2012 Crude Oil CAPP Forecast, Markets & Pipeline Expansions

Crude Oil
Forecast, Markets & Pipelines
June 2012
Crude Oil Forecast, Markets & Pipelines
Disclaimer:
This publication was prepared by the Canadian Association of Petroleum Producers (CAPP). While it is believed that the information contained herein is
reliable under the conditions and subject to the limitations set out, CAPP does not guarantee the accuracy or completeness of the information. The use
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CANADIAN ASSOCIATION OF PETROLEUM PRODUCERS
EXECUTIVE SUMMARY
CAPP annually publishes a long-term outlook for Canadian crude oil production. This year, our forecast has been extended
by five years to 2030. Growth in conventional oil production is even stronger than was expected last year, however, oil
sands remain the dominant component of future production. This longer term outlook predicts total Canadian production
will exceed 6 million b/d at the end of this period. Western Canadian crude oil producers need to find new markets for their
expanding production. Eastern Canada, which currently imports over half of its oil from offshore foreign suppliers, is a prime
candidate. Other market opportunities include increasing the share of the U.S. markets that have been traditionally served,
as well as accessing new U.S. markets, particularly those located on the U.S. Gulf Coast. Beyond the confines of North
America, growing economies in Asia represent a market that producers are actively pursuing. As a result of strong growth
in both U.S. and Canadian oil production, pipeline capacity is expected to be tight in the next few years, requiring the need
for timely expansions to provide market access. A number of pipeline projects are being proposed to connect the growing
supply with the anticipated market demand.
Oil Sands
Canadian Crude Oil Production

and Supply
The main driver for future growth continues to be oil sands

development, which is higher than previously forecast due
to the addition of several new projects reflecting growing
producer confidence.
CAPPs 2012 outlook for western Canadian crude

oil production predicts continued strong growth for
the forecast period. Overall, compared to CAPPs
2011 forecast, the total Canadian outlook is higher by
885,000 b/d in 2025.
Atlantic Canada
Production from offshore Atlantic Canada accounted for
9 per cent of Canadas production in 2011 and is expected
to average around 220,000 b/d over the next decade. The
start-up up of the Hebron project in 2017 helps to offset
production declines from the existing projects.
Conventional
The degree of resurgence in conventional production
is even greater than we predicted last year. In 2011,
conventional production, including pentanes, from western
Canada grew for the first time in many years, surpassing
previous expectations and is expected to grow until at
least 2017.
Total Canadian
(including oil sands)
Eastern Canada
Western Canada
Conventional
Oil sands
Canadian Oil Sands & Conventional Production

thousand barrels per day
8,000
Actual
2011 2015
million b/d
2020
2025
2030
3.0
3.8
4.7
5.6
6.2
0.3
0.2
0.2
0.2
0.1
1.1
1.6
1.3
2.3
1.3
3.2
1.2
4.2
1.1
5.0
Forecast
7,000
Eastern Canada
6,000
5,000
June 2011 Forecast
Oil Sands Growth
4,000
3,000
Oil Sands Operating & In Construction
2,000
1,000
0
Conventional Heavy
Conventional Light
Pentanes
2010
2012
2014
2016
2018
2020
2022
2024
2026
2028
2030
Crude Oil Markets

The production of crude oil in Canada far exceeds our
domestic needs. Western Canadian producers require
access to new markets for their steadily growing
production.
Coast, western Canadian producers could supply at least

1.1 million b/d into this market by 2020. Foreign imports
account for the majority of the Gulf Coasts heavy crude oil
feedstock today so heavy crude oil from western Canada
is well suited to meet this markets requirements thereby
displacing imports from traditional suppliers such as
Venezuela and Mexico.
Eastern Canada
Refineries located in Ontario, Qubec and Atlantic Canada
currently import over half of their crude oil requirements
from offshore foreign suppliers. There is an opportunity
for producers in western Canada to serve this market and
reduce Canadas exposure to volatile world oil markets.
United States
Growing domestic U.S. crude oil production will increase
competition for western Canadian crude oil in various
U.S. markets. Nonetheless, the U.S. Gulf Coast still
represents a significant market opportunity for Canadian
supplies given the huge refining complex that is in place.
Based on the contractual commitments underpinning
pipeline projects that would provide capacity to the Gulf
The demand for western Canadian crude oil in the U.S.

Midwest, Canadas largest traditional market, is expected
to rise by almost 470,000 b/d. However, the flow of crude
oil into this region currently far exceeds its ability to
process it and there exists insufficient takeaway capacity
to transport these growing supplies beyond the Cushing,
Oklahoma pipeline and storage hub. Refineries in California
and Washington are expected to increase imports of
foreign sourced crude oil given declining production from
Alaska. Western Canadian producers can compete for this
market opportunity.
2011 Canada and U.S. Crude Oil Demand by Market Region
AB, BC, SK
[577]
Atlantic Canada
[411]
PADD V - excl CA
[731]
ON, QC
[681]
PADD IV
[544]
PADD V - CA
[1,614]
PADD II - North
(ND, SD,MN, WI)
[439]
PADD I - East Coast

[1,097]
PADD II - South (KS, OK)
[741]
PADD II - East
(MI, IL, IN, OH, KY, TN)
[2,191]
U.S. - Alaska only

U.S. (excl Alaska)
Other Imports
E. Canada
W. Canada
Source: EIA, Statistics Canada
ii
PADD III - Gulf Coast

[7,475]
[2011 total refinery demand]
A number of pipeline proposals to the Gulf Coast have

recently been announced that will increase access by 2014
via connections to existing infrastructure and new projects. In
addition to looking for increased penetration to U.S. markets,
western Canadian crude oil producers are also seeking
much greater market diversification through increased
connectivity to Eastern Canada and world markets. This
would be achieved by more pipeline capacity to the west
coast, where crude oil could be shipped to the burgeoning
economies of Asia. There is also much interest in improving
connectivity to western Canadian supplies for all Canadians.
As such, a number of projects to increase pipeline access
from western Canada to eastern Canadian markets are being
contemplated.
Asia
Asia represents a large new market and China, in particular,
continues to emerge as a significant potential market. In
2011, it imported some 5.7 million b/d of oil.
Crude Oil Pipelines and

Expansions
Growing conventional oil, including tight oil, and oil sands
production has created an urgent need for additional
transportation infrastructure. New pipelines, expansions to
existing infrastructure and increased transportation by rail are
all required to meet this need for capacity. Pipelines continue
to be the dominant mode of transportation for crude oil but it
takes time for pipeline infrastructure to be built or expanded.
In the short-term, crude oil transport by rail will increase
sharply due to the ability to use rail capacity relatively quickly
and in small increments as needed and utilizing the rail
infrastructure already in place.
Canadian & U.S. Crude Oil Pipelines - All Proposals
Kitimat
Enbridge Gateway
Trans
Mountain
Edmonton
Hardisty
Burnaby
Anacortes
Alberta Clipper Expansion

Bakken Expansion
Kinder Morgan
TM Expansion (TMX)
Cromer
Express
TransCanada
Keystone XL
Southern Access Expansion
Clearbrook
Superior
Enbridge Line 9
Reversal
Montral
Portland
St. Paul
Enbridge
Guernsey
Sarnia
Flanagan
BP
TransCanada Keystone
El Paso
Lima
Spearhead North Expansion
Va
ll
Mustang
M
id
Cushing
line
Wood Patoka
River
Spearhead South
Flanagan South
Centurion Pipeline
Chicago
ey
Platte
Cap
Salt Lake City
ExxonMobil Pegasus
Seaway Reversal
& Twin Line
TransCanada Gulf Coast
Crane
Magellan Houston to
El Paso (former Longhorn)
Freeport
- partial conversion
Port Arthur
New Orleans
St. James
Shell Ho-Ho
Houston
Canadian and U.S. Oil Pipelines

Enbridge Pipelines and connections
to the U.S. Midwest and E. Canada
Kinder Morgan Express
Kinder Morgan Trans Mountain
Proposed pipelines to the West Coast
Existing / Proposed pipelines to PADD II
Expansion/Reversal to existing pipeline
iii
TABLE OF CONTENTS
EXECUTIVE SUMMARY
LIST OF FIGURES AND TABLES
INTRODUCTION
1.1
Production and Supply Forecast Methodology
1.2
Market Demand Outlook Methodology
OIL PRODUCTION AND SUPPLY FORECAST
2.1
2.2
Western Canadian Crude Oil Production
2.2.1
Conventional Crude Oil Production
2.2.2
Oil Sands
2.3
Western Canadian Crude Oil Supply
2.5
Crude Oil Production and Supply Summary
CRUDE OIL MARKETS
10
3.1
Canada
11
3.1.1
Western Canada
12
3.1.2
Ontario
12
3.1.3
Qubec
3.2
12
United States
13
3.2.1
PADD I (East Coast)
13
3.2.2
PADD II (Midwest)
14
3.2.3
PADD III (Gulf Coast)
17
3.2.4
PADD IV (Rockies)
17
3.2.5
PADD V (West Coast)
18
3.3
Asia
20
3.5
Markets Summary
20
CRUDE OIL PIPELINES
21
4.1
Existing Oil Pipelines Exiting Western Canada
22
4.2
Oil Pipelines to the U.S. Midwest
24
4.3
Oil Pipelines to the U.S. Gulf Coast
25
4.4
Projects Dedicated to Divert U.S. Crude Oil from the Cushing Bottleneck
26
4.5
Oil Pipelines to the West Coast
27
4.6
Eastern Access
28
4.7
Diluent Pipelines
28
4.8
An Alternative Mode of Transport: Rail
29
4.9
Projects to Transport North Dakota Production
31
4.10 Pipeline Summary
31
GLOSSARY
33
APPENDIX A: Acronyms, Abbreviations, Units and Conversion Factors
35
APPENDIX B: CAPP Canadian Crude Oil Production and Supply Forecast 2012 2030
37
APPENDIX C: Crude Oil Pipelines and Refineries
39
iv
LIST OF FIGURES AND TABLES

Figures
Figure 2.1
Figure 2.2
Figure 2.3
Figure 2.4
Figure 2.5
Canadian Oil Sands & Conventional Production

Western Canada Conventional Production (Light, Medium, Condensates)
Oil Sands Regions
Western Canada Oil Sands & Conventional Production
Western Canada Oil Sands & Conventional Supply
4
6
6
7
8
Figure 3.1
Figure 3.2
Figure 3.3
Figure 3.4
Figure 3.5
Figure 3.6
Figure 3.7
Figure 3.8
Figure 3.9
Figure 3.10
Figure 3.11
Figure 3.12
Figure 3.13
Figure 3.14
Figure 3.15
Canada and U.S. Market Demand for Crude Oil in 2011 by Source
Market Demand for Western Canadian Crude Oil: Actual 2011 and 2020 Additional
Western Canada: Forecast Western Canadian Crude Oil Receipts
Ontario: Forecast Western Canadian Crude Oil Receipts
2011 PADD I: Foreign Sourced Supply by Type and Domestic Crude Oil
2011 PADD II: Foreign Sourced Supply by Type and Domestic Crude Oil
PADD II (North): Forecast Western Canadian Crude Oil Receipts
PADD II (East): Forecast Western Canadian Crude Oil Receipts
PADD II (South): Forecast Western Canadian Crude Oil Receipts
2011 PADD III: Foreign Sourced Supply by Type and Domestic Crude Oil
PADD IV: Forecast Western Canadian Crude Oil Receipts
2011 PADD V: Foreign Sourced Supply by Type and Domestic Crude Oil
Washington: Forecast Western Canadian Crude Oil Receipts
2011 PADD V (California): Foreign Sourced Supply by Type and Domestic Crude Oil
Net Oil Imports: Asia 2010 to 2030
10
11
12
12
13
14
15
15
16
17
18
18
19
19
20
Figure 4.1
Figure 4.2
Figure 4.3
Figure 4.4
Canadian & U.S. Crude Oil Pipelines - All Proposals

CP Rail Network
CN Rail Network
WCSB Takeaway Capacity vs Supply Forecast
21
29
30
32
Table 2.1
Table 2.2
Table 2.3
Table 2.4
Table 2.5

Western Canadian Crude Oil Production
Foreign Direct Investment in Oil Sands: 2009-2012
Oil Sands: Raw Bitumen Production
Western Canadian Crude Oil Supply
3
4
5
7
9
Table 3.1
Table 3.2
Table 3.3
Table 3.4
Summary of Refinery Closures/Expansions in PADD I

Summary of Major Announced Refinery Upgrades in Eastern PADD II
Summary of Major Announced Refinery Upgrades in PADD III
Total Oil Demand in Major Asian Countries
14
16
17
20
Table 4.1
Table 4.2
Table 4.3
Table 4.4
Table 4.5
Table 4.6
Major Existing Crude Oil Pipelines and Proposals Exiting the WCSB
Summary of Crude Oil Pipelines to the U.S. Midwest
Summary of Crude Oil Pipelines to the U.S. Gulf Coast
Summary of Crude Oil Pipelines to the West Coast
Summary of Diluent Pipelines
Summary of Existing and Proposed Projects to Transport Production from North Dakota
22
24
25
27
28
31
Tables
INTRODUCTION
CAPP annually publishes a long-term outlook for Canadian crude oil production.
This year our forecast has been extended by five years to 2030. The decisions
producers make to increase investment in order to grow supply are not made in
a vacuum. Producers want to know what the market opportunities are for any
increased supply and whether there will be sufficient infrastructure to provide
market access. Hence, this report also provides a demand outlook for western
Canadian crude oil that has also been extended out by five years, to 2020.
In addition, the report includes a discussion on the existing and developing
transportation options that will be required to enable the efficient flow of crude
oil from supply regions to end-use markets.
The purpose of this report is to provide industry
stakeholders and government agencies with a benchmark
from which to compare their own outlooks of Canadian
crude oil supply. Through its examination of evolving
industry trends, this report is intended to contribute to
stakeholders market analysis and facilitate decisionmaking in an industry that faces complex issues. Other
interested parties may value the report as a reference
document that reflects the latest emerging developments.
This report captures a number of interesting
developments. Top of this list is the revitalization of
conventional crude oil production taking place in a
number of western Canadian plays. In 2011, conventional
production, including pentanes, from western Canada
grew for the first time in many years, significantly
surpassing previous expectations. It is now expected
to grow until at least 2017. Oil sands development is
also higher than previously forecast due to the addition
of a number of new projects. By 2025, the combined
western Canadian production from both conventional and
unconventional crude oil development in this forecast is
about 885,000 b/d higher than last year. CAPPs estimate
of industry capital spending for oil sands development is
$20 billion for 2012 compared to an estimated $19 billion
spent in 2011.
Production from offshore Atlantic Canada, which in 2011

accounted for 9 per cent of total Canadian production, is
expected to decline by 21 per cent in 2012. Production
will remain relatively stable, averaging around 220,000 b/d
until 2022, supported by production from satellite fields
and the Hebron project starting up in 2017. In 2024,
production falls to just over 170,000 b/d and declines
steadily thereafter.
The forecasted higher growth in supply for western
Canadian crude oil has resulted in increased awareness
regarding the potential for pipeline constraints. The
largest market for western Canadian crude has
traditionally been the U.S. Midwest but future production
growth requires Canadian producers to look to extend
their reach and serve new markets. Avoiding constraints
in transportation capacity to markets is essential to a
well-functioning crude oil market and the potential for
such constraints is currently one of the oil industrys major
concerns.
Growth in western Canadian and U.S. Mid-continent
crude oil supply, which has taken place in the last few
years, has already resulted in a market characterized by
tight pipeline capacity that has seen the emergence of a
number of bottlenecks. Most notable is the oversupply
situation at the Cushing, Oklahoma pipeline and storage
hub. In this case, pipeline capacity has been added to
transport crude from areas with growing production

into Cushing while there has been no commensurate
takeaway capacity from the hub added to date to take
these crude oil supplies to refineries located outside of
the Mid-continent. As a result, the price of crude oil in
the Mid-continent has been depressed relative to global
crude oil prices. For example, in the past year the price
of West Texas Intermediate (WTI), a benchmark Midcontinent crude oil, has sold at a discount at times well
over $20 per barrel compared to North Sea Brent, which
is a light crude oil of similar quality that is sold on world
markets.
1.1 Production and Supply

