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Reduced flow on several US-bound Canadian pipelines following introduction of tariffs
Analysing the immediate impact on key cross-border oil transportation routes
2 minute read
Dylan White
Principal Analyst, North American Crude Markets
Dylan White
Principal Analyst, North American Crude Markets
Dylan leverages cutting-edge data to offer real-time insight into the oil industry.
View Dylan White's full profileJohn Trischan
Senior Research Manager - CTA Midstream
On 4 March, the United States imposed 25% tariffs on imports from Canada and Mexico. A 10% exception was given to energy imports from Canada – including oil and gas – highlighting the imperative co-dependency between Canadian producers and US refiners.
Since the announcement, Wood Mackenzie’s real-time pipeline monitoring has detected flow reductions along three major crude systems that deliver Canadian crude to US markets: Southbow’s 590,000 bpd Keystone – Hardisty to Steele City pipeline, TransMountain’s 890,000 bpd TransMountain system, and Enbridge’s 307,000 bpd Express pipeline.
Using insight from our Commodity Trading Analytics suite we share our analysis of the immediate impact on these key pipeline systems, examining flow rates before and after the tariff implementation and exploring the potential implications for both Canadian producers and US refiners.
Potential impact of tariffs
It is unclear if the reductions were directly related to the new tariffs. However, the timing could indicate that the recently implemented policy may have at least some impact on Canada-to-US deliveries, at least temporarily. We expect the vast majority of Canada-to-US crude movements will persist under a 10% tariff scenario. But it will likely take time for optimal trade flows to re-establish amid shifting policies. With the possibility of additional tariffs coming from an escalating trade war – or of negotiations leading to a lifting of tariffs – certain shippers might await greater clarity through the coming days.
Southbow's Keystone pipeline
Southbow’s Keystone system flows south out of Hardisty, AB, to Steele City, NE, from which it can transport barrels south to Cushing, OK, or east to Patoka, IL. Keystone is critical for delivering Canadian crude to refinery markets in both the US Midcon and US Gulf Coast. Keystone was flowing above 600,000 bpd an hour before midnight, when tariffs took effect. Flows quickly fell through the night, dipping to 560,000 bpd by 3:00am ET and 395,000 bpd by 10:00am ET. As of 2:00pm ET, Keystone pipeline utilization remained near 70%, down from 101% earlier in the day.
TransMountain system
The TransMountain system transports Canadian barrels west from Edmonton, AB, to the Port of Vancouver, remaining north of the US/Canada border throughout its route. However, TransMountain (which includes TMX) delivers barrels to refineries in the US West Coast via the Puget Sound pipeline and Westridge waterborne loadings. An hour before tariffs took hold, the TransMountain system was flowing at 838,000 bpd. Flows fell to 720,000 bpd by 3:00 am ET and 650,000 bpd by 10:00am ET. System utilization was at approximately 77% as of 2:00pm ET, down from 91% earlier in the day.
Enbridge's Express pipeline
Enbridge’s Express pipeline flows south out of Hardisty to Casper, WY. When tariffs took effect at 12:00am ET, Express was flowing at 206,000 bpd. Flows dropped to 65,000 bpd by 5:00am ET. As of 2:00pm ET, Express utilisation was at approximately 19%, down from 67% early in the day.
All three pipeline models are currently set to high confidence, meaning Wood Mackenzie pipeline flows aligned well with recent regulatory data points.
Commodity Trading Analytics
Our Commodity Trading Analytics suite provides unparalleled real-time insights into crude oil and natural gas supply and demand, leveraging innovative data points and analysis. By combining proprietary data collection, advanced data science, and expert energy market analysts, we deliver cutting-edge real-time analytics services.
