An Economic and Environmental Assessment of Eastern Canadian Crude Oil Imports
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Study No. 167 January 2018 CANADIAN AN ECONOMIC AND ENVIRONMENTAL ENERGY ASSESSMENT OF EASTERN CANADIAN RESEARCH INSTITUTE CRUDE OIL IMPORTS Canadian Energy Research Institute | Relevant • Independent • Objective AN ECONOMIC AND ENVIRONMENTAL ASSESSMENT OF EASTERN CANADIAN CRUDE OIL IMPORTS ii Canadian Energy Research Institute An Economic and Environmental Assessment of Eastern Canadian Crude Oil Imports Authors: Paul Kralovic Andrei Romaniuk Anna Vypovska Dinara Millington ISBN 1-927037-52-2 Copyright © Canadian Energy Research Institute, 2018 Sections of this study may be reproduced in magazines and newspapers with acknowledgement to the Canadian Energy Research Institute January 2018 Printed in Canada Front photo’s courtesy of various Google searches Acknowledgements: The authors of this report would like to extend their thanks and sincere gratitude to the Canadian Fuels Association and ClipperData; as well as all CERI staff involved in the production and editing of the material, including but not limited to Allan Fogwill and Megan Murphy. ABOUT THE CANADIAN ENERGY RESEARCH INSTITUTE – CANADA’S VOICE ON ENERGY Founded in 1975, the Canadian Energy Research Institute (CERI) is an independent, registered charitable organization specializing in the analysis of energy economics and related environmental policy issues in the energy production, transportation, and consumption sectors. Our mission is to provide relevant, independent, and objective economic research of energy and environmental issues to benefit business, government, academia and the public. For more information about CERI, visit www.ceri.ca CANADIAN ENERGY RESEARCH INSTITUTE 150, 3512 – 33 Street NW Calgary, Alberta T2L 2A6 Email: [email protected] Phone: 403-282-1231 January 2018 An Economic and Environmental Assessment of iii Eastern Canadian Crude Oil Imports Table of Contents LIST OF FIGURES ............................................................................................................. v LIST OF TABLES ............................................................................................................... vii ACRONYMS AND ABBREVIATIONS .................................................................................. ix EXECUTIVE SUMMARY .................................................................................................... xiii CHAPTER 1 INTRODUCTION ........................................................................................ 1 CHAPTER 2 BACKGROUND INFORMATION .................................................................. 3 Crude Oil Supply and Disposition ....................................................................................... 3 Refineries: Background and Trends .................................................................................. 6 The Refinery Process .................................................................................................... 6 Eastern Canadian Refineries within a North American and Global Context ............... 13 Crude Oil Transportation – Pipeline, Rail and Tanker/Barge ............................................. 21 Pipeline......................................................................................................................... 22 Crude-by-Rail................................................................................................................ 26 Oil Tankers and Marine Terminals ............................................................................... 29 CHAPTER 3 METHODOLOGY AND ANALYSIS ................................................................ 33 Overview of Methodology and Description of Scenarios .................................................. 33 Models and Their Approaches ........................................................................................... 39 Crude Flows Model ...................................................................................................... 39 Costs of Feedstock Model ............................................................................................ 52 Emissions/LCA Model................................................................................................... 61 CHAPTER 4 MODELLING RESULTS ............................................................................... 83 Made in Canada Scenario .................................................................................................. 83 Crude Flows .................................................................................................................. 83 Cost of Feedstock ......................................................................................................... 87 Emissions ...................................................................................................................... 88 Expanded Access Scenario ................................................................................................. 91 Crude Flows .................................................................................................................. 91 Cost of Feedstock ......................................................................................................... 95 Emissions ...................................................................................................................... 96 Current Reality Scenario .................................................................................................... 99 Crude Flows .................................................................................................................. 99 Cost of Feedstock ......................................................................................................... 104 Emissions ...................................................................................................................... 105 International Social Concerns Scenario.............................................................................. 107 Crude Flows .................................................................................................................. 108 Cost of Feedstock ......................................................................................................... 111 Emissions ...................................................................................................................... 113 January 2018 iv Canadian Energy Research Institute CHAPTER 5 CONCLUSIONS AND IMPORTANT FUTURE DYNAMICS ............................... 115 Conclusions by Scenario..................................................................................................... 115 Made in Canada ........................................................................................................... 116 Expanded Access .......................................................................................................... 118 Current Reality ............................................................................................................. 118 International Social Concerns ...................................................................................... 119 Conclusions by Province .................................................................................................... 120 Inter-scenario Comparisons ............................................................................................... 122 Expanded Access vs. Current Reality ........................................................................... 123 Expanded Access vs. Made in Canada ......................................................................... 123 Important Future Dynamics ............................................................................................... 124 Crude Oil Price Dynamics ............................................................................................. 124 Availability of Crude Oil ............................................................................................... 126 Final Remarks ..................................................................................................................... 128 BIBLIOGRAPHY ............................................................................................................... 131 APPENDIX A FACTUAL AND USED 2016 IMPORT VOLUMES ........................................... 143 APPENDIX B DETAILED CRUDE FLOWS AND TRANSPORTATION PATH OF THE BASE CASE .................................................................................................... 145 APPENDIX C INVENTORY OF CANADIAN AND FOREIGN CRUDE OILS USED IN THE STUDY AND RESULTS OF UPSTREAM AND MIDSTREAM GHG EMISSIONS MODELLING ............................................................................................ 147 APPENDIX D TANKER TRANSPORTATION COSTS BY ORIGIN AND DESTINATION............. 157 APPENDIX E DETAILED SUBSTITUTION OF CRUDE OIL BY SCENARIO .............................. 159 APPENDIX F DETAILED EMISSIONS BY SCENARIO .......................................................... 167 APPENDIX G COST OF FEEDSTOCK VS. GHG EMISSIONS BY PROVINCE ........................... 171 APPENDIX H SELECTED FOREIGN CRUDE OIL BRANDS IMPORT VOLUMES AND PRICE COMPARISON WITH SELECTED CANADIAN CRUDES ......................................... 177 January 2018 An Economic and Environmental Assessment of v Eastern Canadian Crude Oil Imports List of Figures 2.1 Canadian Crude Oil Production by Province, Conventional + Oil Sands ...................... 4 2.2 US Imports from Canada by Crude Type ....................................................................