Forecast Methodology
1.2 Market Demand Outlook

Methodology
CAPP did not make any risk adjustments to the data
submitted by refiners beyond checking it for potential
errors. Certain assumptions were also made based
on discussions with refiners and the review of publicly
available information.
The CAPP survey categorizes western Canadian crude oil
into four main types as follows:
1.
Conventional Light Sweet (greater than 27 API

and less than or equal to 0.5% sulphur) including
condensates and pentanes plus;
2.
Heavy (equal to or less than 27 API) including

conventional heavy, synthetic sour and crude oil
blends such as DilBit, SynBit and DilSynBit;
3.
Conventional Medium Sour (greater than 27 API

and greater than 0.5% sulphur); and
4.
Light Sweet Synthetic
CAPPs oil sands forecast is derived from its survey of oil

sands producers who were asked for the following data:
a)
expected production by project and phase;
b)
upgraded light crude oil that would be produced;
c)
amount of synthetic crude oil used as diluent

required to move the volumes to market; and
d)
amount of condensate used as diluent to move

the volumes to market.
The survey results were then risked accordingly based

on each projects current development stage. The overall
forecast was then verified for reasonableness against
historical trends. There were no constraints put on the
forecast due to availability of condensate or pipeline
capacity.
CAPP also surveyed Saskatchewan conventional oil
producers regarding their annual drilling outlook by well
type (horizontal or vertical), as well as their anticipated
initial production rates and declines. These survey results
were subsequently incorporated with CAPPs internal
analysis of historical trends, recent announcements and
discussions with industry stakeholders in order to develop
CAPPs latest conventional forecast.
For the purposes of the historical data in this section

of the report, the following crude types and definitions
apply:
Sweet: crude oil with a sulphur content of less

than or equal to 0.5%
Sour: crude oil with a sulphur content of greater

than 0.5%
Light: crude oil with an API of at least 30
Medium: crude oil with an API of greater than 27

but less than 30
Heavy: crude oil with an API of 27 or less
No differentiation is made between sweet and sour crude

oil that falls into the heavy category because heavy crude
oil is generally assumed to be sour.
CRUDE OIL PRODUCTION

AND SUPPLY FORECAST
With over 174 billion barrels of proven crude oil reserves, Canada holds the
worlds third largest reserves after Saudi Arabia and Venezuela. Also according
to the Oil and Gas Journal, in 2011, Canada ranked as the sixth largest crude oil
producing country in the world, with combined production of over 3 million b/d
of crude oil, bitumen, upgraded light oil, condensate and pentanes plus. In this
report, CAPP has extended its production and supply outlook to 2030.
2.1 Canadian Crude Oil Production

In 2011, about 9 per cent of Canadas crude oil production,
or 273,000 b/d, can be attributed to Eastern Canada,
almost all of which was sourced from offshore Atlantic
Canada with some small volumes from Ontario. Most
of Canadas production, or over 2.7 million b/d, was
produced in western Canada. Of this amount, 41 per cent
was conventional production and 59 per cent was derived
from the oil sands areas. Table 2.1 shows the forecast for
total Canadian production divided between Eastern and
Western Canada.
Atlantic Canadas oil resources are located off the shores
of Newfoundland and Labrador and current production
results from developments in three main fields Hibernia,
Terra Nova, and White Rose. Recovery from satellite
fields is expected to slow the exhibited natural decline
of production from these fields. The North Amethyst field
started producing in 2010 and is the first satellite field
development at White Rose. First oil flowed in September
2011 from the West White Rose area, a second satellite
field, which is considered to be potentially the largest of
the White Rose expansions. Oil started flowing in June
2011 from the Hibernia Southern Extension development.
The Hibernia Southern Extension development added 223
million barrels of new reserves.
Table 2.1 Canadian Crude Oil Production

million b/d
Total* Canadian
(including oil sands)
Eastern Canada
Western Canada
2011 2015
2020
2025
2030
3.02
3.85
4.70
5.62
6.24
0.27
2.74
0.22
3.63
0.22
4.49
0.16
5.46
0.09
6.16
*Totals may not add up due to rounding.
Following a 3 per cent decline in 2011 due to maintenance

work and well shut-in at Terra Nova, Newfoundland
offshore production is forecast to decline by 21 per cent in
2012 due to the natural decline in production from Hibernia
and Terra Nova, and scheduled maintenance at both Terra
Nova and White Rose. Production from the Hebron field,
which will be Newfoundlands fourth standalone offshore oil
project, is expected to start in 2017. Most of this oil will be
around 20 API. This production accounts for the growth in
production from 2017 to 2018. Costs to construct Hebron
are estimated to be around $8.3 billion. Federal and
provincial regulators conditionally approved development
of the project on May 31, 2012.
The remainder of this report will focus on western Canada
as it is the primary source of future Canadian growth. The
degree of resurgence in conventional production has been
even greater than we predicted last year. New drilling and
completion methods have contributed to the increase
of conventional crude oil production as producers have
perfected hydraulic fracturing techniques coupled with
horizontal drilling technologies.
Figure 2.1 Canadian Oil Sands & Conventional Production

8,000
Actual
Forecast
7,000
Eastern Canada
6,000
5,000
June 2011 Forecast
Oil Sands Growth
4,000
3,000
Oil Sands Operating & In Construction
2,000
1,000
0
Conventional Heavy
Conventional Light
Pentanes
2010
2012
2014
2016
2018
2020
2022
2024
2026
2028
2030
Despite the resurgence of conventional production,

however, supplies from the oil sands will continue to
comprise the bulk of the anticipated future increases in
overall crude oil production. Figure 2.1 shows the Canadian
production forecast. The oil sands projects that are already
currently operating or are in construction account for the
growth until 2015 or 2016.
The new long-term forecast calls for a reversal of the

ongoing decline in conventional crude oil production
witnessed over the past decade or more, and instead
shows growth in the near term. A vibrant drilling forecast
drives production growth until around 2017 when the
impact of well production declines is expected to temper
the overall growth rate.
2.2 Western Canadian Crude Oil

Production
Compared to the 2011 forecast, oil sands production is

higher by about 100,000 b/d for most of the forecast period
due to the acceleration of some projects before becoming
higher by about 480,000 b/d by 2025 due to the inclusion
of additional projects.
For western Canada, relative to the 2011 report, higher

production is forecast in both conventional and oil sands
areas (Table 2.2). The bulk of this output originates from
the Western Canada Sedimentary Basin, which covers
most of the province of Alberta, northeast British Columbia,
southern Saskatchewan, and parts of Manitoba and the
Northwest Territories.
In the last three years, there has been a significant number

of direct investments made in the oil sands by Asian
companies. Producers turn to overseas partners to provide
capital to speed up development and to share in the risk
and rewards of these projects (Table 2.3).
Table 2.2 Western Canadian Crude Oil Production

million b/d
2011 2015
2020
2025
2030
Total
Conventional
2.74
3.63
4.48
5.46
6.16
1.13
1.33
1.32
1.25
1.14
1.61
2.30
3.16
4.21
5.02
(including condensate)
Oil sands
Table 2.3 Foreign Direct Investment in Oil Sands: 2009-2012

Close Date
Investor
Project
Cost (Million $)*
2012 Jan
PetroChina
40% stake in AOSC Mackay River
$680
2011 Nov
CNOOC
Purchased OPTIs 35 % stake in the Nexen operated

Long Lake Project
US$2,100
2011 Jan
PTT Exploration & Prod
Purchased 40% stake in Kai Kos Dehseh from Statoil
US$ 2,280
2010 Nov
Korea Investment Corp
Private placement 7.7 million common shares in

OSUM
$100
2010 Aug
Korea Investment Corp
Private placement 2.5 million common shares in

Laricina
$76.2
2010 Jun
Sinopec
Purchased 9% of Syncrude from ConocoPhillips
US$ 4,650
2010 Jun
China Investment Corp
45% JV with Pennwest
$817
2010 Feb
PetroChina
Purchased 60% of MacKay River and Dover
$1,900
2009 Dec
Korea National Oil Co
Acquisition of Harvest Energy Trust
$1.8B + assumption
of $2.3B debt
2009 Jul
China Investment Corp
Private placement for 101.3 million Class B

subordinate voting shares of Teck Resources,
(approx 17.2% equity and 6.7% voting interest).
Teck Resources owns a number of oil sands assets
including a 20% interest in the Fort Hills mining
project and the Frontier leases
$1,740
2009 Apr
Sinopec
10% interest in Northern Lights (now 50/50 Total/

Sinopec)
* Cost stated in Canadian dollars unless otherwise specified
2.2.1 Conventional Crude Oil

Production
Although much of Canadas rise in importance in the global
energy scene can be attributed to the emergence of oil
sands, a significant portion of Canadas oil production still
comes from conventional production.
Conventional production is forecast to grow from
1.1 million b/d in 2011 to 1.3 million b/d by 2020, thereby
reversing a long term trend of continual decline. The
previous outlook for conventional crude oil declines has
been eclipsed by the emergence of drilling for conventional
oil that takes advantage of new production and completion
technologies. A high level of drilling is expected to drive
production growth until around 2017 when the impact of
well production declines temper the overall growth rate.
Current estimates of the ultimate potential production
recoverable from conventional reserves may still be
conservative as these technologies are still in their early
stages. Most of the conventional production comes from
Alberta and Saskatchewan and is expected to be light
crude oil (Figure 2.2).
5
In Alberta, the combination of hydraulic fracturing and

horizontal drilling is being used in an increasing number
of oil plays. The most advanced plays are the Cardium
in west-central Alberta, the Beaverhill Lake Carbonates
near Swan Hills, the Viking in east-central Alberta and at
Redwater, north of Edmonton. Emerging plays include the
Alberta Bakken in the southern reaches of the province and
in oil prone regions in the Duverney and Montney shale
gas plays. High drilling activity in these areas will offset
the steep decline in Alberta conventional production that
would otherwise be expected.
Russias largest oil company has formed a Canadian
subsidiary, RN Cardium Oil Inc., and picked up a nonoperated 30 per cent equity stake in ExxonMobils
Harmattan tight oil play near Olds, Alberta. The investment
is believed to be the first by a Russian firm in Canadas oil
and gas industry, and could help to speed up development
activity in the Cardium play.
Production from Saskatchewan only grew by 2 per cent
in 2011, however, this growth is considered to underrepresent production levels that would have occurred
absent poor weather and other extraordinary conditions.
Figure 2.2 Western Canada Conventional Production (Light, Medium, Condensates) 2000-2015
800
Actual (Monthly)
700
Forecast (Annual)
Alberta
600
500
400
300
Saskatchewan
200
100
BC & NWT
Manitoba
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
2.2.2 Oil Sands

Production from oil sands currently comprises 59 per cent
of western Canadas total crude oil production. In this
forecast, oil sands production rises from 1.6 million b/d
in 2011 to almost double at 3.1 million b/d by 2020 and
4.2 million b/d by 2025 and 5.0 million b/d by the end of
the forecast period in 2030. If the only projects to proceed
were the ones in operation or currently under construction,
oil sands production would still increase by 54 per cent to
2.5 million b/d by 2020 and then remain relatively flat for
the rest of the forecast. Please refer to Appendix B.1 for a
detailed production data table.
Compared to CAPPs 2011 outlook, the latest oil sands
forecast is very similar but is higher near the end. In 2025,
this latest forecast is higher by 480,000 b/d. With the
5-year extension of the forecast period, more projects
have been included in the outlook. The higher forecast in
2025 compared to CAPPs 2011 outlook can be attributed
to some acceleration project time lines and the inclusion
of additional projects that are now considered more likely
to proceed due to increased industry confidence and the
emergence of joint venture partnerships.
Canadas oil sands deposits are divided into three major

regions in northern Alberta. The regions are referred
to as the Athabasca, Cold Lake and Peace River
deposits (Figure 2.3). The Alberta Energy Resources and
Conservation Board (ERCB) estimated at year-end 2010,
that these areas contain remaining established reserves of
169 billion barrels.
Figure 2.3 Oil Sands Regions
Athabasca
Deposit
Fort
McMurray
Peace
River
Peace River
Deposit
Area of
Potential
Cold Lake
Deposit
Edmonton
Lloydminster
Calgary
Figure 2.4 Western Canada Oil Sands & Conventional Production
8,000
Actual
Forecast
7,000
6,000
5,000
In Situ
June 2011 Forecast
4,000
3,000
Mining
2,000
1,000
0
Conventional Heavy
Conventional Light
Pentanes
2010
2012
2014
2016
2018
2020
Of the remaining established reserves in Alberta,

