Canadian Manufacturing

Eastern refineries could save millions by buying more Canadian oil

A Canadian Energy Research Institute report finds better east-west collaboration could reduce reliance on foreign oil while cutting costs and emissions


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CALGARY—Refineries in central and Atlantic Canada could save money on oil costs and produce fewer global greenhouse gas emissions if they bought more Canadian crude oil, according to a study by the Canadian Energy Research Institute released Jan. 24.

The study finds that substituting Canadian oil wherever possible using space on existing pipelines, railcars and ocean tankers would result in a 47 per cent reduction in foreign oil imports into Eastern Canada, saving the refineries $210 million per year and the equivalent of more than two million tonnes of carbon dioxide, or about 5.7 per cent.

It adds that expanding the transportation system through a new pipeline equal to TransCanada Corp.’s cancelled Energy East would allow the eight refineries in Ontario, Quebec, New Brunswick and Newfoundland and Labrador to replace 57 per cent of imported oil at a savings of $317 million per year, while still cutting GHGs by two million tonnes.

“I think there’s an opportunity for the energy sector to do more work together—east to west—to benefit Canada as a whole,” said CERI CEO Allan Fogwill following a presentation in Calgary.

“There’s a social benefit in keeping it in the family and an economic benefit for eastern refineries (along with) an environmental benefit internationally.”

He said the report, based on 2016 numbers gathered mainly without the refiners’ co-operation, doesn’t answer the question of why they buy from foreign suppliers when it would make sense to buy from within Canada.

But he said he hopes its conclusions lead to a discussion about where the refineries source their oil.

Peter Boag, CEO of the Canadian Fuels Association, which represents refiners, said operators weigh many factors to maximize the economic efficiency of their refineries, including looking at the composition of different types of crude oil.

“Crude cost, the configuration and complexity of the refinery, and anticipated product demand are all factors that influence crude oil choice,” he said.

He added that providing eastern Canadian refineries with better pipeline access to western Canadian crude would provide further flexibility in crude selection.

The CERI study notes that the eastern refineries process just over one million barrels per day, of which 56 per cent comes from foreign countries led by the United States at 260,000 barrels of oil per day.

About 39 per cent comes from Western Canada and five per cent is from eastern Canadian sources such as the offshore oilfields of Newfoundland and Labrador.


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