The importance of Canadian crude oil to refineries in the U.S.

From the Canadian Energy Centre

By Ven Venkatachalam

Oil from Canada supplies more than 23% of U.S. refinery feedstock, helping bolster North American energy security

Introduction

The refining industry¹ in the United States is one of the world’s largest, with capacity to process 18 million barrels of oil per day. Canada plays a crucial role by supplying more than one-fifth of the crude oil refined in the U.S.

The U.S.–Canada cross-border crude oil trade is essential to North American energy security. Canadian crude oil exports and the U.S. refinery industry are highly integrated. In recent years, Canada’s crude oil sector has been making a growing contribution to the operations of U.S. oil refineries.

U.S. refineries are converting Canadian crude oil, including heavy oil,² into products that North Americans use daily, such as transportation fuels (gasoline and diesel), chemicals, and plastics. Although the U.S. has increased its production of oil in recent years, U.S. refineries still rely on Canadian heavy crude oil to meet their feedstock (i.e., the raw materials and intermediate materials processed at refineries to produce finished petroleum products, otherwise known as refinery inputs) specifications.

In this CEC Fact Sheet, we examine several economic indicators that illustrate the importance of Canadian crude oil, particularly heavy crude, to U.S. refineries. This fact sheet also analyzes the refining industry’s direct and indirect economic impacts on the U.S. economy.

1. NAICS Code 324110 (Petroleum Refineries): This industry comprises
establishments primarily engaged in refining crude petroleum into refined petroleum.

2. A majority of the crude oil imported by the U.S. from Canada is heavy crude (between 15-25 API gravity). API gravity is a commonly used index for measuring the density of crude oil or refined products. Crude oil typically has an API between 15 and 45 degrees. The higher the API, the lighter the crude; the lower the API, the heavier the crude.

Imports of Canadian crude oil to refineries in the United States

The physical characteristics of crude oil determine how it is processed in refineries. Generally, heavy crude oil offers higher yields of low-value products (coke and asphalt) and lower yields of high-value products (gasoline). Heavy crude oil requires more complicated processing than lighter crude if it is to produce high-value products.

Overall, Canadian crude oil imports to U.S. refineries for processing have risen from over 1.3 million barrels per day in 2000 to just under 3.8 million barrels per day in 2022, an increase of 181 per cent (see Figure 1). The per cent of Canadian crude in U.S. refinery feedstock has steadily risen from nearly 9 per cent in 2000 to over 23 per cent by the end of 2022.

Source: U.S. Energy Information Administration (2024a, 2024b, 2024c)

The U.S. refining industry

Since the first U.S. refinery began operating in 1861, the refining industry has been one of the largest manufacturing sectors in the United States. There are currently 129 petroleum refineries across the five U.S. PADDS³ (125 operating refineries and five refineries that are idle but not permanently shut down) (see Table 1).

3. The United States is divided into five Petroleum Administration for Defense 
Districts (PADDs) for the allocation of fuels derived from petroleum products, 
including gasoline and diesel fuel. The geographic breakdown of PADDs enables 
U.S. policymakers to better analyze petroleum supplies in the country

Source: U.S. Energy Information Administration (2023)

Total refining capacity in the United States has risen from 16.2 million barrels of crude processed in 2000 to nearly 17.8 million barrels per day in 2022, an increase of over 8 per cent (see Figure 2). The refining utilization⁴ has also recovered, growing from 79 per cent during COVID-19 to a high of 91 per cent in 2022.

Source: U.S. Energy Information Administration (2024b)

The impact of the U.S. refining industry on the American economy

The estimated direct and indirect economic impacts of the U.S. refining industry in 2024 include 1.6 million direct and indirect jobs, $206 billion in labour income, $577 billion in direct and indirect value-added, and $1.6 trillion in what is known as “outputs,” i.e., the value of goods and services produced by the industry (see Table 2).⁵

4. Capacity measures how much crude oil refineries are able to process. 
Utilization measures how much is actually being processed (as a percentage of 
maximum capacity). 
5. These projected amounts are in nominal U.S. dollars

Source: Author’s calculations using the IMPLAN modelling system. Details may not add up to totals due to rounding

Projected spending by the U.S. refining industry, 2024-2030

Figure 3 illustrates the industry’s projected annual spending between 2024 and 2030. Industry spending is expected to be US$58 billion in 2024, rising to US$62 billion by 2030. This includes operating expenditures (OPEX) and capital expenditures (CAPEX). Cumulatively, between 2024 and 2030, the industry is projected to spend over US$428 billion.⁶

6. These projected amounts are in nominal U.S. dollars and are calculated using 
the Rystad Energy UCube.

Source: Derived from Rystad Energy (2024), Service Market Solution

Conclusion

American refineries are critical to the country’s strategic interest. U.S. refineries are projected to spend more than $428 billion in the next seven years on operating and capital expenditures. The industries support millions of jobs. Canadian crude is an important part of the equation. It supplies more than 23 per cent of U.S. refinery feedstock.