135 billion barrels, or 80 per cent, is considered
recoverable by in situ methods and 34 billion barrels or
20 per cent can be recovered by surface mining. In situ
recovery includes both primary methods, which are similar
to those used to recover conventional production, as well
as other methods whereby steam, water or other solvents
are injected into the reservoir to reduce the viscosity of the
bitumen, allowing it to flow to a vertical or horizontal well
bore.
In 2011, 51 per cent of the total raw bitumen produced
from oil sands deposits was mined. Traditionally, mined
bitumen is transformed into upgraded light crude oil as
part of an overall integrated operation. However, with its
startup in 2012, the Imperial Kearl Lake mining project will
be the first mining project to deliver diluted bitumen into
the market as it does not have an affiliated upgrader. There
will be additional upgrading capacity being built as a result
of the North West Upgrader, which is slated to come online in 2014. This facility is owned by North West Redwater
Partnership, a 50/50 joint venture between North West
Upgrading and Canadian Natural Resources Limited, and
would be able to upgrade some of the growing volumes
of diluted bitumen available from both in situ and mining
projects.
2022
2024
2026
2028
2030
Table 2.4 Oil Sands: Raw Bitumen Production

million b/d
2011
Total
Mining
In Situ
1.74
0.89
0.85
2015
2.48
1.21
1.27
2020
2025
2030
3.39
1.52
1.87
4.50
1.93
2.57
5.33
2.17
3.16
Recovery of raw bitumen using in situ methods is set

to surpass production from mining methods by 2015, a
year earlier than forecast in the 2011 report. Of the in situ
projects currently in operation, only the Long Lake project
operated by Nexen Inc. is coupled with an upgrading
facility. Production from the Suncor Firebag and MacKay
River projects are upgraded at Suncors integrated mining
facilities depending on spare capacity at the upgraders
and market conditions. Otherwise, the majority of in situ
bitumen production is not upgraded prior to reaching
markets. Recently, producers have been transporting
undiluted bitumen in rail cars; the bitumen is later blended
with condensate at facilities nearby the end market, prior to
delivery to the refiners.
with upgraded light crude oil (also known as SynBit) and

bitumen diluted with condensate (also known as DilBit).
An example of DilBit would be Cold Lake crude oil, which
has a density of about 930 kg/m3 (21 API) and a sulphur
content of 3.6%. Blending for DilBit differs slightly by
project but requires approximately a 70:30 bitumen to
condensate ratio while the blending ratio for SynBit is
approximately 50:50.
Existing mines with integrated upgrading projects in

operation are listed below:
Suncor Steepbank and Millennium Mine;
Syncrude Mildred Lake Mine and Aurora Mine;
Athabasca Oil Sands Project (AOSP);
Shell Jackpine Mine; and
Canadian Natural Resources Horizon Project.
2.3 Western Canadian Crude

Oil Supply
In order to be transported by pipeline and meet refinery
specifications, the production discussed in the previous
section may be upgraded or blended to create a variety of
crude oil types. It is these volumes that comprise the crude
oil supply that is delivered to markets.
In this report, CAPP categorizes the various crude oil types
that comprise western Canadian crude oil supply into four
main categories: Conventional Light, Conventional Heavy,
Upgraded Light and Oil Sands Heavy. Oil Sands Heavy
includes upgraded heavy sour crude oil, bitumen diluted
As previously mentioned, bitumen is so viscous that it

needs to be diluted with a lighter hydrocarbon, to create
a type of crude oil that meets pipeline specifications
for density and viscosity. The main source of diluent is
condensate that is recovered from processing natural
gas in western Canada, however; the needs of growing
bitumen production has exceeded this supply. In 2011, an
average of almost 140,000 b/d of imported condensates,
diluents from upgraders and quantities of butane,
supplemented the condensate supply. This latest forecast
is not constrained by the availability of condensate imports
as new sources of condensate are assumed to be available
to meet market requirements. Refer to Section 4.7 for
additional details on existing and proposed diluent pipeline
projects.
Figure 2.5 Western Canada Oil Sands & Conventional Supply
8,000
Actual
Forecast
7,000
6,000
5,000
June 2011 Forecast
Oil Sands Heavy *
4,000
3,000
2,000
Upgraded Light
Conventional Heavy
Conventional Light
1,000
0
2010
2012
2014
2016
2018
2020
2022
2024
2026
2028
2030
A factor that could reduce estimated diluent demand would

be an increase in the number of undiluted bitumen barrels
that would be transported by rail and later blended with
condensate at facilities located in destination markets.
Table 2.5 shows the projections for total western Canadian
crude oil supply. Refer to Appendix B.2 for detailed
data. Light crude oil supply is projected to grow from
1.3 million b/d in 2011 to 1.9 million b/d in 2020 and then
remains relatively flat thereafter since little new upgrading
capacity is currently expected to be built. Heavy crude oil
supply is projected to grow from 1.6 million b/d in 2011
to 3.0 million b/d in 2020 to more than triple the current
volume in 2030, when it reaches 5.1 million b/d.
Table 2.5 Western Canadian Crude Oil Supply

million b/d
2011 2015
2020
2025
2030
Total
Light
Heavy
2.92
1.31
1.61
4.95
1.91
3.04
6.18
1.95
4.23
6.87
1.77
5.10
3.89
1.80
2.09
2.5 Crude Oil Production and

Supply Summary
Compared to the 2011 outlook, western Canadian
conventional production is higher by 388,000 b/d by 2025.
This higher forecast is supported by higher production,
mostly from Alberta and Saskatchewan, resulting from
increased drilling of horizontal wells that have higher
initial production rates than traditional vertical wells. Oil
sands production is higher by 478,000 b/d resulting from
accelerated project time lines and the addition of new
projects that industry has reported in the survey.
Production from offshore Atlantic Canada will remain
relatively stable for most of the forecast and averages
around 220,000 b/d until 2022, supported by production
from satellite fields and the Hebron project starting up in
2017. In 2024, production falls to just over 170,000 b/d and
declines steadily thereafter.
Overall, compared to CAPPs 2011 forecast, total Canadian
outlook is higher by 885,000 b/d by 2025.
The Upgraded Light crude oil supply includes the light

crude oil volumes produced from:
Upgraders that process conventional heavy oil,

e.g., the Husky Upgrader at Lloydminster and the
CCRL Upgrader in Regina;
Integrated mining and upgrading projects,

e.g. Suncor, Syncrude and Canadian Natural
Resources operations;
Integrated in situ projects, e.g., the Nexen Long

Lake project;
Off site upgraders, e.g., the Athabasca Oil Sands

Project; and
the North West Partnership North West Upgrader
Compared to the 2011 forecast, the overall light crude oil

supply is higher due to increased conventional production.
The Oil Sands Heavy category is forecast to increase from
1.3 million b/d in 2011 to 3.9 million b/d in 2025 and up to
4.8 million b/d at the end of the forecast period in 2030.
CRUDE OIL MARKETS
The production of crude oil in Canada far exceeds its domestic refining capacity.
This chapter discusses the outlook for the consumption of Canadian crude
oil in both markets that have been traditionally served by this supply and new
markets that may also be potentially served as more transportation infrastructure
is developed. Figure 3.1 shows the demand for crude oil in the major refining
regions in Canada and the U.S. The U.S. Gulf Coast provides the most significant
opportunity for Canadian supplies for market diversification in North America.
In 2011, the U.S. Gulf Coast imported some 4.8 million b/d from non-Canadian
sources.
Figure 3.1 Canada and U.S. Market Demand for Crude Oil in 2011 by Source
AB, BC, SK
[577]
Atlantic Canada
[411]
PADD V - excl CA
[731]
ON, QC
[681]
PADD IV
[544]
PADD V - CA
[1,614]
PADD II - North
(ND, SD,MN, WI)
[439]
PADD I - East Coast

[1,097]
PADD II - South (KS, OK)
[741]
PADD II - East
(MI, IL, IN, OH, KY, TN)
[2,191]
U.S. - Alaska only

U.S. (excl Alaska)
Other Imports
E. Canada
W. Canada
Source: EIA, Statistics Canada
PADD III - Gulf Coast

[7,475]
[2011 total refinery demand]
10
In 2011, Canadian refineries processed 878,000 b/d

of western Canadian crude; 111,000 b/d of crude oil
produced in eastern Canada; and 680,000 b/d of foreign
imports. The Canadian demand for western Canadian
crude oil is expected to increase to 978,000 b/d by
2020 with planned refinery expansions and future
transportation infrastructure developments.
In 2011, western Canada supplied 2.9 million b/d to

various markets. Domestic demand for western Canadian
crude oil was 878,000 b/d and the remaining supply
of over 2.0 million b/d, or 70 per cent, was exported
(Figure 3.2). PADD II which comprises the U.S. Midwest is
the largest regional market for western Canadian crude oil.
3.1 Canada
Only about 60 per cent of the crude oil processed in
Canada is sourced from domestic production since
refineries in eastern Canada have limited access to
western Canadian crude oil supplies. The current oil
pipeline network exiting western Canada is connected to
refineries in western Canada and Ontario. According to
Statistics Canada, Qubec processed small volumes of
western Canadian crude oil in 2011. This would be the
first year since 1999 that this has occurred. With no direct
pipeline access, these volumes were either delivered by
rail or truck.
Figure 3.2 Market Demand for Western Canadian Crude Oil: Actual 2011 and 2020 Additional
632
Supply
2011 - 2,918
2020 - 4,946
577 [+56]
Non-US
795
35 [unknown]
301 [+37]
PADD IV
PADD V
PADD II
3,775
630
3,261
1,142
234 [+10]
1,436 [+466]
178 [+65]
59 [+11]
2012 Total Refining Capacity
PADD I
9,078
PADD III
112 [+1,158]
2011 Actual
Demand
2020 Potential
Additional Demand
Sources: CAPP, EIA, NEB, Statistics Canada

Note: 2011 demand exceeds available supply by 14,000 b/d likely due to factors such as inventory adjustment and data discrepancies in information collection.
11
3.1.1 Western Canada

The eight refineries located in western Canada exclusively
process western Canadian crude oil. These refineries have
a total refining capacity 632,000 b/d. In 2011, they refined
some 576,600 b/d of crude oil and this volume is expected
to increase to 632,800 b/d by 2020 (Figure 3.3). Future
additional western Canadian crude oil receipts are related
to expansion plans for the Consumers Co-operative
refinery, located in Regina, Saskatchewan and the
start-up of the North West Redwater Partnership North
West Upgrader. The Moose Jaw refinery in Moose Jaw,
Saskatchewan produces mostly asphalt while the other
refineries manufacture a wide range of petroleum products.
Figure 3.3 Western Canada: Forecast Western

Canadian Crude Oil Receipts
700
as Imperials refinery in Nanticoke, Ontario would be able

to receive greater volumes of western Canadian crude oil.
Ultimately, the refineries will select their feedstock from
a variety of sources based on both availability and price
(Figure 3.4).
According to Statistics Canada, Ontario refineries received
351,700 b/d of crude oil in 2011 from the following
sources: Western Canada (298,300 b/d or 84.8 per cent);
Eastern Canada (1,400 b/d or 0.4 per cent); North Sea
(18,000 b/d or 5.1 per cent); United States and Mexico
(14,000 b/d or 4.0 per cent); and other foreign sources
(20,000 b/d or 5.7 per cent).
Figure 3.4 Ontario: Forecast Western Canadian Crude

Oil Receipts
400
Total refining capacity = 632
600
300
500
250
400
200
300
150
100
200
50
100
0
350
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Light Synthetic
Conventional Light Sweet
Conventional Medium Sour
Heavy
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Light Synthetic
Heavy
Source: 2012 CAPP Refinery Survey
3.1.1 Ontario
3.1.3 Qubec
There are four refineries located in Ontario (excluding the

Nova Chemical refinery and petrochemical complex in
Sarnia) with a total refining capacity of 393,000 b/d. They
primarily process western Canadian crude oil but also
refine some imported crude oil and some volumes from
Atlantic Canada. The supply from the latter two sources
arrive on the Atlantic seaboard by tanker and are then
transported through the Portland-to-Montral Pipeline
before being transported on the Enbridge Montral-toSarnia Pipeline (Line 9). Enbridge has applied to the NEB
to re-reverse the direction of the Line 9 segment from
Sarnia to Westover, Ontario to flow eastward. Refer to
Section 4.5 for details on oil pipelines to Eastern Canada.
If approved, there could be some increase in receipts of
western Canadian crude oil in the region from 2013 onward
The refineries in Qubec process crude originating from

both Atlantic Canada and foreign sources. However,
Statistics Canada reported average crude oil receipts from
western Canada for June and July in 2011 of 16,000 b/d.
Qubec has two refineries with a combined capacity of
402,000 b/d. These refineries are configured to process
mostly light crude oil. If Enbridges Line 9 Re-reversal
proposal obtains regulatory approval to flow east all the
way to Montral as proposed in Enbridges second project
on Line 9, these refineries would have access to the
growing light oil production from western Canada and the
U.S. Bakken in Montana and North Dakota.
12
Once crude oil reaches Montral, companies could barge

oil from there to Qubec City, and potentially even ship it
by rail to Saint John, New Brunswick.
Suncor has reported that it continues to assess the
feasibility of building a coker at its Montral refinery. If this
project is ultimately developed, there would be increased
demand for heavy crude oil in this region.
The Atlantic refineries represent a possible additional outlet
for western Canadian crude oil but the transportation cost
for these refineries to access these supplies would be a
major consideration given the lack of infrastructure. These
refineries have a total refining capacity of 497,000 b/d
and currently source crude oil from a number of global
suppliers. In May 2012, Imperial announced that its
Dartmouth refinery will be put up for sale and potentially
converted to an oil terminal or permanently shutdown,
thereby decreasing the refining capacity in this market. A
final decision will be made in May 2013.
3.2 United States

The United States is the worlds largest oil market with
a total refining capacity of almost 18 million b/d. Since
2004, Canada has been the largest exporter of crude oil
to the U.S. The U.S. demand for western Canadian crude
oil supply is expected to reach 3.7 million b/d in 2020
assuming the proposed infrastructure receives regulatory
approval to connect growing western Canadian supplies to
the large U.S. Gulf Coast market.
In 2011, Canada exported over 2.2 million b/d to the
U.S., which was 12 per cent more than in 2010 and was
equivalent to almost 25 per cent of total U.S. imports.
Of these volumes, 2.0 million b/d was sourced from
western Canada. The next largest sources of imports
to the U.S. were Saudi Arabia, Mexico and Venezuela.
Western Canadian production could continue to capture
an even larger share of U.S. imports as it replaces volumes
currently supplied by these countries. A number of factors
in the near term are expected to reduce supplies available
to the U.S. from these sources. These include: declining
production, increased domestic consumption and the
diversion of supplies to Asia.
The U.S. Department of Energy divides the 50 states in

the U.S. into five Petroleum Administration for Defense
Districts or PADDs (Appendix C). The PADDs were
originally delineated during World War II for oil allocation
purposes and remain the convention for describing U.S.
market regions.
3.2.1 PADD I (East Coast)

PADD I is located along the east coast of the United States
with refineries in Delaware, Georgia, New Jersey,
Pennsylvania, and West Virginia. There are nine refineries
with a total refining capacity of 1.1 million b/d. As shown in
Table 3.1, a number of refineries have closed in the past
few years.
In 2011, imports of foreign crude oil by refineries in PADD I
totaled 1.1 million b/d, which is virtually unchanged from
2010. About 66 per cent of these volumes were light sweet
crude oil (Figure 3.5). Two refineries located in Pennsylvania
were idled in the latter part of 2011. Since then, the Phillips
66 refinery in Trainer was purchased by Delta Air Lines with
the transaction to close in the first half of 2012; however, a
re-startup schedule has not yet been announced. Since
these refineries processed light and medium crude oil,
lower imported volumes of light crude oil in 2012 versus
2011 can be expected. Higher imports of heavy crude oil
are anticipated since PBF Energys Delaware City refinery,
which processes primarily heavy oil, started up again in
October 2011. The refinery had previously been idled since
November 2009.
Figure 3.5 2011 PADD I: Foreign Sourced Supply by

