Taking action in support of our vital natural resource sector

Key Points

• Canada is home to 18 refineries with a total combined refining capacity of nearly 2 million barrels of oil per day

• Eastern refineries rely on foreign nations with lower environmental, social, and governance (ESG) scores for some, if not all feedstock supply

• Refineries employ tens of thousands of Canadians, generate billions in economic activity and play an integral role in providing us with the petroleum products we rely on every day

Refineries play an incredibly important role in the lives of Canadians across the country. That’s the truth, but how so you might ask? Why should you care about refineries in Canada to begin with?

For starters, these facilities refine oil into several components which are then used by various industries to create the products we rely on and use every day. Gasoline, jet fuel, plastics, cosmetics, textiles, electronics, sporting goods and medical supplies are just a few of those products.

That list goes on, and on, quite literally, with thousands upon thousands of items, some of which you may have not had any clue were derived using oil. To grasp a nearly immediate appreciation for refineries, just think about going for a year in life without all the listed products above. I think we can all agree our common reaction to that idea is a quick “thanks, but no thanks!”

Hence, the importance of refineries to our every day lives cannot be overstated and it’s crucial that we address existing misconceptions some people have such as the idea that there are no refineries in Canada, or that we sell all of our oil at a discount. By now you at least know that the first of these statements is not true, and if you aren’t sure about the second, just hold tight.

Below we’ve compiled a list of facts and questions (with answers) which should help you better understand just how important refineries are to Canadians, and why we should support the men and women across the country who work in this critical industry. We encourage you to download and share any of our infographics with your friends and family!

How Many Refineries Are in Canada?

Canada is home to 18 refineries: 5 in Alberta, 5 in Ontario, 2 in British Columbia, 2 in Saskatchewan, 2 in Quebec, 1 in New Brunswick, and 1 in Newfoundland and Labrador. Together they have a total refining capacity of nearly 2 million barrels of oil a day.

Canada’s net production of petroleum products totalled 2.5 million barrels of oil per day in 2019, more than a quarter of which was exported. Domestic sales of petroleum products accounted for 1.8 million barrels per day that same year, with consumption by category as follows:

• 44% - Motor gasoline
• 28% - Diesel
• 9% - Aviaton Turbo Fuel, Kerosene Type
• 5% - Still Gas
• 3% - Residual Fuel Oil
• 10% - Other

Where Do Canadian Refineries Source Their Oil From?

Refineries in Canada get most of their input oil from domestic production. In 2019, for example, approximately 1.72 million barrels a day of crude oil was shipped to Canadian refineries, a majority of which was from domestic sources.

Alberta - home to the world’s third largest oil reserves - has all the feedstock supply it needs for provincial refineries, however these facilities still import lighter grade oils from the U.S. to use as a diluent which when mixed with bitumen allows it to flow in pipelines or be shipped in unheated railcars. Producers in Alberta ship oil on the Trans Mountain pipeline to refineries in B.C., a province which also gets some feedstock from regional sources.

Ontario refineries source most of their feedstock from Western Canada but also some from the United States. The province spent more than $520 million on U.S. crude oil imports in 2019.

Western Canadian Refineries Map - CER

Eastern Canadian Refineries Map - CER

Refineries in Quebec are much more reliant on foreign imports than their counterparts in Ontario, despite relying on Western Canadian sources for feedstock more than ever before with the reversal of Line 9 and additional rail capacity built in recent years. Quebec spent more than $5.5 billion on oil imports in 2019, all from the U.S.

Atlantic Canada is home to just two refineries. Irving in New Brunswick is by far the largest refinery in Canada with a capacity of 320,000 barrels a day. Irving relies heavily on Saudi Arabia and the United States for oil supply, although in late 2020 the refinery did receive one shipment of Canadian oil via tanker from Vancouver which travelled nearly 12,000 kilometres and through the Panama Canal to reach the east coast.