Not only are Canadian crude oil supplies critical for the U.S. refining industry, but they are key to North American energy security. Limiting access to Canadian crude oil for U.S. refineries would require increased U.S. imports from less-free countries, which in turn would risk North American energy security.

References

Rystad Energy (2024), Service Market Solution <http://tinyurl.com/28fmv6a6>; U.S. Energy Information Administration (Undated), Oil and Petroleum Products Explained: Refining Crude Oil <http://tinyurl.com/3b2uwrxh>; U.S. Energy Information Administration (2023), Refinery Capacity Report <http://tinyurl.com/2s4ybz9z>; U.S. Energy Information Administration (2024a), Petroleum and Other Liquids: PADD District Imports by Country of Origin <http://tinyurl.com/58mzvtts>; U.S. Energy Information Administration (2024b), Petroleum and Other Liquids: Refinery Utilization and Capacity <http://tinyurl.com/3wx957k4>; U.S. Energy Information Administration (2024c), Petroleum and Other Liquids: U.S. Imports by Country of Origin <http://tinyurl.com/bdcsbwhn>; U.S. Environmental Protection Agency (Undated), Appendix A — Overview of Petroleum Refining, Proposed Clean Fuels Refinery DEIS <http://tinyurl.com/dveyzc8k>.

Related Topics:#CanadianCrudeOil #CanadianEnergyCentre #NorthAmericanEnergySecurity #USRefineries #VenVenkatachalam canadianoil

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Cross-Canada economic benefits of the proposed Northern Gateway Pipeline project

Published on June 15, 2025

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From the Canadian Energy Centre

Billions in government revenue and thousands of jobs across provinces

Announced in 2006, the Northern Gateway project would have built twin pipelines between Bruderheim, Alta. and a marine terminal at Kitimat, B.C.

One pipeline would export 525,000 barrels per day of heavy oil from Alberta to tidewater markets. The other would import 193,000 barrels per day of condensate to Alberta to dilute heavy oil for pipeline transportation.

The project would have generated significant economic benefits across Canada.

The following projections are drawn from the report Public Interest Benefits of the Northern Gateway Project (Wright Mansell Research Ltd., July 2012), which was submitted as reply evidence during the regulatory process.

Financial figures have been adjusted to 2025 dollars using the Bank of Canada’s Inflation Calculator, with $1.00 in 2012 equivalent to $1.34 in 2025.

Total Government Revenue by Region

Between 2019 and 2048, a period encompassing both construction and operations, the Northern Gateway project was projected to generate the following total government revenues by region (direct, indirect and induced):

British Columbia

Provincial government revenue: $11.5 billion
Federal government revenue: $8.9 billion
Total: $20.4 billion

Alberta

Provincial government revenue: $49.4 billion
Federal government revenue: $41.5 billion
Total: $90.9 billion

Ontario

Provincial government revenue: $1.7 billion
Federal government revenue: $2.7 billion
Total: $4.4 billion

Quebec

Provincial government revenue: $746 million
Federal government revenue: $541 million
Total: $1.29 billion

Saskatchewan

Provincial government revenue: $6.9 billion
Federal government revenue: $4.4 billion
Total: $11.3 billion

Other

Provincial government revenue: $1.9 billion
Federal government revenue: $1.4 billion
Total: $3.3 billion

Canada

Provincial government revenue: $72.1 billion
Federal government revenue: $59.4 billion
Total: $131.7 billion

Annual Government Revenue by Region

Over the period 2019 and 2048, the Northern Gateway project was projected to generate the following annual government revenues by region (direct, indirect and induced):

British Columbia

Provincial government revenue: $340 million
Federal government revenue: $261 million
Total: $601 million per year

Alberta

Provincial government revenue: $1.5 billion
Federal government revenue: $1.2 billion
Total: $2.7 billion per year

Ontario

Provincial government revenue: $51 million
Federal government revenue: $79 million
Total: $130 million per year