Type and Domestic Crude Oil
Total refining capacity = 1,142
Domestic crude
58
Light/Medium
Sour
687
* Includes small volumes of Medium Sweet

Source: EIA
119
Heavy
Light Sweet*
13
233
Table 3.1 Summary of Refinery Closures/Expansions in PADD 1

Current Capacity
(thousand b/d)
Scheduled
In-Service
Eagle Point, NJ
150 (loss)
Feb 2010
Closed; asphalt refinery
Western
Refining
Yorktown, NJ
70 (loss)
Sep 2010
Closed; asphalt refinery
Phillips 66
Trainer, PA
185 (loss)
Idled since
Sep 2011
Idled. Purchased by Delta Air Lines in April 2012;

transaction to close 1H 2012.
PBF Energy
Delaware City,
DE
190
Oct 2011
PBF purchased the refinery in an idled state from

Valero in June 2010 and restarted it in Oct 2011.
The refinery had been idled since Nov 2009.
Sunoco
Marcus Hook,
PA
175 (loss)
Idled since
Dec 2011
Idled. For Sale with the intention to permanently

close if no buyer by July 2012. Sunoco was
purchased by Energy Transfer in April 2012 but
under the agreement Sunoco will continue its
plans to exit the refining business.
PBF Energy
Delaware City,
DE
2014/2015
$1B project consisting of construction of a mild

hydrocracker and hydrogen plant.
Sunoco
Philadelphia, PA
Operator
Location
Sunoco
330 (potential
loss)
The EIA noted that the closed and idled capacity on the
east coast can be replaced with increased refining capacity
in other regions. However, there are transportation
constraints that may hinder the delivery of refined products
to east coast markets that currently rely on local refining
capacity. Ultra-low sulphur diesel fuel will be the most
challenging product to replace as there are few alternative
supply sources outside of the U.S. Gulf Coast.
Transportation constraints may also hamper the movement
of products through Pennsylvania and into western New
York, areas that are currently supplied by pipelines
originating in the Philadelphia area refinery complex. The
industry may not be able to overcome all of the logistical
challenges in the Northeast for a year or more, as
infrastructure changes will be necessary to accommodate
the changing product flows.
With a full year of net refining capacity lost due to refinery
closures, an overall decline in imports and total volumes
processed in PADD I can be expected. PADD I imported
223,800 b/d of crude oil from Canada. About 58,600 b/d
was sourced from western Canada and was primarily
delivered to the United refinery in Warren, Pennsylvania.
NuStar Energy has reported its intention to process
5,000 b/d to 10,000 b/d of Canadian crude oil at its asphalt
refinery in 2012. This oil would be transported by rail.
Jul 2012
Description
Operating but Sunoco announced that if no buyer

found by July 2012, it would close.
3.2.2 PADD II (Midwest)

PADD II has a total refining capacity of 3.7 million b/d and
in 2011, received almost 1.5 million b/d of foreign sourced
crude oil, about 67 per cent of which were heavy crude
oil volumes (Figure 3.6). Crude oil from western Canada
totaled over 1.4 million b/d, making Canada the primary
source of supplies. In 2011, most of the growth in western
Canadian production was delivered to this market.
Figure 3.6 2011 PADD II: Foreign Sourced Supply by

1,013
Heavy
1,851
Domestic Crude
195
Light
Sweet*
Light/
Medium Sour
313
Source: EIA
14
PADD II can be further divided into the Northern, Eastern,

and Southern PADD II states. The primary market hubs
within PADD II are located at Clearbrook, Minnesota for the
Northern PADD II states; Wood River-Patoka, Illinois area
for the Eastern PADD II states; and Cushing, Oklahoma for
the Southern PADD II states. The following subsections will
discuss these markets in greater detail.
The Midwest region is currently Canadas largest market
due to its close proximity, large size and established
pipeline network. However, this historically attractive
market has become saturated as evidenced by the large
buildup of inventories from growing domestic production
and imports from western Canada. A number of refineries
have announced projects designed to increase the heavy
oil processing capability but there has been some delay in
their startup due to the growing availability of light volumes
from domestic production.
Figure 3.7 PADD II (North): Forecast Western Canadian

Crude Oil Receipts
500
450
400
350
300
250
200
150
100
50
0
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Light Synthetic
Heavy
Northern PADD II
Eastern PADD II
Northern PADD II consists of North Dakota, South

Dakota, Minnesota and Wisconsin. There is one refinery
in both North Dakota and Wisconsin and two refineries
in Minnesota. These four refineries have a total refining
capacity of 497,000 b/d. In 2011, foreign imports into
northern PADD II were 295,700 b/d, all sourced from
western Canada. Imports of western Canadian crude oil
are expected to grow moderately to 342,300 b/d by 2020
(Figure 3.7). Growth in Canadian crude oil processed will
be limited by the growing availability of crude oil from U.S.
domestic production. Tesoro announced plans to expand
crude capacity at its Mandan, North Dakota refinery to
68,000 b/d by the end of 2013 to handle increased crude oil
volumes available from the U.S. Bakken play.
Eastern PADD II consists of Michigan, Illinois, Indiana,

Kentucky, Tennessee and Ohio and has 13 refineries
with a total refining capacity of 2.5 million b/d. In 2011
western Canadian crude oil accounted for 1.1 million b/d or
93 per cent of the total foreign imports into the region.
There are several refining expansion projects that will
be starting up in the next two years that are designed to
process heavy crude oil sourced primarily from western
Canada (Figure 3.8). Table 3.2 summarizes the recent
and upcoming refinery upgrades announced for Eastern
PADD II.
Figure 3.8 PADD II (East): Forecast Western Canadian

Crude Oil Receipts
2,000
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Light Synthetic
Heavy
15
Table 3.2 Summary of Major Announced Refinery Upgrades in Eastern PADD II

Current Capacity
(thousand b/d)
Scheduled
In-Service
Roxana, IL
306
2011
Add a 65,000 b/d coker; increase total crude

oil refining capacity by 50,000 b/d; increase
heavy oil refining capacity to 240,000 b/d.
BP
Whiting, IN
400
Late 2012 to mid

2013
Construction of 70,000 b/d new coker and a

new crude distillation unit.
Marathon
Detroit, MI
102
Mid 2012
Increase heavy oil processing capacity by

80,000 b/d and increase total crude oil refining
capacity to 115,000 b/d.
Husky
Lima, OH
160
1H 2013
Increase capacity to 170,000 b/d; 105,000 b/d

would be heavy crude capacity. New
20,000 b/d kerosene hydrotreater.
Operator
Location
WRB Refining
Southern PADD II
Southern PADD II has seven refineries, located in Kansas
and Oklahoma that account for a combined refining
capacity of 807,000 b/d. Cushing, Oklahoma is a hub that
traditionally received crude oil predominately from pipelines
transporting offshore crude oil delivered by tanker to the
U.S. Gulf Coast. This crude oil is then distributed by a
number of pipelines exiting the hub which serve refineries
throughout the PADD II and PADD III regions. However,
pipeline infrastructure has recently been constructed to
transport growing western Canadian and U.S.
Mid-continent crude oil volumes to the hub. These crude
oil supplies are building up in storage in the region due to
the lack of connectivity to markets, particularly those
located on the Gulf Coast. A number of pipeline projects
are expected to come into service that will remove some of
these bottlenecks. The most recent project of note would
be the reversed Seaway pipeline that started operating in
May 2012 and increases takeaway capacity from Cushing
and transports crude oil volumes to the Gulf Coast.
Description
Figure 3.9 PADD II (South): Forecast Western

Canadian Crude Oil Receipts
200
180
160
140
120
100
80
60
40
20
0
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Light Synthetic
Heavy
16
Figure 3.10 2011 PADD III: Foreign Sourced Supply

by Type and Domestic Crude Oil
3.2.3 PADD III (Gulf Coast)

PADD III is comprised of Alabama, Arkansas, Louisiana,
Mississippi, New Mexico and Texas. The refineries in this
market have a total refining capacity of 9.1 million b/d, of
which a significant portion has heavy crude oil processing
capabilities.
2,549
In 2011, PADD III imported 4.9 million b/d of crude oil from
foreign sources, of which 2.4 million b/d was heavy crude
oil (Figure 3.10). The top five sources of these imports are
as follows: Mexico (22 per cent), Saudi Arabia (17 per cent),
Venezuela (16 per cent), Nigeria (9 per cent), and Columbia
(6 per cent). Deliveries of western Canadian crude oil to
this market totaled 112,000 b/d, almost all of which was
transported through the ExxonMobil Pegasus pipeline.
About 79 per cent of the heavy oil imports in the region are
from Mexico, Venezuela and Columbia.
Mexico is the 7th largest crude oil producer in the world.
However, the 2.96 million b/d of production in 2011
represented the seventh straight year of declining
production. Mexicos production from its once prolific
Cantarell and Ku Maloob Zaap oil fields are undergoing
steep declines. Mexicos state-owned company, Pemex,
is struggling to stabilize output from projects located in
the deep waters of the Gulf of Mexico. Recent increases
in Mexicos own refining capacity has led to a decline
in exports, most of which have traditionally gone to the
United States. Mexicos Minatitlan refinerys processing
capacity was expanded by 110,000 b/d in 2011.
2,380
Heavy
Domestic
Crude
Light
Sweet*
Light/Medium
Sour
881
1,664

Source: EIA
Total exports from Venezuela have also been declining

due to both production declines and increased exports to
China.
A number of pipeline projects will extend the reach of
western Canadian producers into the Gulf Coast market in
the next few years. By 2020, CAPP has estimated that this
market could receive at least an additional 1.1 million b/d
based on contractual commitments on the Keystone XL
and Flanagan South pipelines.
Table 3.3 summarizes the recently completed major
refinery upgrades and future upgrades announced for the
region.
Table 3.3 Summary of Major Announced Refinery Upgrades in PADD III

Current Capacity
(thousand b/d)
Scheduled
In-Service
Tuscaloosa, AL
72
Dec 2010
Increased capacity from 52,000 b/d to

72,000 b/d. Delayed coker was expanded to
double in size to 32,000 b/d.
Total
Port Arthur, TX
232
Mar 2011
Increased capacity from 175,000 b/d to

232,000 b/d. Project included a 50,000 b/d
coker; a 55,000 b/d vacuum distillation unit and a
64,000 b/d distillate hydrotreater.
Motiva
Enterprises
Port Arthur, TX
285
2012
Addition of new single-train distillation unit with

capacity of 325,000 b/d that would increase total
capacity to over 600,000 b/d. New 95,000 b/d
delayed coker; 85,000 b/d catalytic reformer,
75,000 b/d.
Valero
McKee, TX
170
2014
Increase capacity by 25,000 b/d. Expansion will

process WTI and locally produced crude oil.
Operator
Location
Hunt Refining
17
Description
3.2.4 PADD IV (Rockies)
3.2.5 PADD V (West Coast)
PADD IV includes the states of Idaho, Montana, Wyoming,

Utah, and Colorado. It has 14 refineries spread out in every
state except Idaho. PADD IV has a total refining capacity of
630,300 b/d with foreign imports being exclusively supplied
from western Canada.
PADD V includes the states of Alaska, Washington, Oregon,

California, Nevada, Arizona and Hawaii. The majority of
PADD V is geographically divided from the rest of the United
States by the Rocky Mountains. It has very good access to
tankers, and is located in close proximity to production from
Alaska and California. Nonetheless, this market still depends
on foreign imports for a large portion of its requirements
(Figure 3.12).
In 2011, PADD IV processed 234,200 b/d of Canadian

crude oil representing about 43 per cent of its feedstock
requirements. Throughout the forecast period, western
Canadian crude oil receipts are forecast to remain relatively
flat (Figure 3.11). The U.S. shale production is light oil
and would not compete directly with the heavy crude oil
imports available from western Canada. In January 2012,
the Sinclair refinery in Sinclair, Wyoming was expanded
from 60,000 b/d to 80,000 b/d. A coker unit and sulphur
plants were added to the facility.
Figure 3.11 PADD IV: Forecast Western Canadian

Crude Oil Receipts
600
For the purposes of the remainder of this report, the PADD V

market region will focus only on Washington and California,
as these states represent both the current demand and
future prospects for western Canadian crude oil.
Figure 3.12 2011 PADD V: Foreign Sourced Supply by

387
552
500
Domestic
Alaska
400
300
200
Other
Domestic
100
0
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Light Sweet*
Light/Medium Sour
Heavy
Heavy
Light/Medium
Sour
546
Light
Sweet*
639
221
*Includes small volumes of Medium Sweet

Source: EIA
18
Washington
California
There are five refineries in Washington that have a

combined capacity of 629,000 b/d. As production from
Alaska, the primary source of feedstock, has been
declining since 2002, Washington refineries are growing
more dependent on foreign imports from Canada and other
countries. In 2011, these refineries imported 245,800 b/d
of crude oil from foreign sources. The top three sources
were Canada (58 per cent), Russia (21 per cent), and Oman
(7 per cent).
California has 17 refineries with a total refining capacity of

2.1 million b/d. Most of the refineries are located near the
coast in the Los Angeles area and in the San Francisco Bay
area. These refineries account for almost 95 per cent of the
refining capacity in the state. There is no direct pipeline to
California from producing regions outside of California.
Therefore, as Alaskan crude oil declines an opportunity
arises to process more crude oil from Canada. Western
Canadian crude oil would first have to be transported either
on the Trans Mountain pipeline to the Westridge dock or by
rail to the west coast where it would be loaded on to
tankers. The Enbridge Gateway and Trans Mountain
Pipeline Expansion projects represent an opportunity for
greater future access to this market.
Tesoro is building capacity to receive 30,000 b/d of North

Dakota crude oil by rail at its refinery located in Anacortes
by September 2012. The company is also planning to
apply for permits that would double the capacity to
60,000 b/d. In 2011, receipts of western Canadian crude
oil were 147,600 b/d. Given the limited pipeline capacity
available to the west coast, the use of rail could provide
some additional access to this market in the near term.
CAPPs refinery survey of this market indicates a higher
demand in 2017, which corresponds to the timing of the
startup of announced pipeline projects to the west coast.
Figure 3.13 Washington: Forecast Western Canadian

Crude Oil Receipts
In 2011, California refineries imported 789,700 b/d of crude

oil from foreign sources (Figure 3.14). The top three source
countries were Saudi Arabia (29 per cent); Ecuador
(22 per cent); and Iraq (16 per cent). Canada only
accounted for 4 per cent of total foreign imports.
Figure 3.14 2011 PADD V (California): Foreign Sourced

