3 things to know about refineries FAQ

Oct 02, 2015   | Categories: Canadian Fuels Association, Economy, Energy, Fuels, Refineries
Oil refining in Canada makes a significant economic contribution to our gross domestic product (GDP). Fifteen refineries make the fuels that keep all of us moving, every day. In today’s blog, we answer three frequently asked questions about refineries.


How do refineries fit into the Canadian economy?

Refineries are an important part of Canada’s petroleum value chain – the essential step between crude oil and the high-performance fuels and refined products that keep us on the move. Refineries have three main impacts on Canada’s economy (PDF):

  1. fuelling transportation
  2. high-paying jobs
  3. a big influence on GDP

With our huge landmass, dispersed population and reliance on trade, Canadians are among the highest per capita consumers of transportation fuels in the world.

Every day, we pump around 114 million litres of gasoline and 49 million litres of diesel to fuel our cars and trucks. Members of the Canadian Fuels Association produce fuels that supply 95 per cent of Canada’s transportation energy needs. Not only do we power the cars Canadians drive every day, we also keep ships, trains, planes, trucks and buses on the move. A large percentage of this fleet takes Canadian goods to market, within the country and internationally.

Canada’s refining sector operates 24/7, produces about two million barrels of fuel per day and employs more than 18,000 skilled workers, who earn 70 per cent more on average than the overall manufacturing sector. Not only that, 15,000 people work in the fuels distribution sector, while fuel retailers employ another 78,500 people at retail and commercial sites across Canada.

The refineries contribute nearly $5.6 billion to Canada’s GDP annually, with investments in structures, machinery and equipment of over $2.2 billion each year on average over the last decade. Beyond refineries, 70 fuel distribution terminals get fuels to the right places in the right amounts, and 12,000 retail and commercial outlets sell those fuels directly to the public.

Why are there fewer refineries today than there were a few decades ago?

In the first half of the 20th century, small refineries were common. Over time, as the formulation of fuels has grown more complex, and as Canada has gained exposure to an increasingly competitive global market, they’ve been replaced by larger, high-tech and high-performance refineries.

Today, a much smaller number of refineries – 15 — process crude oil into products like gasoline, diesel and other fuels, down from 40 in 1970.

This change has been largely due to global competition: Gasoline, diesel and aviation fuels are globally traded. As the world’s refining capacity has grown, Canadian refiners have responded by increasing the capacity and efficiency – and therefore competitiveness – of refineries.

Even though there are fewer refineries, their collective output has remained relatively stable since the early 1980s, around two million barrels (PDF) per day.

Why don’t we refine more oil in Canada?

Three main reasons explain why we don’t refine all our oil in Canada.

  1. Canada already refines more oil than what is necessary to meet domestic demand. Canada is a net exporter of refined products and the United States, our closest and biggest export market, also has surplus refining capacity, so it’s hard to see an expanded market there. When you factor in flat to declining demand for petroleum products in North America, coupled with rapidly growing refining capacity in Asia, where demand is on the rise, the investment case for a new plant or expanding refinery capacity in Canada is challenging.
  2. Many Canadian refineries are not currently capable of processing bitumen from the oil sands. While they might look similar from the outside, in fact, all refineries are quite different, with varying abilities to process different kinds of crude oil. The United States, on the other hand, already has significant refining capacity for heavier grades of crude oil.
  3. Refineries are extremely capital-intensive, which is particularly true for high-complexity refineries that are equipped to process heavy crude oil such as what is extracted from the oil sands. The cost of a new project can range from $10 billion to $15 billion, and it takes many years for the refinery to get return on its capital investment.

Want to know more about refineries? Our and reports provide more information on some of the top issues on the minds of many Canadians. You can also read our blogs on which fuels we refine, how refineries are reducing greenhouse gas emissions and how Canada is maintaining a strong refining sector.

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