
A
Tesoro .................102
WI Westover
NY MA
KOCH Wood River

C ExxonMobil ..............236
CE
S S
PDV ........................180
KIANTONE
CA
PADD II CT RI
SALT LAKE CITY
USGC (Keystone/Gulf Coast Ext.) 7.15 -11.55
KANSAS
WESTERN CANADA HEAVY OIL SANDS SUPPLY
Big West ............. 35 NE CHS (McPherson)....................................85
provides 95 MI WARREN
PENNSYLVANIA
per cent of this DENVER/COMMERCE
SH
dramatic change to projects due
ELL
Tesoro ................ 63 PO
Suncor........................... 98 NY St. James to Wood River (Capline/Capwood) 1.30
CHEVRON
EX
PRE
FFS
DE
NEW JERSEY
Hardisty to:
IL
OB
PACIF
M
Phillips 66 (Ponca City) .........................203 D DELAWARE
N
Kern Oil ..................... 26 EA
XO
EASTERN CANADA
IC
EX
SP OUT
Valero (Ardmore).....................................86 S
KY WOOD RIVER
BP-Husky (Toledo)........................160
PBF (Toledo).................................170
5.85
5.05**-6.00
ROBINSON
Marathon (Canton) .........................93
Alon USA .........................70 OK Marathon..........................231 Marathon (Catlettsburg) ...............273 USGC (Enbridge/Seaway) 7.00 - 9.05
TN
MARKETS
S
OP
MT VERNON
Valero .......................... 195 SU
Chevron ................................ 291 GA USGC (Keystone/Gulf Coast Ext.) 7.80 - 12.55
ETC
CENT
U RION ond PE NC
Phillips 66 ............................ 139
PADD III
MEMPHIS Notes 1) Assumed exchange rate = 0.73 US$ / 1C$ (May 2017 average)
PADD I
Valero .................................... 85 Valero ..................180
SEAWAY TWIN
Artesia Slaughter
TRAN
Big
Spring
SCAN
2014
these incremental supplies. International Joint Tariff
GA
ADA
M R AL
GULF
N
EX
PR EX ALABAMA
Crane XO
MS
COAS
Tesoro (El Paso)................................... .135 ID
GE
ES
S
LA
$34
CRAN TE
BIL
2017 X Shell (Saraland) .............................85
T
CA
St.
PBF (Chalmette)...........................189
James PADD
CT
US
Port Arthur/ Lake
Rivers
Nederland/
Shell (Norco) ................................229
$15
Valero ............................. 89
ExxonMobil ....................363
LAKE CHARLES
CITGO ............................. 425
Valero (Meraux)............................125
Canadian crude oil
BILLION
.578 Phillips 66....................... 249
Total ..............................226
BILLION Valero (2) ................80+225
2017
EXECUTIVE
SUMMARY
Disclaimer:
1.5
2016 2030

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2017

Crude Oil Forecast, Markets and Transportation

CANADAS OIL INDUSTRY

5.4 MILLION BARRELS PER DAY (B/D).

PRODUCTION AND SUPPLY MN Suncor................... 85

KOCH Wood River

CANADAS OIL INDUSTRY

5.4 MILLION BARRELS PER DAY (B/D).

PRODUCTION AND SUPPLY MN Suncor................... 85

KOCH Wood River

PROCESSING CAPACITY OF MORE THAN 2 MILLION B/D,

Crude Oil Forecast, Markets & Transportation i

EXECUTIVE SUMMARY IFC

LIST OF FIGURES AND TABLES iii

2 CRUDE OIL PRODUCTION & SUPPLY FORECAST 3

3 CRUDE OIL MARKETS 13

ii CANADIAN ASSOCIATION OF PETROLEUM PRODUCERS

Figure2.1 Canadian Oil Sands & Conventional Production 4

Figure3.1 Canada and U.S.: 2016 Crude Oil Receipts by Source 13

Table3.1 Refineries in Western Canada by Province 14

Table4.1 Major Existing Crude Oil Pipelines Exiting Western Canada 24

Crude Oil Forecast, Markets & Transportation iii

Source: IEA, World Energy Outlook 2016

1 CANADIAN ASSOCIATION OF PETROLEUM PRODUCERS

Crude Oil Forecast, Markets & Transportation 2

Producers were asked to respond to the survey based

3 CANADIAN ASSOCIATION OF PETROLEUM PRODUCERS

Total production is forecast to grow from

TABLE 2.1 CANADIAN CRUDE OIL PRODUCTION

millionb/d 2016 2020 2025 2030

Crude Oil Forecast, Markets & Transportation 4

TABLE2.2 ATLANTIC CANADA PROJECTS AND RECENT DISCOVERIES

Producing Field Year First Oil Cumulative Production Estimated

5 CANADIAN ASSOCIATION OF PETROLEUM PRODUCERS

thousand barrels per day

200 Terra Nova

2.4 WESTERN CANADA PRODUCTION 2.4.1 CONVENTIONAL

Crude Oil Forecast, Markets & Transportation 6

1.4 June 2016 Forecast

0.2 BC & NWT

7 CANADIAN ASSOCIATION OF PETROLEUM PRODUCERS

2.4.2 OIL SANDS Peace

This latest forecast for oil sands production is Peace River

approved to date (including approved projects that

Crude Oil Forecast, Markets & Transportation 8

million barrels per day

9 CANADIAN ASSOCIATION OF PETROLEUM PRODUCERS

Crude Oil Forecast, Markets & Transportation 10

Oil Sands Heavy *

Table 2.5 shows the projections for total western

11 CANADIAN ASSOCIATION OF PETROLEUM PRODUCERS

Eastern Canadas contribution increases to o Divergent environmental policies

Western Canada oil sands production grows

Western Canada conventional crude oil

Pentanes & condensate production from

An incremental 1.5millionb/d of crude oil

From 2017 to 2020, the growth in supply is

Long-term activity and growth is significantly

Crude Oil Forecast, Markets & Transportation 12

FIGURE3.1 CANADA AND U.S.: 2016 CRUDE OIL RECEIPTS BY SOURCE

PADD I - East Coast

[2016 total refinery receipts]

U.S. - Alaska only

2.4 WESTERN CANADA PRODUCTION 2.4.1 CONVENTIONAL

2.4.2 OIL SANDS Peace

Eastern Canadas contribution increases to o Divergent environmental policies

Western Canada oil sands production grows

Western Canada conventional crude oil

Pentanes & condensate production from

An incremental 1.5millionb/d of crude oil

From 2017 to 2020, the growth in supply is

Long-term activity and growth is significantly

FIGURE3.6 2016 PADDV: FOREIGN SOURCED SUPPLY BY