Supply by Type and Domestic Crude Oil
195
600
348
Domestic
Alaska
500
Heavy
400
300
Other
Domestic
200
Light/
Medium
Sour
100
0
629
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Light Synthetic
Heavy
19
27

Source: EIA and the California Energy Commission
Light
Sweet*
415
3.3 Asia
3.5 Markets Summary
Asia is the worlds fastest growing energy market and

China and Japan are the second and 3rd largest oil markets
in the world. World oil demand remains strong despite a
slowdown in the U.S. and European economies because of
increased demand in the Middle East and Asia. Japanese
demand for crude oil as a source of power generation has
also increased somewhat in order to make up for some of
the lost nuclear generating capacity as a result of the
Fukushima Daiichi nuclear disaster.
The refineries on the U.S. Gulf Coast still represent an

attractive market for Canadian crude oil supplies. Despite
increasing U.S. domestic production, growing western
Canadian crude oil supplies can still establish a larger
market share in this region as pipeline infrastructure is
developed. Foreign imports account for the majority of
the feedstock requirement today but heavy crude oil from
western Canada is well suited to displace a portion of
the imports from Venezuela and Mexico. Based on the
contractual commitments that have been obtained to
underpin pipeline projects that would provide capacity
to the Gulf Coast, western Canadian producers could
supply at least 1.1 million b/d into this market by 2020.
The demand for western Canadian crude oil in the U.S.
Midwest is expected to rise by almost 470,000 b/d. The
current flow of crude oil into this region far exceeds its
ability to process it and there is insufficient takeaway
capacity to move these growing supplies beyond the
Cushing hub. Refineries in California and Washington
are expected to import increasing volumes of foreign
sourced crude given declining production from Alaska and
western Canadian producers can compete for this market
opportunity.
The outlook for Chinas demand for heavy crude oil is

improving, which is attributable to several modernizing
projects in the last few years that have added new coking
capacity. This has enabled Brazil to emerge as a growing
supplier of medium heavy crude oil to this market without
directly competing with the established Middle East
producers, who are suppliers of light sour crude oil.
Canadian synthetic crude oil is suitable for Japanese
refineries but would compete with sour grades imported
from the Middle East. Table 3.4 shows oil demand from
2009 to 2012 in the major Asian markets. The International
Energy Agency (IEA) forecasts that oil demand from China
and India will grow in 2012 by 4 per cent and 3 per cent,
respectively.
However, there is currently limited pipeline capacity
available for the transportation of western Canadian crude
oil to the west coast. The earliest that Canadian crude oil
producers would be able to increase their market share in
Asia is in 2017, if a new pipeline project to the west coast
is approved.
With growing North American supplies being forecast in

conjunction with a flat outlook for crude oil demand in the
U.S., producers are seeking to establish relationships with
Asian refineries in order to diversify their export markets.
China continues to emerge as a significant market,
importing 5.7 million b/d of oil in 2011.
Figure 3.15 Net Oil Imports: Asia 2010 to 2030
Table 3.4 Total Oil Demand in Major Asian Countries

million b/d
2009
2010
2011
2012
China
8.06
9.07
9.51
9.90
India
3.26
3.34
3.47
3.59
Japan
4.39
4.45
4.48
4.52
Korea
2.19
2.25
2.23
2.24
Source: IEA Oil Market Report, May 2012
15,000
2010
2020
2030
12,000
9,000
6,000
3,000
China
India
Japan
South Korea
Source: EIA 2012 Annual Energy Outlook, Early Release
20
CRUDE OIL PIPELINES
Western Canadian crude oil is virtually landlocked and as such has very limited
connectivity to world markets. Growing conventional, oil shale and oil sands
production has created an urgent need for additional transportation infrastructure.
Steps are being taken to address this need through a number of project proposals
including new pipelines, expansions or modifications to existing infrastructure
and increased transportation by rail. Pipelines will, however; continue to be the
dominant mode of transportation for crude oil but it will take a few years for
pipeline infrastructure to be built. In the short-term, crude oil transport by rail will
increase sharply due to the ability to add rail capacity relatively quickly and in small
increments as needed and utilizing the rail infrastructure already in place.
Figure 4.1 Canadian and U.S. Crude Oil Pipelines - All Proposals
Kitimat
Enbridge Gateway
Trans
Mountain
Edmonton
Hardisty
Burnaby
Anacortes
Alberta Clipper Expansion

Bakken Expansion
Kinder Morgan
TM Expansion (TMX)
Cromer
Express
TransCanada
Keystone XL
Southern Access Expansion
Clearbrook
Superior
Enbridge Line 9
Reversal
Montral
Portland
St. Paul
Enbridge
Guernsey
Sarnia
Flanagan
BP
El Paso
Lima
id
Va
ll
Mustang
Cushing
ine
Wood Patoka
River
Spearhead South
Flanagan South
Centurion Pipeline
Chicago
ey
Platte
Cap
l
Salt Lake City
ExxonMobil Pegasus
Seaway Reversal
& Twin Line
Crane
Magellan Houston to
El Paso (former Longhorn)
Freeport
- partial conversion
21
Port Arthur
New Orleans
St. James
Shell Ho-Ho
Houston
Canadian and U.S. Oil Pipelines

Enbridge Pipelines and connections
to the U.S. Midwest and E. Canada
Kinder Morgan Express
Proposed pipelines to the West Coast
Existing / Proposed pipelines to PADD III
Expansion/Reversal to existing pipeline
Higher than expected production from Alberta and

Saskatchewan conventional oil developments; the growth
in North Dakota Bakken production, and new U.S. shale
(Niobrara, Eagle Ford, etc.) production have added to the
challenges to be resolved regarding the transportation of
growing oil sands production.
Tight pipeline capacity as a result of these growing
supplies has been one of the major reasons for the
discounted prices received by Canadian and Mid-continent
crude oil producers, whose production is priced off of WTI
and not Brent, which is the global benchmark.
The existing pipeline network provides access to a number
of markets for western Canadian crude oil including:
western Canadian refineries; Ontario, the U.S. Midwest;
PADD IV; and the West Coast. There is very limited access
to the U.S. Gulf Coast. The major pipeline proposals
currently being assessed are primarily expansions into
the U.S. Gulf Coast and for exports off Canadas west
coast. Figure 4.1 shows all existing pipelines and active
proposals.
4.1 Existing Crude Oil Pipelines

Exiting Western Canada
There are four major pipelines that are directly connected
to the Canadian supply hubs at Edmonton and
Hardisty, Alberta: Enbridge Mainline, Kinder Morgan
Trans Mountain Pipeline, Kinder Morgan Express Pipeline,
and TransCanada Keystone Pipeline. Cumulatively, these
pipelines provide a total annual average pipeline capacity
out of western Canada of 3.5 million b/d. Proposals have
been announced that would increase this capacity in
2014 and 2015 (Table 4.1). Existing capacity is currently
constrained somewhat by the available takeaway capacity
of connecting downstream pipelines. Capacity was further
impacted in 2011 and early 2012 by short-term disruptions
and pressure restrictions.
Enbridge Pipelines
The Enbridge Mainline is a multi-pipeline system that
delivers crude oil and other refined products from western
Canada, Montana and North Dakota to markets in western
Canada, the U.S. Midwest and Ontario. It further extends
its reach into additional markets through connections with
a number of pipelines, namely the Minnesota Pipeline at
Clearbrook, Minnesota and Spearhead South at Flanagan,
Illinois. The receipt capacity of the Mainline system
originating in western Canada is 2.3 million b/d.
Table 4.1 Major Existing Crude Oil Pipelines and

Proposals Exiting the WCSB
Pipeline
Enbridge
AB Clipper
Expansion
Crude Type
Annual
Capacity
(thousand b/d)
Light
1,081
Heavy
1,246
Heavy
+120 (in 2014)
Enbridge
Gateway
+525 (in 2017)
Express
Light/heavy (35/65)
280
Trans Mountain
Light/heavy (80/20)
300
TM Expansion
+450 (in 2017)
Keystone
Light/heavy (25/75)
Keystone XL
Light/heavy
Total Existing Capacity
591
+830 (in 2015)
3,498
Crude oil production from Montana and North Dakota

enters the Enbridge Mainline system through Enbridges
North Dakota pipeline, which has a capacity of 210,000 b/d
and is connected at Clearbrook, Minnesota. The Bakken
Expansion project, which entails connecting production
received at Berthold, North Dakota for delivery to the
Enbridge Mainline at Cromer, Manitoba was approved by
the NEB in December 2011. The incremental capacity of
145,000 b/d is expected to be in-service in 2013 and is
designed to accommodate some of the escalating crude oil
production from the Bakken play.
Enbridge Mainline Expansions - Alberta

Clipper and Southern Access
The Alberta Clipper forms part of the Enbridge Mainline
capacity exiting western Canada. It is a 36-inch pipeline
extending from Hardisty, Alberta to Superior, Wisconsin
with a capacity of 450,000 b/d that can be expanded to
an ultimate capacity of 800,000 b/d with the addition of
pumping stations. Enbridge has announced that it will be
expanding the Alberta Clipper pipeline by 120,000 b/d in
2014.
22
The Southern Access Pipeline originates downstream of

the Alberta Clipper at Superior, Wisconsin and runs to
Flanagan, Illinois. It has a current capacity of 400,000 b/d,
which can be expanded up to 1.2 million b/d. Enbridge has
announced that it will expand the line by 160,000 b/d in
2014.
These Mainline expansions are required to support access
to the U.S. Gulf Coast, ultimately through a connection to
the Seaway Pipeline.
Kinder Morgan Trans Mountain Pipeline

The Trans Mountain system originates in Edmonton,
Alberta and transports crude oil and petroleum products to
delivery points in British Columbia. These delivery points
include the Westridge dock for offshore exports to final
destinations that include California, Asia and the U.S. Gulf
Coast, as well as to a pipeline that provides deliveries to
refineries in Washington State.
In December 2011, the NEB approved Kinder Morgans
application to convert 54,000 b/d of common carrier
capacity to firm service and change the land dock
allocation on the system. Consequently, since February
2011, of the current pipeline capacity of 300,000 b/d
(assuming 20 per cent of the volumes being transported
are heavy crude oil), 221,000 b/d is allocated to refinery
and terminal locations in British Columbia and Washington
State and 79,000 b/d is allocated to Westridge dock
shippers. The capacity designated to the dock is further
divided between 54,000 b/d underpinned by firm contracts
and the remainder available for spot shippers.
There was high apportionment on the pipeline throughout
2011; indicating strong demand by both land and dock
shippers. The situation was magnified by pressure
restrictions on the pipeline between April 2011 and March
2012. Strong demand for this pipeline space is expected
to continue until there is additional capacity available
to transport crude oil to the west coast for export. Two
proposals currently exist. Refer to Section 4.5 for more
details on oil pipelines to the West Coast. As an indication
of high potential demand by offshore markets, a record
volume of 143,000 b/d was delivered off the dock in April
2010.
23
Kinder Morgan Express-Platte Pipelines

The Express Pipeline system is a batch-mode, common
carrier pipeline system comprised of the Express Pipeline
and the Platte Pipeline that connects Canadian and
U.S. crude oil producers to refineries in PADD IV and
the U.S. Midwest. The Express Pipeline is a 24-inch
diameter pipeline that originates at Hardisty, Alberta and
terminates at the Casper, Wyoming facilities on the Platte
Pipeline. Approximately 231,000 b/d out of the pipelines
total capacity of 280,000 b/d has been secured by firm
contracts from 2012 through to 2015.
The Platte Pipeline is a 20-inch diameter pipeline that runs
from Casper, Wyoming to refineries and interconnecting
pipelines in the Wood River, Illinois area. The Platte Pipeline
has capacity of 150,000 b/d from Casper, Wyoming and
approximately 140,000 b/d downstream of Guernsey,
Wyoming.
Express currently has capacity on its system that cant be
used due to insufficient downstream capacity available on
the Platte Pipeline. The Canadian portion of throughput
exiting Guernsey in 2011 was 43 per cent versus
60 per cent in 2010.
TransCanada Keystone and Cushing

Extension
The existing Keystone pipeline system runs from
Hardisty, Alberta to terminals in Wood River and Patoka,
Illinois and has been in operation since June 2010. The
Keystone Cushing Extension, which runs from Steele City,
Nebraska to Cushing, Oklahoma has been in-service since
February 2011. The system can deliver a total capacity of
591,000 b/d, to either Wood River or Cushing depending
on market requirements. Originally Keystone was
underpinned by 375,000 b/d of contracted capacity while
the Cushing Extension was underpinned by an additional
155,000 b/d of contracts.
TransCanada Keystone XL
On May 4, 2012, TransCanada filed a new Presidential
Permit application for Keystone XL. This application will
be supplemented later in 2012 with a revised routing in
Nebraska once the Nebraska alternative route selection
project is completed. If approved, TransCanada is planning
for construction to start in the first quarter of 2013 with
a targeted in-service date of late 2014 or early 2015.
Keystone XL would originate at Hardisty, Alberta and end
at Steele City, Nebraska. If the project is approved, its
capacity of 830,000 b/d would contribute to the available
pipeline capacity exiting western Canada.
TransCanada concluded a successful open season in
October 2011 that secured contracts totaling 65,000 b/d
of capacity for its Bakken Marketlink project from Baker,
Montana, to Cushing. The project will enable receipts of
up to 100,000 b/d of crude oil from the Williston Basin,
primarily from the Bakken play, using capacity on the
northern leg of Keystone XL. More than 500,000 b/d of
capacity on Keystone XL has been contracted for an
average term of 18 years.
4.2 Oil Pipelines to the U.S.

