I Want You to (Refine) Me, Part 3 - Eastern Canadian Refineries Shift To More Domestic Slates

Many countries like to talk about energy independence, but Canada is one of the few to come close to that elusive goal. For many years, Western Canada has produced more than enough crude oil to satisfy the demand of refineries in the region. More recently, a combination of rising Western Canadian oil production, and new and reworked pipelines, has enabled many of Canada’s eastern refineries to increase their intake of Western Canadian barrels. In the few remaining cases where they can’t, imported barrels from the U.S. have filled the gap, leaving crude imports from overseas accounting for just 1% of the market. Not surprisingly, Canada is also a net exporter of refined products, with refiners in Western Canada, and especially Atlantic Canada, producing far more than the country’s demand. Today, we conclude our series on Canada’s refining sector with a look at its growing reliance on Western Canadian crude oil and its ability to meet most of Canada’s need for gasoline and distillates.

Long established as an oil-producing region, Western Canada has also become a major producer of refined products. With enough oil available to serve the nine refineries in the region, there is no need to import crude oil, making Western Canada one of the few parts of the world where the refineries are completely self-sufficient regarding oil supply. The region is also noteworthy in that, like the U.S. Gulf Coast, its refining capacity and gasoline, diesel, and jet fuel output is vastly greater than its own demand, resulting in a large surplus of refined fuels that can be sent across Canada and exported to the U.S. Today, we look westward, focusing on the nine refineries located in the Canadian West.

The U.S. and Canada make quite a team. Friends for most of the past century and a half — and best buddies since World War II — the two countries have highly integrated economies, especially on the energy front. Large volumes of crude oil, natural gas, NGLs, and refined products flow across the U.S.-Canadian border, and a long list of producers, midstreamers, and refiners are active in both nations. One more thing: since the mid-2000s, the development of U.S. shale and the Canadian oil sands in particular has enabled refiners in both countries to significantly reduce their dependence on overseas oil — a big victory for North American energy independence. However, due to its smaller population and economy, Canada typically gets far less attention than its southern neighbor, so in today’s blog we try to right that wrong by discussing highlights from a new, freshly updated Drill Down Report on Canada’s refining sector.