The North Atlantic Refinery in Newfoundland and Labrador is situated in Come By Chance, a municipality near the provincial capital of St. John’s. In recent years, this refinery has relied entirely on oil tankers from the U.S. for its feedstock supply.

How Much Foreign Oil Does Canada Import?

Refineries in New Brunswick, Quebec, Ontario and Newfoundland and Labrador are largely responsible for the tens of billions in foreign oil imports into Canada each year. In 2019, for example, Canada imported $18.9 billion of oil mostly from the U.S. and Saudi Arabia, almost all of which went to these four provinces.

Saskatchewan and Alberta also import lighter oils from the U.S. to use as a diluent in heavy crudes before shipping out via pipeline. Bitumen mined from heavy oil operations is too viscous (thick) to be pumped to buyers in North America, therefore diluents are required to allow it to flow more easily within pipelines such as Keystone, Trans Mountain and Enbridge’s Mainline.

A recent study conducted by the Canadian Energy Research Institute (CERI) found that if refineries out east replaced all foreign oil with Canadian oil, it would reduce emissions by 6.2 per cent and save them tens of millions of dollars. All Canadians should be able to support such an initiative that would benefit not only our national economy, but the global environment as well!

• How Much Oil Does Canada Import? Too Much!

Where Does Canadian Oil Go?

Canadian Crude Oil Supply & Disposition Map (2016) - CER

In 2019, 98 per cent of Canada’s oil exports went to the United States. A majority of those exports – at nearly 2 million barrels per day – go to PADD II in the U.S. Midwest and are primarily transported by the Keystone pipeline system, Enbridge’s Main Line, and the Express Pipeline.

Nearly 390,000 barrels a day make their way to PADD III (U.S. Gulf Coast) by railcar, the Keystone pipeline, and Enbridge’s Mainline via the Mid-Valley pipeline system. If Keystone XL does get built, PADD III will be able to source more oil from Canada and rely less on supply from foreign nations who rank much lower on environmental, social, and governance metrics.

Together, PADD II and PADD III have a total of 84 refineries which are able to process nearly 14 million barrels of oil a day. Heavy oil is a preferred feedstock for many U.S. Midwest and Gulf Coast refiners who have invested billions of dollars over the past several years to process additional volumes of heavy crudes.

PADD IV (Rocky Mountains) and V (West Coast) are also receivers of Canadian oil but aren’t able to source as large of quantities as other regions of the U.S. due to limited transportation capacity. PADD IV does currently get all of its oil imports from Canada (about half of required supply), but has limited capacity for expanding those import volumes. Trans Mountain and rail are the primary export conduits to these regions of the U.S.

Canadian oil is also shipped to other international buyers through the Port of Vancouver and U.S. Gulf Coast. Over the past few years, more than 34 million barrels were shipped to buyers in China, India, South Korea, and Europe. Canada’s offshore oil production is shipped to buyers in Eastern Canada, the U.S., Asia and sometimes Europe.

• Is There Global Demand for Canadian Oil in 2021 and Beyond?

Is Canadian Oil Sold at a Discount?

A common misconception is that Canada sells all of its oil at a discount compared to the West Texas Intermediate (WTI) benchmark. That’s just not true.

Approximately 35 per cent of bitumen production in Canada is upgraded into a light/sweet synthetic crude (SCO) before being sold to downstream buyers. The remaining 65 per cent is diluted usually with natural gas condensate and then sold as a heavy / sour blend. Western Canadian Select (WCS) is the most popular heavy / sour blend in Canada and does currently sell at a premium to WTI for a number of reasons.

The quality of SCO is much higher than diluted bitumen (WCS) and is even marginally better than some conventional light / sweet blends. As a result, SCO blends typically sell at a price which is much closer to par with the WTI benchmark. Take for example the following price charts:

Oil Prices January 13th, 2021 – oilprice.com

What Would Happen if Canadian Refineries Shutdown?