Midwest
The U.S. Midwest is the largest market for western
Canadian crude oil. The major market hubs in the U.S.
Midwest where crude oil can be stored and transported to
market are found at Wood River and Patoka in Illinois and
at Cushing, Oklahoma. Table 4.2 summarizes the pipelines
delivering Canadian-sourced crude oil to the Midwest.
Minnesota Pipeline System

The Minnesota Pipeline system is connected to the
Enbridge system at Clearbrook, Minnesota, which enables
it to deliver crude oil from Canada to the Northern Tier
refinery located in St. Paul Park and the Flint Hills refinery
in Rosemont. This is the primary route for Canadian crude
oil destined for the Minnesota refineries. The system has a
capacity of 465,000 b/d and can be further expanded by
185,000 b/d.
Koch Wood River Pipeline

The Minnesota refineries are connected to western
Canadian crude oil supplies via connections to the
Enbridge system as well as via deliveries from the Express
system to Wood River where it then transits on the Koch
Wood River System.
Table 4.2 Summary of Crude Oil Pipelines to the U.S. Midwest

Pipeline
Originating Point
Destination
Status
Minnesota Pipeline
Clearbrook, MN
Minnesota refineries
Operating
465
Enbridge Mainline
Superior, WI
Operating
1,551
Flanagan, IL
various delivery
points via L5, L6,
L14/64,
Spearhead North
Chicago, IL,
Proposed - 2014
+100
Enbridge Spearhead South
Flanagan, IL
Cushing, OK
Operating
Enbridge Flanagan South
Flanagan, IL
Cushing, OK
Proposed - 2014
Enbridge Mustang
Lockport, IL
Patoka, IL
Operating
100
Kinder Morgan Express-Platte
Guernsey, WY
Wood River, IL
Operating
145
Trans Canada Keystone

to Patoka or Wood River
Hardisty, AB
Patoka, IL
Operating
591*
Trans Canada Keystone to Cushing
Steele City, NE
Cushing, OK
Operating
591*
Capacity
(thousand b/d)
193
+585
* Total capacity originating on the Keystone system to Patoka is up to 591,000 b/d less any volumes moved to the Cushing extension. Likewise, capacity for volumes delivered on Keystone to Cushing is up to 591,000 b/d less any volumes delivered to Patoka
24
Table 4.3 Summary of Crude Oil Pipelines to the U.S. Gulf Coast
Pipeline
Originating Point
Destination
Status
Capacity
(thousand b/d)
ExxonMobil Pegasus
Patoka, IL
Nederland, TX
Operating
Seaway Reversal Phase 1

Seaway Reversal Phase 2
Seaway Twin Line
Cushing, OK
Freeport, TX
Operating - May 2012

Proposed - Early 2013
Proposed - Mid 2014
150
+250
+450;
expandable
Cushing, OK
Nederland, TX
Proposed - Mid 2013
550;
expandable
96
Spearhead Pipeline
ExxonMobil Pegasus Pipeline
The Spearhead Pipeline receives crude oil from the

Enbridge Mainline and originates at Flanagan, Illinois.
From there, crude oil can be transported to Griffith,
Indiana via Spearhead North or to Cushing, Oklahoma
on Spearhead South. Spearhead North currently has a
capacity of 135,000 b/d, which Enbridge plans to expand
to 235,000 b/d by 2014. The Spearhead South system
has a capacity 193,000 b/d and will be expanded once its
proposed twin pipeline, Flanagan South is built and begins
operations.
Before the reversed Seaway Pipeline came online on

May 19, 2012, the ExxonMobil Pegasus Pipeline was
the only pipeline that could deliver Canadian crude oil
to the U.S. Gulf Coast. Pegasus is a 20-inch diameter
pipeline with a capacity of 96,000 b/d that receives crude
oil at Patoka, Illinois and delivers it to Nederland, Texas.
Western Canadian crude oil, originating from Hardisty,
Alberta transits to Pegasus from one of the following three
originating routes
Enbridges Toledo Pipeline Expansion

The Enbridge Toledo Pipeline connects to the Enbridge
mainline at Stockbridge, Michigan and serves refineries at
Toledo, Ohio and Detroit, Michigan. It is a 16-inch diameter
pipeline with 100,000 b/d capacity. Enbridge is proposing
to increase the capacity along this route by building a new
20-inch diameter pipeline that would have a capacity of
80,000 b/d. The new pipeline could be operating in early
2013.
4.3 Oil Pipelines to the U.S. Gulf

Coast
The Gulf Coast is home to the largest refinery market in
the world with refineries in the region being among the
most complex in the world, enabling them to process a
wide range of both light and heavy crude oil types. They
are currently supplied by both U.S. domestic crude oil and
foreign imports. A number of pipeline project proposals aim
to serve this major market. Canadian crude, however, will
be in competition with growing volumes of U.S. domestic
supplies from the Mid-continent for space on these
pipeline projects. Incidentally, there are several projects
underway that propose to move U.S. production from new
tight oil plays to the Gulf Coast and avoid the Cushing hub.
25
1) The Enbridge system followed by a connection on the

Mustang Pipeline, which has a capacity of 100,000 b/d;
2) The Express/Platte system to Wood river, Illinois
followed by a connection on the WOODPAT Pipeline,
which has a capacity of 250,000 b/d; or
3) The Keystone Pipeline, which has a current capacity of
591,000 b/d.
Enbridge Flanagan South Pipeline

The Flanagan South Pipeline project is a 36-inch diameter
pipeline that will be built parallel to the existing Enbridge
Spearhead South Pipeline. The pipeline will originate at
Flanagan, Illinois and terminate at Cushing, Oklahoma and
will have an initial capacity of 585,000 b/d. The pipeline
could be expanded to 800,000 b/d through the addition of
pump capacity.
Enbridge/Enterprise Seaway Pipeline

The Seaway Pipeline is jointly owned by Enbridge Inc. and
Enterprise Products Partners L.P. In 2011, Enbridge
purchased a 50 per cent interest from ConocoPhillips. The
pipeline was reversed in May 2012 and now moves crude
oil from Cushing, Oklahoma to the U.S. Gulf Coast.
The first phase of the reversed 30-inch diameter Seaway
Pipeline provides a capacity of 150,000 b/d. Following the
completion of pump station additions and other
modifications, which are expected to be completed in the
first quarter of 2013, the capacity will increase to
400,000 b/d. In addition, Enbridge and Enterprise have
held successful open seasons which resulted in five to
20 year contracts underpinning a new 30-inch diameter
pipeline along the existing route of the Seaway pipeline.
The initial capacity on this new Seaway Twinned pipeline
would be 450,000 b/d, which could then be further
expanded with the addition of incremental pump stations in
the future. By mid-2014, these expansions would more
than double the capacity of the Seaway system to
850,000 b/d from Cushing to the Gulf Coast.
Following successful open seasons, Enbridge secured 10,
15 and 20 year commitments. Western Canadian crude oil
supplies could utilize this pipeline to connect to the
reversed Seaway Pipeline at Cushing, Oklahoma to reach
markets in the U.S. Gulf Coast. The target in-service date
for this project is mid 2014.
TransCanada Gulf Coast Project and

Houston Lateral
In an effort to address the urgent need for pipeline
capacity to the U.S. Gulf Coast and in light of the U.S.
Department of States denial of the TransCanada Keystone
Pipeline, L.P. (TransCanada) Presidential Permit application
for Keystone XL on January 18, 2012, TransCanada
is developing the Gulf Coast segment of the project
separately so that it may be in-service sooner. The 36-inch
diameter, Gulf Coast Pipeline Project would originate at
Cushing, Oklahoma and extend to Nederland, Texas. The
Gulf Coast Pipeline project is anticipated to be in-service
by mid to late 2013 with an initial capacity of 550,000 b/d
that could ultimately ramp up to 830,000 b/d after
Keystone XL begins operations.
The Houston Lateral Project is an additional project under

development that is intended to extend the market reach of
Keystone to refineries in Houston, Texas. The construction
of this project is planned to begin in the first quarter of
2013 with the intent that the project would be operating
by the first quarter of 2014. A number of options are also
being explored to connect to refineries in Louisiana.
Once in-service, the Gulf Coast Pipeline and Houston
Lateral projects will become integrated with the Keystone
Pipeline System. Crude oil production from western
Canada will enter the system through expanded facilities
originating at Hardisty, Alberta to Steele City, Nebraska.
The crude will subsequently be transported on to Cushing,
Oklahoma.
4.4 Projects Dedicated to Divert

U.S. Crude Oil from the
Cushing Bottleneck
A number of projects are underway that propose to divert
U.S. production of crude oil to the Gulf Coast and bypass
the Cushing hub.
Shells Houma-to-Houston (Ho-Ho)

Shell Pipeline held a successful 45-day open season for
its Ho-Ho Reversal project that ended April 20, 2012.
The project entails reversing the existing Ho-Ho service
in order to connect the Houston and Port Arthur markets
in Texas with the Louisiana markets. This project could
enable distribution of 300,000 b/d of crude oil across the
region. Shell is proceeding with next steps and subject
to regulatory approval, the Ho-Ho Reversal could begin
service in early 2013.
26
Magellan Midstreams Crane-to-Houston

Pipeline
Kinder Morgan Trans Mountain Expansion

The Trans Mountain Expansion project could increase
capacity of the existing Trans Mountain system by
450,000 b/d, bringing the total capacity of the system from
300,000 to 750,000 b/d, at a projected cost of $4.1 billion.
Through an open season process that ended in April
2012, shippers have signed 20-year term commitments
totaling 510,000 b/d of capacity on the entire system. The
expansion will twin the existing pipeline, where possible and
also involves expansion of the Westridge Marine Terminal.
Preceding a facilities application, Kinder Morgan intends to
file a commercial tolling application in 2012 to review the
companys proposed tolling structure once the expansion
is operational. Kinder Morgans facilities application with
the National Energy Board is anticipated in 2014, and
if approved, the proposed expansion is expected to be
operational by 2017.
Magellan is proposing to reverse and convert a portion

of its 18-inch Houston-to-El Paso pipeline (the former
Longhorn pipeline) to crude oil service. Specifically, the
project entails reversing the segment from Crane, Texas to
Houston and converting it from refined petroleum products
service to crude oil service. The objective is to transport
crude oil produced in Texas producing regions (Permian
Basin) to refineries in the Houston area. Subject to
receiving the necessary regulatory approvals, the reversed
18-inch diameter pipeline would begin transporting crude
oil at partial capacity by early 2013, ramping to its full
225,000 b/d capacity by mid-2013.
This project would provide a direct connection to the U.S.
Gulf Coast and avoid the Cushing hub, potentially reducing
the congestion there.
Enbridge Northern Gateway

The Northern Gateway Project includes the construction
of a new 36-inch diameter pipeline that could transport
525,000 b/d of crude oil westward from Bruderheim,
Alberta (near Edmonton, Alberta) to a deep water port at
Kitimat, British Columbia. The pipeline could be expanded
to an ultimate capacity of 850,000 b/d. Enbridge submitted
an application to the National Energy Board at the end of
May 2010. The ongoing hearing on the project is scheduled
to conclude in April 2013. Subject to regulatory approval,
startup of the pipeline is targeted for 2017.
4.5 Oil Pipelines to the West

Coast
The Kinder Morgan Trans Mountain Pipeline is currently
the only pipeline route for western Canadian producers to
transport crude oil to the west coast. Once there, the crude
oil can be loaded off the dock to reach other markets such
as California, the U.S. Gulf Coast and Asia. Forecasted
growth in western Canadian production will quickly surpass
the existing transportation capacity. New additional
capacity to the west coast is key in order to link western
Canadian crude oil production to the world market. Both
Kinder Morgan and Enbridge have pipeline projects to
increase access to the west coast. Table 4.4 summarizes
the existing and proposed pipeline projects that could
deliver western Canadian crude oil to the West Coast.
Table 4.4 Summary of Crude Oil Pipelines to the West Coast

Pipeline
Originating Point
Destination
Status
Edmonton , AB
Burnaby, BC
Operating

Expansion
27
Bruderheim, AB
Kitimat, BC
Capacity
(thousand b/d)
300
Proposed - 2017
+450
Proposed - 2017
+525
4.6 Eastern Access
TransCanada East Coast Pipeline Project
Refineries in Eastern Canada take some of their crude oil

requirements from Newfoundlands offshore wells, but most
of the refinery feedstock is currently sourced internationally.
There is significant interest in connecting western supplies
to these markets.
TransCanada has introduced the concept of a new pipeline

system to transport about 625,000 b/d of western Canadian
crude oil across the country to Montral, Qubec and
potentially further east to Saint John, New Brunswick. The
project would involve converting about 3,000 km of underutilized natural gas pipe into oil service; while building
approximately 375 km of new pipe from Hardisty, Alberta to
the Mainline at Burstall, Saskatchewan, and from Cornwall,
Ontario, to Montral. Another 220 km of pipe would be
required to reach Qubec City. Tankers could then take
the crude oil to Europe or Asia. The proposal is only at
the conceptual stage and has received very limited public
discussion to date.
Enbridge Line 9 Reversal

Enbridge Line 9 is a 30-inch diameter crude oil pipeline with
a capacity of 240,000 b/d. Since 1999, the pipeline has been
flowing crude oil westward from Montral, Qubec to Sarnia,
Ontario, although originally the pipeline transported crude
oil in a west to east direction when first placed in-service in
1975.
In August 2011, Enbridge filed an application with the
National Energy Board (NEB) for the partial re-reversal of
the line between Sarnia, Ontario and Westover, Ontario.
The purpose of this reversal is to allow greater volumes of
western Canadian crude oil to be delivered to the Imperial
refinery at Nanticoke. The public hearing, conducted by
the NEB to examine the application, was concluded in May
2012 and a decision is pending.
4.7 Diluent Pipelines

Table 4.5 summarizes the diluent pipeline proposals. These
projects address the potential demand by western Canadian
heavy crude oil producers for additional diluent supply
needed to transport growing volumes of bitumen.
Further, Enbridge has announced a separate and distinct

project for which it has secured sufficient commercial
commitments to proceed with the reversal of Line 9 all the
way to Montral. An open season will be held from May 17
to June 15, 2012 to provide additional shippers with an
opportunity to secure capacity on the pipeline. While subject
to regulatory approval, the target in-service date for this
project is in early 2014.
Table 4.5 Summary of Diluent Pipelines

Pipeline
Originating Point
Destination
Status
Capacity
(thousand b/d)
Enbridge Southern Lights
Flanagan, IL
Edmonton, AB
Operating
180
Kitimat, BC
Edmonton, AB
Proposed - 2017
193
Kinder Morgan Cochin

Conversion
Kankakee County, IL
Fort Saskatchewan,
AB
Open Season ends May 2012
75
28
Enbridge Southern Lights

Since July 2010, the Southern Lights pipeline, which has
a capacity of 180,000 b/d, has been transporting diluent
from Flanagan, Illinois (near Chicago) to Edmonton, Alberta.
In 2011, average throughput on the pipeline was around
60,000 b/d. Enbridge has announced an open season period
ending June 22, 2012 to solicit interest for 85,000 b/d of firm
contracted capacity on the pipeline. In its notice to FERC,
Enbridge added that first rights to the additional capacity
would be given to existing customers BP and Norways
Statoil, who have already secured 77,000 b/d of capacity.
The pipeline can be expanded to 330,000 b/d with minor
looping and to over 400,000 b/d with full looping.
Enbridge Northern Gateway Diluent

As part of its Northern Gateway crude oil pipeline project,
Enbridge is proposing a 193,000 b/d diluent import line that
would extend from Kitimat, British Columbia to Edmonton,
Alberta. The ongoing hearing on the project is scheduled to
conclude in April 2013. Subject to regulatory approval, the
target in-service date is 2017.
Kinder Morgan Cochin Reversal Project

