Rapid development of liquids-rich shale gas in the US reduced demand for Canadian natural gas
The United States is a key market for energy producers from Canada, but the degree of US reliance varies, according to a National Energy Board press release.
In 2016, 79 per cent of crude oil production was exported to the US – the highest percentage in 10 years.
Most natural gas production is also sent south of the border, although this share dropped from 63 per cent in 2007 to 55 per cent in 2016.
For natural gas liquids (NGLs), exports to the US have fluctuated over the last decade, but typically accounted for about half of Canadian production.
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Finally, the share of Canadian electricity generation exported to the US is the smallest of all commodity types, but grew from 8 per cent in 2007 to 11 per cent in 2016.
The vast majority of all Canadian energy exports are destined for the US. No other international market has accounted for more than 1.1 per cent of Canadian exports of any energy commodity since 2007.
The growing share of Canadian crude oil production exported to the US is due to several factors.
Canadian oil production has been growing strongly while demand has grown at a much slower pace.
This has resulted in overall crude exports growing significantly from 2007 to 2016.
Further, US refineries in the Midwest and Gulf Coast have reconfigured their facilities to process increasing Canadian production of heavier crudes.
For natural gas, the rapid growth in shale gas production commencing about a decade ago increased US domestic production and decreased the need for imports to meet US demand, especially in the US northeast.
Similarly, rapid development of liquids-rich shale gas in the US reduced demand for NGLs.
As a result, the percentage ofnatural gas and NGL production exported to the US has declined over the last decade.
The percentage of generated electricity being exported to the US increased slightly in the last 10 years in part due to slow growth in Canadian demand.
In addition, sales of electricity to the US rose to satisfy US state and federal policies to increase electricity consumption from renewable sources.
However, electricity remains by far the most domestically-oriented energy sector within Canada.