Businesses and industries who rely on domestic refinery production would feel the ripple effect immediately. Direct and indirect job losses would ensue and tens of thousands of Canadians would lose their means to earn a living and provide for their families. Tens of billions of dollars in economic activity would also be lost.

All of a sudden, the oil products mentioned above – gasoline, jet fuel, plastics, cosmetics, textiles, electronics, sporting goods, medical supplies, etc. – would become more expensive due to increased import and supply chain costs. Governments would have less revenues to spend on healthcare, education and social programs (to name just a few examples).

Come By Chance, NL

Take for example the Come by Chance refinery which shut down in March of 2020 due to the COVID-19 pandemic (but has since been bought by an American refiner). According to analysts, a total of 1,400 jobs were on the line with the potential for economic fallout to spread to other sectors through lost retail sales, income taxes, sales taxes, public revenues and so on and so forth.

The lack of access to domestically refined fuels would also cause a need to import those products from elsewhere. The economic consequences of losing GDP output from refineries combined with the increased costs of importing petroleum products would take a serious toll on the wallets of all Newfoundland and Labradorians.

Sarnia, ON

Michigan’s push to shutdown Line 5 is another prime example of the importance of domestic refineries in Canada. The mayor of Sarnia, a city in southern Ontario known as a petrochemical and refining hub, says there could be at least 5,000 job losses if Michigan is successful at shutting down the pipeline.

According to the Canadian Fuels Association, significant shortages of feedstock for refineries in Ontario and Quebec would ensue. No viable alternatives to replace the lost supply of light oil and natural gas liquids that heat homes and businesses, fuel vehicles and power industry would be immediately available either.

Shutting down Line 5 would create both economic and environmental consequences as these refineries would be required to source more oil via rail and truck – methods of transport which have been shown to be much more GHG-intensive and costly to do.

What are the Economic Benefits of Canada’s Refining Industry?

Updated ... Nov Cdn energy trade balance (CAD):
• Exports: $6.9B +$380M
• Imports: $1.6B +$40M
Data from @StatCan_eng: https://t.co/9MoiYKL26V pic.twitter.com/iB7VUHpl5O

— Oil Sands Magazine (@OilSandsMag) January 14, 2021

Here are some of the latest figures from the Canadian Fuels Association regarding the economic contribution of the refining industry:

> $6.7 billion – added to the economy by the refining sector Canada-wide

> $320 million – amount of generated provincial and federal tax revenues

> 18,000 – number of people employed directly or indirectly by the refining industry

> $300,000 – value added to the economy for each worker employed by the sector, third place behind oil and gas extraction and mining and much higher than the national average of $77,000

> 1,600 – number of suppliers in the supply chain supported by the refining industry

> $550 million – value in feedstock for the chemical, plastic and rubber industries accounted for by refineries in Canada

Join Us Today!

“Our family is a proud supporter of Canadian oil and gas.

We teach our children how important this industry is and how #Canada is a world leader in #environmental protection.” - Jodihttps://t.co/XhmJgP7ZPB pic.twitter.com/uvqYUYBgAb

— Oil Sands Action (@OilsandsAction) December 10, 2020

Canadian refineries provide us with the components needed to make many of the day-to-day products we all rely on. Smartphones, computers, televisions, gasoline, motor vehicles, rubbers, plastics, refrigerators, heart valves, prescriptions, contact lenses, shampoo, toothpaste and hearing aids are just the tip of the iceberg of products derived using oil. All Canadians should appreciate and be grateful for the role that refineries have in our contemporary lifestyle and support the men and women who work hard in this industry everyday to make that happen!

If you liked this article, we invite you to join us and hundreds of thousands of fellow Canadians on Twitter, Instagram and Facebook to learn more about the positive influence natural resources have on our daily lives and how we should be a global supplier of choice for oil, natural gas, minerals, metals, forest products, agricultural products, petroleum products and everything in between. We hope to see you there!

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