Quebec

Provincial government revenue: $21 million
Federal government revenue: $16 million
Total: $37 million per year

Saskatchewan

Provincial government revenue: $204 million
Federal government revenue: $129 million
Total: $333 million per year

Other

Provincial government revenue: $58 million
Federal government revenue: $40 million
Total: $98 million per year

Canada

Provincial government revenue: $2.1 billion
Federal government revenue: $1.7 billion
Total: $3.8 billion per year

Employment by Region

Over the period 2019 to 2048, the Northern Gateway Pipeline was projected to generate the following direct, indirect and induced full-time equivalent (FTE) jobs by region:

British Columbia

Annual average: 7,736
Total over the period: 224,344

Alberta

Annual average: 11,798
Total over the period: 342,142

Ontario

Annual average: 3,061
Total over the period: 88,769

Quebec

Annual average: 1,003
Total over the period: 29,087

Saskatchewan

Annual average: 2,127
Total over the period: 61,683

Other

Annual average: 953
Total over the period: 27,637

Canada

Annual average: 26,678
Total over the period: 773,662

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Natural gas pipeline ownership spreads across 36 First Nations in B.C.

Published on June 14, 2025

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Chief David Jimmie is president of Stonlasec8 and Chief of Squiala First Nation in B.C. He also chairs the Western Indigenous Pipeline Group. Photo courtesy Western Indigenous Pipeline Group

From the Canadian Energy Centre

Stonlasec8 agreement is Canada’s first federal Indigenous loan guarantee

The first federally backed Indigenous loan guarantee paves the way for increased prosperity for 36 First Nations communities in British Columbia.

In May, Canada Development Investment Corporation (CDEV) announced a $400 million backstop for the consortium to jointly purchase 12.5 per cent ownership of Enbridge’s Westcoast natural gas pipeline system for $712 million.

In the works for two years, the deal redefines long-standing relationships around a pipeline that has been in operation for generations.

“For 65 years, there’s never been an opportunity or a conversation about participating in an asset that’s come through the territory,” said Chief David Jimmie of the Squiala First Nation near Vancouver, B.C.

“We now have an opportunity to have our Nation’s voices heard directly when we have concerns and our partners are willing to listen.”

Jimmie chairs the Stonlasec8 Indigenous Alliance, which represents the communities buying into the Enbridge system.

The name Stonlasec8 reflects the different regions represented in the agreement, he said.

The Westcoast pipeline stretches more than 2,900 kilometres from northeast B.C. near the Alberta border to the Canada-U.S. border near Bellingham, Wash., running through the middle of the province.

It delivers up to 3.6 billion cubic feet per day of natural gas throughout B.C. and the Lower Mainland, Alberta and the U.S. Pacific Northwest.

“While we see the benefits back to communities, we are still reminded of our responsibility to the land, air and water so it is important to think of reinvestment opportunities in alternative energy sources and how we can offset the carbon footprint,” Jimmie said.

He also chairs the Western Indigenous Pipeline Group (WIPG), a coalition of First Nations communities working in partnership with Pembina Pipeline to secure an ownership stake in the newly expanded Trans Mountain pipeline system.

There is overlap between the communities in the two groups, he said.

CDEV vice-president Sébastien Labelle said provincial models such as the Alberta Indigenous Opportunities Corporation (AIOC) and Ontario’s Indigenous Opportunities Financing Program helped bring the federal government’s version of the loan guarantee to life.

“It’s not a new idea. Alberta started it before us, and Ontario,” Labelle said.

“We hired some of the same advisors AIOC hired because we want to make sure we are aligned with the market. We didn’t want to start something completely new.”

Broadly, Jimmie said the Stonlasec8 agreement will provide sustained funding for investments like housing, infrastructure, environmental stewardship and cultural preservation. But it’s up to the individual communities how to spend the ongoing proceeds.

The long-term cash injections from owning equity stakes of major projects can provide benefits that traditional funding agreements with the federal government do not, he said.

Labelle said the goal is to ensure Indigenous communities benefit from projects on their traditional territories.

“There’s a lot of intangible, indirect things that I think are hugely important from an economic perspective,” he said.

“You are improving the relationship with pipeline companies, you are improving social license to do projects like this.”

Jimmie stressed the impact the collaborative atmosphere of the negotiations had on the success of the Stonlasec8 agreement.

“It takes true collaboration to reach a successful partnership, which doesn’t always happen. And from the Nation representation, the sophistication of the group was one of the best I’ve ever worked with.”