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CALGARY, Alberta, Nov 13 (Reuters) - Canadian crude oil imports have fallen by an average 5 percent a year since 2010 and look set to drop further as cheaper Western Canadian crude displaces imports from overseas, the industry regulator, the National Energy Board, said on Thursday.
In the first eight months of 2014, crude oil imports averaged 634,000 barrel per day, compared with more than 800,000 barrels per day in 2010.
Canada has the world's third-largest crude reserves behind Saudi Arabia and Venezuela, most of which are located in the oil sands in northern Alberta. The country still imports crude oil, however, because of limited transport infrastructure connecting Eastern Canadian refineries with oilfields in Western Canada.
But shipping capacity is increasing as Enbridge Inc expands its Mainline pipeline system and more crude is loaded onto rail cars.
"With improvements to infrastructure and the recent commissioning of rail offloading facilities at Eastern Canadian refineries, the downward trend in oil imports is likely to continue in the near future," the NEB said.
The closure of Shell Canada's Montreal East refinery in Quebec, and Imperial Oil Ltd's refinery in Dartmouth, Nova Scotia, has also reduced demand for imported crude.
NEB data showed that the U.S. shale boom has resulted in offshore crude imports being replaced by cheaper light grades from North Dakota, Texas, New Mexico and Colorado.
In 2013 the United States displaced Algeria as the main source of Canadian crude imports, and now accounts for nearly half of all Canada's imports. (Reporting by Nia Williams; Editing by Peter Galloway)