Kinder Morgan is holding an open season to secure
transportation contracts for its Cochin Reversal Project,
which proposes to move condensate from Kankakee
County, Illinois to existing terminal facilities near Fort
Saskatchewan, Alberta. The project requires modifying and
expanding the existing Cochin Pipeline to connect to the
Explorer Pipeline in Kankakee County, then reversing the
product flow to move condensate northwest to Canada.
Subject to shipper support and regulatory approval, the
pipeline would be in-service in July 2014. The existing
Cochin pipeline system is a 12-inch diameter multi-product
pipeline with the capacity to move 70,000 b/d. The Cochin
Reversal project would be capable of delivering 75,000 b/d
of light condensate.
EDMONTON
4.8 An Alternative Mode of

Transport: Rail
The rapid rise in U.S. Bakken crude oil production, the
potential for further growth in tight oil production, as well
as the long time lines required for the construction of new
pipeline projects has led to an increased opportunity for rail
as an alternative mode for transporting crude oil. In the span
of just one year, rail exports from North Dakota have risen
from about 50,000 b/d in March 2011 to about 225,000 b/d
in March 2012, according to estimates by the North Dakota
Pipeline Authority.
Transportation of crude oil production originating from
western Canada by rail is also growing but is comparatively
small around 20,000 b/d in 2011. Rail is, however, starting
to provide a larger proportion of the crude oil transportation
market than it has held historically. According to Statistics
Canada, about 8,823 rail cars (707,647 tonnes) were loaded
in March 2012 transporting fuel oils and crude petroleum
compared to 5,602 rail cars (458,696 tonnes) in March 2011.
There is much discussion focused on using rail capacity
to reach the various markets that are not currently well
supplied by pipeline capacity.
Transporting crude by rail requires capital investment in
new loading facilities that must also have corresponding
unloading terminals at the destination centres. Rail car
supply is currently tight and it takes about a year to put new
rail cars into service. However, a major advantage to rail
transport is the relatively quick startup for small additional
volumes since an extensive rail network is already in place.
Figure 4.2 is a map of the CP rail network and Figure 4.3 is
a map of the CN rail network. A greater number of unloading
terminals have been or are being built near destination
markets.
Figure 4.2 CP Rail Network
LLOYDMINSTER
SASKATOON
CALGARY
REGINA
VANCOUVER
WINNIPEG
THUNDER BAY
KINGSGATE
COUTTS
SUDBURY
MONTREAL
DULUTH
RAPID CITY
MINNEAPOLIS/
ST. PAUL
TORONTO
ALBANY
DETROIT
CHICAGO
NEW YORK
PHILADELPHIA
Source: Canadian Pacific Railway
29
KANSAS CITY
Figure 4.3 CN Rail Network
Source: Canadian National Railway
The existing rail network has access to the Pacific, Atlantic

and Gulf Coasts, and Eastern Canada. Test trains have
been sent to California, Texas and Louisiana. Rail is being
used to transport light crude and condensate. The rail
industry has also proposed the option of utilizing heated
rail cars to transport bitumen that could then be blended to
specifications at terminals near the destination refineries.
Enbridge is proposing to enhance its North Dakota crude
oil system by upgrading and expanding its current facilities
located in Berthold, North Dakota to connect into a rail car
loading facility south of its existing Berthold Station.
In mid 2011, G Seven Generations Ltd. unveiled a new
strategy to transport crude oil from Fort McMurray, Alberta
to the West Coast. Under the Unifying Nationals Railco
Initiative, Alberta oil would travel by electric rail and would
then be shipped to Asian markets from an existing marine
terminal at Valdez, Alaska. Oil sands crude oil would be
uploaded from rail cars at Delta Junction in Alaska, and then
fed into an existing pipeline that terminates at Valdez.
30
Table 4.6 Summary of Existing and Proposed Projects to Transport Production from North Dakota
Pipeline
Originating Point
Destination
Status
Rail
Alexander, McKenzine
County, ND
Clearbrook, MN
Open Season ended

Mar 2012
+150
Tesoro West Coast Rail

Future expansion
Bakken oil play
Anacortes, WA
Proposed (Sep 2012)

Proposed (for TBD)
+30
+30
Clearbrook, MN
Operating
210
Enbridge North Dakota
Capacity
(thousand b/d)
Enbridge Bakken Access
Berthold, ND
Cromer, MB
Proposed (for 2013)
+145
TransCanada Bakken Marketlink
Baker, MT
Keystone XL
delivery points
Proposed (for 2015)
+100
KM Pony Express/True Companies

Belle Fourche Pipeline
Baker, MT
Cushing, OK
Proposed (for 2014)
+100
Oneok Bakken Crude Express PL
Bakken oil play
Cushing, OK
Proposed (for 2015)
+200
4.9 Projects to Transport North

Dakota Production
Production from North Dakota is sharply rising (producing
a record 534,000 b/d in December 2011). Tesoros Mandan
refinery in North Dakota is the closest market for Bakken
crude but beyond this demand, producers must look for
ways to transport production out of the state.
This production will compete for pipeline capacity out of
western Canada. A number of projects have been proposed
that would increase transportation out of this region, with the
projects in turn seeking to connect downstream on the same
facilities that transport Canadian crude oil production out of
western Canada. The projects are summarized in Table 4.6.
Kinder Morgan Pony Express/True

Companies Belle Fourche
Kinder Morgans Pony Express subsidiary and Belle Fourche
Pipeline will hold an open season for 100,000 b/d of crude
service from Baker, Montana, to Ponca City and Cushing,
Oklahoma. The Open Season will close on June 20, 2012.
Service under a joint tariff will begin in the fourth quarter of
2014. The pipeline is anchored with a 30,000 b/d long-term
commitment from a major anchor shipper.
The project will combine True Companies Belle Fourche
system, which runs from Baker to Guernsey, Wyoming,
with Kinder Morgans 210,000 b/d Pony Express line, which
involves the conversion of a natural gas pipeline to crude oil
service from Guernsey to Cushing.
31
Projects that increase the downstream capacity of existing

pipelines have been proposed that could partially alleviate
tight capacity as access to markets is enhanced. However,
additional capacity exiting western Canada will need to
be built if growing production is to avoid facing chronic
apportionment as a result of limited pipeline capacity to
desired markets. Figure 4.4 shows the existing and proposed
takeaway capacity exiting the WCSB versus forecasted
supply. The forecasted supply volume was developed by
coupling CAPPs latest supply forecast of Western Canadian
production with U.S. Bakken volumes that could utilize a
portion of the capacity that exits western Canada.
4.10 Pipeline Summary

The dynamics of the North American crude oil market are
changing as growing western Canadian and Mid-continent
crude oil production emerges while North American crude
oil consumption is anticipated to be fairly flat. Despite the
forecast for flat demand for crude oil, the U.S., specifically
the Gulf Coast, remains a large, attractive market for western
Canadian producers due to the opportunity to displace crude
oil supplies from international sources. A number of pipeline
proposals to the Gulf Coast have recently been announced
that will increase access by 2014 through connections to
existing infrastructure as well as new projects. In addition to
looking for increased penetration to U.S. markets, western
Canadian crude oil producers are also seeking much greater
market diversification through increased connectivity to world
markets. This would primarily be achieved through more
pipeline capacity to the west coast, where crude oil could
be shipped to the burgeoning economies of Asia. There is
also significant interest in improving connectivity to western
Canadian supplies for all Canadians. As such, a number of
projects to increase pipeline access from western Canada to
eastern Canadian markets are being pursued.
Transportation of crude oil by rail is growing since it has the

advantage of quick start-up and its network extends to a
number of markets that are currently not connected through
the pipeline network. However, pipelines will remain the
preferred mode of transportation for crude oil. This analysis
indicates that additional pipeline capacity exiting western
Canada will be required by 2014.
Figure 4.4 WCSB Takeaway Capacity vs Supply Forecast
8,000
7,000
CAPP 2012 Supply Forecast

(W. Canadian supply + U.S. Bakken movements)
6,000
5,000
Proposed ex-WCSB Oil Pipeline Capacity
4,000
3,000
Existing ex-WCSB Oil Pipeline Capacity +
Western Canadian Refinery Demand
2,000
1,000
0
2012
2014
2016
2018
2020
2022
2024
2026
2028
2030
32
GLOSSARY
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. It may be gaseous in its reservoir state
but is liquid at the conditions under which its volumes is measured or estimated.
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 their source (oil
sands).
Feedstock
In this report, feedstock refers to the raw material supplied to a refinery or oil sands upgrader.
Integrated mining
project
A combined mining and upgrading operation where oil sands are mined from open pits.
The bitumen is then separated from the sand and upgraded by a refining process.
In Situ 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.
33
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 ERCB 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.
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
Products
End products in the refining process (e.g. gasoline).
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.
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.
34
APPENDIX A
ACRONYMS, ABBREVIATIONS,
UNITS AND CONVERSION FACTORS
Acronyms
API
American Petroleum Institute
CAPP
Canadian Association of Petroleum Producers
EIA
Energy Information Administration
ERCB
(Alberta) Energy Resources Conservation Board
FERC
Federal Energy Regulatory Commission
IEA
International Energy Agency
NEB
National Energy Board
PADD
Petroleum Administration for Defense District
U.S.
United States
WCSB
Western Canada Sedimentary Basin
WTI
West Texas Intermediate
Canadian Provincial Abbreviations

AB
Alberta
BC
British Columbia
MB
Manitoba
NWT
Northwest Territories
ON
Ontario
QC
Qubec
SK
Saskatchewan
Units
b/d
barrels per day
Conversion Factor
1 cubic metre = 6.293 barrels (oil)
35
U.S. State Abbreviations

AL
Alabama
AK
Alaska
AZ
Arizona
AR
Arkansas
CA
California
CO
Colorado
CT
Connecticut
DE
Delaware
FL
Florida
GA
Georgia
ID
Idaho
IL
Illinois
IN
Indiana
IA
Iowa
KS
Kansas
KY
Kentucky
LA
Louisiana
ME
Maine
MD
Maryland
MA
Massachusetts
MI
Michigan
MN
Minnesota
MS
Mississippi
MO
Missouri
MT
Montana
NE
Nebraska
NV
Nevada
NH
New Hampshire
NJ
New Jersey
NM
New Mexico
NY
New York
NC
North Carolina
ND
North Dakota
OH
Ohio
OK
Oklahoma
OR
Oregon
PA
Pennsylvania
SC
South Carolina
SD
South Dakota
TN
Tennessee
TX
Texas
UT
Utah
VT
Vermont
VA
Virginia
VI
Virgin Islands
WA
Washington
WV
West Virginia
WI
Wisconsin
WY
Wyoming
36
37

267
610
268
276
574
277
851
Newfoundland & Labrador
W Canada Light and Medium
E Canada Light and Medium
Total Conv. Light and Medium
857
759
1,616
Oil Sands Mining
Oil Sands In Situ
TOTAL OIL SANDS
OIL SANDS RAW BITUMEN**
2,840
TOTAL CANADIAN OIL PRODUCTION
2,743
284
WESTERN CANADA OIL PRODUCTION 2,556
EASTERN CANADA OIL PRODUCTION
1,615
1,470
TOTAL OIL SANDS
1,745
852
892
3,017
273
844
727
743
772
142
Oil Sands In situ
144
1,259
382
242
140
878
Oil Sands Mining
OIL SANDS (BITUMEN &

UPGRADED CRUDE OIL)
PENTANES/CONDENSATE
375
1,226
TOTAL CONVENTIONAL
Saskatchewan Conv. Heavy 1,2
Total Conventional Heavy
140
235
Alberta Conv. Heavy
Heavy
Ontario
40
10
32
15
188
20
350
2011
N.W.T.
186
22
319
2010
Actuals
Manitoba
Saskatchewan 1,2
B.C.
Alberta
Light & Medium
CONVENTIONAL
1,931
924
1,007
3,220
215
3,009
1,776
914
862
137
1,311
394
255
139
917
211
706
210
13
41
219
20
413
2012
Forecast
2,195
1,033
1,162
3,530
242
3,290
2,027
1,011
1,016
132
1,374
391
250
141
983
240
743
239
12
41
227
19
443
2013
2,358
1,162
1,196
3,693
206
3,487
2,178
1,133
1,045
127
1,388
396
253
142
992
206
786
205
12
41
250
18
466
2014
2,481
1,267
1,214
3,850
216
3,634
2,299
1,238
1,061
124
1,427
393
249
144
1,034
216
818
215
11
41
265
17
484
2015
2,638
1,389
1,249
4,009
212
3,797
2,454
1,361
1,093
121
1,434
391
248
143
1,043
212
831
211
11
38
273
16
493
2016
2,780
1,503
1,277
4,159
217
3,942
2,597
1,476
1,120
119
1,444
389
245
144
1,056
217
839
216
10
37
277
16
499
2017
2,934
1,592
1,342
4,309
236
4,073
2,736
1,565
1,171
116
1,457
383
239
144
1,074
236
838
235
10
36
278
15
499
2018
3,158
1,716
1,442
4,500
227
4,273
2,942
1,690
1,252
113
1,444
381
237
144
1,063
227
836
226
35
279
14
499
2019
3,389
1,865
1,524
4,702
216
4,486
3,165
1,838
1,327
111
1,426
379
236
143
1,047
216
831
215
35
277
13
498
2020
CAPP Canadian Crude Oil Production Forecast 2012 2030
APPENDIX B.1
3,619
2,002
1,616
4,898
216
4,682
3,375
1,975
1,400
109
1,414
375
232
142
1,040
216
824
215
34
275
13
494
2021
3,843
2,170
1,674
5,078
207
4,871
3,581
2,141
1,440
107
1,391
370
229
141
1,021
207
814
206
33
272
12
489
2022
3,999
2,307
1,691
5,199
191
5,008
3,732
2,277
1,455
104
1,363
367
229
138
995
191
804
190
33
269
11
484
2023
4,240
2,432
1,808
5,399
173
5,226
3,965
2,402
1,564
102
1,331
365
230
135
966
173
793
172
32
265
11
478
2024
4,497
2,570
1,927
5,622
161
5,461
4,215
2,539
1,676
100
1,306
365
232
133
942
161
781
160
31
263
10
470
2025
4,635
2,691
1,944
5,707
140
5,567
4,340
2,660
1,680
99
1,268
362
233
129
907
140
767
139
31
259
10
460
2026
4,846
2,827
2,018
5,867
126
5,741
4,537
2,795
1,742
97
1,233
359
234
125
874
126
748
125
30
256
446
2027
5,023
2,929
2,094
6,002
111
5,891
4,713
2,896
1,817
95
1,194
355
234
121
839
111
728
110
29
252
432
2028
5,143
3,024
2,119
6,091
98
5,993
4,834
2,994
1,840
93
1,163
354
236
117
810
98
712
97
29
248
420
2029
5,326
3,155
2,170
6,243
86
6,157
5,020
3,129
1,891
92
1,131
351
238
114
780
86
694
85
28
244
408
2030
38
879
TOTAL CONVENTIONAL
1,794
1,229
1,444
2,673
TOTAL OIL SANDS AND

UPGRADERS
Total Light Supply
Total Heavy Supply
WESTERN CANADA OIL SUPPLY
2,918
1,608
1,311
2,001
1,296
705
917
312
606
2011
3,139
1,633
1,506
2,115
1,310
804
1,025
323
702
2012
Forecast
3,468
1,803
1,665
2,409
1,483
926
1,059
320
739
2013
3,705
1,968
1,736
2,601
1,647
954
1,103
321
782
2014
3,890
2,092
1,797
2,758
1,775
983
1,132
317
814
2015
4,125
2,287
1,839
2,983
1,971
1,012
1,142
316
827
2016
4,295
2,486
1,809
3,147
2,173
974
1,148
313
835
2017
4,420
2,611
1,809
3,280
2,304
976
1,140
307
834
2018
4,653
2,801
1,852
3,516
2,496
1,020
1,137
305
832
2019
4,946
3,037
1,909
3,817
2,734
1,083
1,129
303
827
2020
5,177
3,229
1,948
4,060
2,932
1,128
1,117
298
820
2021
2. Includes: a) imported condensate b) manufactured diluent from upgraders and c) upgraded heavy volumes coming from upgraders.
1. Includes upgraded conventional.
Notes:
1,134
Oil Sands Heavy 2
Upgraded Light (Synthetic)1

660
309
Net Conventional Heavy to Market
OIL SANDS
570
2010
Actuals
Total Light and Medium
CONVENTIONAL
Blended Supply to Trunk Pipelines and Markets thousand barrels per day
5,424
3,470
1,954
4,322
3,178
1,144
1,102
292
810
2022
5,606
3,675
1,931
4,516
3,386
1,130
1,090
289
800
2023
5,871
3,947
1,924
4,796
3,661
1,135
1,076
287
789
2024
APPENDIX B.2 2012 2030 Western Canadian Crude Oil Supply
integrated upgrader projects. Production from off-site upgrading projects are included in the production numbers as bitumen.
6,179
4,233
1,945
5,116
3,947
1,169
1,063
287
777
2025
6,244
4,325
1,920
5,199
4,041
1,157
1,046
283
763
2026
6,418
4,556
1,862
5,394
4,276
1,118
1,024
280
744
2027
6,585
4,757
1,828
5,585
4,481
1,104
1,000
276
724
2028
6,695
4,893
1,802
5,712
4,618
1,094
982
274
708
2029
** Raw bitumen numbers are highlighted. The oil sands production numbers (as historically published) are a combination of upgraded crude oil and bitumen and therefore incorporate yield losses from
2. CAPP has revised from the June 2007 report historical light/heavy ratio for Saskatchewan starting in 2005.
1. CAPP allocates Saskatchewan Area III Medium crude as heavy crude. Also 17% of Area IV is > 900 kg/m3.
Notes:
6,870
5,102
1,769
5,909
4,830
1,079
962
272
690
2030
APPENDIX C
Crude Oil Pipelines and Refineries
ENBRIDGE NW
RAINBO
Upgraders
Syncrude (Fort McMurray) .............407
Suncor (Fort McMurray) ..................428
Shell (Scotford)...................................155
CNRL Horizon......................................135
OPTI/Nexen Long Lake...................... 72
Vancouver to:
Japan - 4,300 miles
Taiwan - 5,600 miles
S.Korea - 4,600 miles
China - 5,100 miles
Prince George
Husky...............12
Edmonton
Imperial...........................187
Suncor .............................135
Shell..................................100
Lloydminster
Husky................................. 28
Husky Upgrader............. 82
San Francisco - 800 miles

Los Angeles - 1,100 miles
HU
Vancouver
Chevron ...........55
SK
Y
KEYSTONE
Regina
Co-op Refinery/
Upgrader .......................100
Moose Jaw
Moose Jaw ..................... 15
Puget Sound
BP (Cherry Pt)............225
Phillips 66 (Ferndale)100
Shell (Anacortes).......145
Tesoro (Anacortes) ...120
US Oil (Tacoma)........... 39
WA
Great Falls
Montana Refining..... 10
San Francisco
Chevron ...................240
Phillips 66 ................120
Shell...........................165
Tesoro .......................166
Valero........................170
Wyoming
Little America (Casper) ................25
Sinclair Oil (Sinclair) ......................80
Wyoming (Newcastle)..................14
Frontier (Cheyenne)......................52
CA
NV
CHEVRON
ND
Mandan
Tesoro ..............58
WY
OB
IC
PACIF
EX
XO
NM
Kansas
NCRA (McPherson)................ 85
Frontier (El Dorado) ............135
Coffeyville Res(Coffeyville)115
Denver/Commerce City
Suncor ........................... 98
Oklahoma
Phillips 66 (Ponca City) ........................ 187
Holly (Tulsa) ............................................ 125
Coffeyville Res. (Wynnewood).............70
Valero (Ardmore) ......................................90
Bakersfield
Kern Oil....................... 26
San Joaquin .............. 24
AZ
St. Paul
Flint Hills .............320
Northern Tier....... 74
CO
UT
Los Angeles
Alon USA ..............................94
BP ........................................ 265
Chevron ............................. 285
ExxonMobil....................... 155
Phillips 66 .......................... 139
Tesoro ....................................97
Valero ................................. 135
MN
SD
NE
IL
ELL
SH
Salt Lake City

Big West ..............35
Chevron ..............45
Holly.....................31
Tesoro ..................58
MT
KEYSTONE
ID
Billings
CHS (Laurel) ................ 55
Phillips 66 .................... 58
ExxonMobil................. 60
KOCH (Wood River)
OR
KS
Borger/McKee
WRB ..................................146
Valero...............................170
OK
NM
CENT
IA
EA
RH
EA H
SP OUT
S
URION
NM
XO
EX
AR
Artesia
Slaughter
Big Spring
EXXONM
O
BIL
Tyler
Delek ...................... 60
EX
XO
NM
M
ON
EXX
New Mexico/W. Texas

Western Refining (El Paso).................. 128
Holly (Artesia) ........................................ 100
Alon (Big Spring).......................................70
IL
OB
LA
Three Rivers
Valero..............................100
Corpus Christi
CITGO..............................165
Flint..................................300
Valero..............................325
39
Sweeny
Phillips 66 ......................247
Houston/Texas City
PRSI (Pasadena) ..........117
BP ....................................475
Shell (Deer Park)..........340
ExxonMobil...................584
Houston Refining .......268
Marathon......................... 80
Valero (2)............. 160+245
H
KOC
TX
Lake Cha
Port Arthur/
Beaumont
Port Arthur/
ExxonMobil.
Motiva...........
Valero............
Total...............
2011 Canadian Crude Oil Production

000 m3/d
000 b/d
British Columbia
Alberta
Saskatchewan
Manitoba
Northwest Territories
6
354
69
6
2
37
2,225
431
40
10
Western Canada
Eastern Canada
Total Canada
436
43
479
2,741
273
3,017
For Information Contact: (403) 267-1141 / www.capp.ca
Newfoundland & Labrador

North Atlantic .................. 115
Come by Chance
Saint John
Irving....................300
Montral/Qubec
Suncor .....................137
Ultramar..................265
Superior
Calumet........... 45
Sarnia
Imperial............... 121
Nova ........................80
Shell.........................75
Suncor ....................85
Nanticoke
Imperial............... 112
WI
Saint John
Montral
TREA
L
NH
NY
MI
Flanagan
WV
Philadelphia
TN
IL
B
MO
R
MS
BIL
DE
VA
Ohio
BP-Husky (Toledo)...................... 160
PBF (Toledo) ................................. 170
Marathon (Canton) .......................78
Husky (Lima)................................. 160
Marathon (Catlettsburg) .......... 233
NC
Pipeline Tolls -Heavy Oil (US$ per barrel)

Hardisty to:
Chicago (Enbridge)
Cushing (Enbridge/Spearhead)
Cushing (Keystone)
Cushing (Keystone)
Wood River (Enbridge/Mustang/Capwood)
Wood River (Keystone)
Wood River (Express/Platte)
USGC (Enbridge/Spearhead/Seaway)
1.55*
1.90*
4.70**
3.75
4.40
1.05
4.00
5.00
6.15**
6.55*
5.45
5.35**
2.30*
8.00*
Notes 1) Assumed exchange rate = 1US$ / 1C$

2) Tolls rounded to nearest 5 cents
3) Tolls in effect July 1, 2012
SC
GA
Mississippi
Chevron(Pascagoula) 330
Alabama
Hunt (Tuscaloosa) ........ 72
Shell (Saraland) ............. 85
FL
Lake Charles
CITGO................................425
Phillips 66 ........................239
Valero................................250
New Jersey
Phillips 66 (Bayway).....238
PBF (Paulsboro) .............180
Delaware
PBF (Delaware City) .....190
2.70
2.90
3.95
3.55
4.60
6.15
7.05*
* 10-year committed toll

**20-year committed toll
arles
/Beaumont
.................. 365
.................. 325
.................. 310
.................. 174
NJ
Memphis
Valero...................195
El Dorado
Lion......................... 80
AL
MO
MD
WV
Wood River
WRB .....................................306
Robinson
Marathon...........................206
Mt Vernon
Countrymark ...................... 27
Pennsylvania
Phillips 66 (Trainer) *idled* ....... 185
Sunoco (Marcus Hook) *idled* 175
Sunoco (Philadelphia)................. 330
Warren
United ......... 70
ID
OH
MO
MA
CT RI
PA
Detroit
Marathon............106
IL
Halifax
Imperial............... 82
VT
Chicago
BP ............................. 413
ExxonMobil............ 250
PDV .......................... 167
ME
MON
Pipeline Tolls Light Oil (US$ per barrel)

Edmonton to
Burnaby (Trans Mountain)
Anacortes (Trans Mountain/Puget)
Sarnia (Enbridge)
Chicago (Enbridge)
Wood River (Enbridge/Mustang/Capwood)
USGC (Enbridge/Mustang/ExxonMobil)
USGC (Enbridge/Spearhead/Seaway)
Hardisty to
Guernsey (Express/Platte )
Wood River (Express/Platte)
Wood River (Keystone)
USGC (Express/Platte/MAP/ExxonMobil)
USEC to Sarnia (Portland/Montral/Enbridge)
St. James to Wood River (Capline/Capwood)
Mississippi River
ExxonMobil (Baton Rouge) ..... 503
Chalmette...................................... 192
Marathon (Garyville) ................. 490
Motiva (Convent)........................ 235
Motiva (Norco)............................. 220
Valero (Meraux) ........................... 135
Phillips 66 (Belle Chasse) ......... 247
Alon (Krotz Springs)......................83
Shell (St. Rose) *idled* .................55
Placid (Port Allen)..........................56
Major Existing Crude Oil Pipelines carrying

Canadian crude oil
Selected Other Crude Oil Pipelines
40
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 companies
produce more than 90 per cent of Canadas natural gas
and crude oil. CAPPs associate members provide a wide
range of services that support the upstream crude oil
and natural gas industry. Together CAPPs members and
associate members are an important part of a national
industry with revenues of about $100 billion-a-year.
CAPPs mission is to enhance the economic sustainability
of the Canadian upstream petroleum industry in a safe
and environmentally and socially responsible manner,
through constructive engagement and communication
with governments, the public and stakeholders in the
communities in which we operate.
Get in on the oil

sands discussion
Mobile Application
Upstream Dialogue:
The Facts on Oil Sands
Available for free download to Apple
and BlackBerry devices by searching
Oil Sands in the app stores.
Twitter
Facebook
@OilSandsToday
Oil Sands Today
Websites
www.oilsandstoday.ca www.capp.ca/upstreamdialogue
Calgary Office:
Ottawa Office:
St. Johns Office:
2100, 350 - 7 Avenue SW

Calgary, Alberta, Canada
T2P 3N9
1000, 275 Slater Street

Ottawa, Ontario, Canada
K1P 5H9
403, 235 Water Street

St. Johns, Newfoundland and Labrador
Canada A1C 1B6
Phone: 403-267-1100
Fax: 403-261-4622
Phone: 613-288-2126
Fax: 613-236-4280
Phone: 709-724-4200
Fax: 709-724-4225
www.capp.ca communications@capp.ca June 2012 2012-0004
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2012 Crude Oil CAPP Forecast, Markets & Pipeline Expansions

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Crude Oil

Forecast, Markets & Pipelines

CANADIAN ASSOCIATION OF PETROLEUM PRODUCERS

Canadian Crude Oil Production

The main driver for future growth continues to be oil sands

CAPPs 2012 outlook for western Canadian crude

Canadian Crude Oil Production

Canadian Oil Sands & Conventional Production

Oil Sands Growth

Crude Oil Forecast, Markets & Pipelines

Crude Oil Markets

Coast, western Canadian producers could supply at least

The demand for western Canadian crude oil in the U.S.

2011 Canada and U.S. Crude Oil Demand by Market Region

thousand barrels per day

PADD I - East Coast

U.S. - Alaska only

Source: EIA, Statistics Canada

CANADIAN ASSOCIATION OF PETROLEUM PRODUCERS

PADD III - Gulf Coast

[2011 total refinery demand]

A number of pipeline proposals to the Gulf Coast have

Crude Oil Pipelines and

Canadian & U.S. Crude Oil Pipelines - All Proposals

Alberta Clipper Expansion

Southern Access Expansion

Salt Lake City

Canadian and U.S. Oil Pipelines

Crude Oil Forecast, Markets & Pipelines

LIST OF FIGURES AND TABLES

Production and Supply Forecast Methodology

Market Demand Outlook Methodology

OIL PRODUCTION AND SUPPLY FORECAST

Canadian Crude Oil Production

Western Canadian Crude Oil Production

Conventional Crude Oil Production

Western Canadian Crude Oil Supply

Crude Oil Production and Supply Summary

CRUDE OIL MARKETS

PADD I (East Coast)

PADD III (Gulf Coast)

PADD V (West Coast)

CRUDE OIL PIPELINES

Existing Oil Pipelines Exiting Western Canada

Oil Pipelines to the U.S. Midwest

Oil Pipelines to the U.S. Gulf Coast

Oil Pipelines to the West Coast

An Alternative Mode of Transport: Rail

Projects to Transport North Dakota Production

4.10 Pipeline Summary

APPENDIX A: Acronyms, Abbreviations, Units and Conversion Factors

APPENDIX C: Crude Oil Pipelines and Refineries

CANADIAN ASSOCIATION OF PETROLEUM PRODUCERS

LIST OF FIGURES AND TABLES

Canadian Oil Sands & Conventional Production

Canadian & U.S. Crude Oil Pipelines - All Proposals

Canadian Crude Oil Production

Summary of Refinery Closures/Expansions in PADD I

Crude Oil Forecast, Markets & Pipelines