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

Up Next

Online Harms Act threatens free expression in Canada

Don't Miss

Canada’s struggling private sector—a tale of two cities

Todayville

Todayville is a digital media and technology company. We profile unique stories and events in our community. Register and promote your community event for free.

Follow Author

Net zero’s cost-benefit ratio is CRAZY high

Media / 8 hours ago

CBC retracts false claims about residential schools after accusing Rebel News of ‘misinformation’

Business / 8 hours ago

‘Great Reset’ champion Klaus Schwab resigns from WEF

Canadian Energy Centre

First Nations in Manitoba pushing for LNG exports from Hudson’s Bay

Published on April 18, 2025

Todayville

From the Canadian Energy Centre

By Will Gibson

NeeStaNan project would use port location selected by Canadian government more than 100 years ago

Building a port on Hudson’s Bay to ship natural resources harvested across Western Canada to the world has been a long-held dream of Canadian politicians, starting with Sir Wilfred Laurier.

Since 1931, a small deepwater port has operated at Churchill, Manitoba, primarily shipping grain but more recently expanding handling of critical minerals and fertilizers.

A group of 11 First Nations in Manitoba plans to build an additional industrial terminal nearby at Port Nelson to ship liquefied natural gas (LNG) to Europe and potash to Brazil.

Courtesy NeeStaNan

Robyn Lore, a director with project backer NeeStaNan, which is Cree for “all of us,” said it makes more sense to ship Canadian LNG to Europe from an Arctic port than it does to send Canadian natural gas all the way to the U.S. Gulf Coast to be exported as LNG to the same place – which is happening today.

“There is absolutely a business case for sending our LNG directly to European markets rather than sending our natural gas down to the Gulf Coast and having them liquefy it and ship it over,” Lore said. “It’s in Canada’s interest to do this.”

Over 100 years ago, the Port Nelson location at the south end of Hudson’s Bay on the Nelson River was the first to be considered for a Canadian Arctic port.

In 1912, a Port Nelson project was selected to proceed rather than a port at Churchill, about 280 kilometres north.

The Port Nelson site was earmarked by federal government engineers as the most cost-effective location for a terminal to ship Canadian resources overseas.

Construction started but was marred by building challenges due to violent winter storms that beached supply ships and badly damaged the dredge used to deepen the waters around the port.

By 1918, the project was abandoned.

In the 1920s, Prime Minister William Lyon MacKenzie King chose Churchill as the new location for a port on Hudson’s Bay, where it was built and continues to operate today between late July and early November when it is not iced in.

Lore sees using modern technology at Port Nelson including dredging or extending a floating wharf to overcome the challenges that stopped the project from proceeding more than a century ago.

Port Nelson, Manitoba in 1918. Photo courtesy NeeStaNan

He said natural gas could travel to the terminal through a 1,000-kilometre spur line off TC Energy’s Canadian Mainline by using Manitoba Hydro’s existing right of way.

A second option proposes shipping natural gas through Pembina Pipeline’s Alliance system to Regina, where it could be liquefied and shipped by rail to Port Nelson.

The original rail bed to Port Nelson still exists, and about 150 kilometers of track would have to be laid to reach the proposed site, Lore said.

“Our vision is for a rail line that can handle 150-car trains with loads of 120 tonnes per car running at 80 kilometers per hour. That’s doable on the line from Amery to Port Nelson. It makes the economics work for shippers,” said Lore.

Port Nelson could be used around the year because saltwater ice is easier to break through using modern icebreakers than freshwater ice that impacts Churchill between November and May.

Lore, however, is quick to quell the notion NeeStaNan is competing against the existing port.

“We want our project to proceed on its merits and collaborate with other ports for greater efficiency,” he said.

“It makes sense for Manitoba, and it makes sense for Canada, even more than it did for Laurier more than 100 years ago.”

Canadian Energy Centre

Why nation-building Canadian resource projects need Indigenous ownership to succeed

Published on April 12, 2025

Todayville

Chief Greg Desjarlais of Frog Lake First Nation signs an agreement in September 2022 whereby 23 First Nations and Métis communities in Alberta will acquire an 11.57 per cent ownership interest in seven Enbridge-operated oil sands pipelines for approximately $1 billion. Photo courtesy Enbridge

From the Canadian Energy Centre

U.S. trade dispute converging with rising tide of Indigenous equity

A consensus is forming in Canada that Indigenous ownership will be key to large-scale, nation-building projects like oil and gas pipelines to diversify exports beyond the United States.

“Indigenous ownership benefits projects by making them more likely to happen and succeed,” said John Desjarlais, executive director of the Indigenous Resource Network.

“This is looked at as not just a means of reconciliation, a means of inclusion or a means of managing risk. I think we’re starting to realize this is really good business,” he said.

“It’s a completely different time than it was 10 years ago, even five years ago. Communities are much more informed, they’re much more engaged, they’re more able and ready to consider things like ownership and investment. That’s a very new thing at this scale.”

John Desjarlais, executive director of the Indigenous Resource Network in Bragg Creek, Alta. Photo by Dave Chidley for the Canadian Energy Centre

Canada’s ongoing trade dispute with the United States is converging with a rising tide of Indigenous ownership in resource projects.

“Canada is in a great position to lead, but we need policymakers to remove barriers in developing energy infrastructure. This means creating clear and predictable regulations and processes,” said Colin Gruending, Enbridge’s president of liquids pipelines.

“Indigenous involvement and investment in energy projects should be a major part of this strategy. We see great potential for deeper collaboration and support for government programs – like a more robust federal loan guarantee program – that help Indigenous communities participate in energy development.”

In a statement to the Canadian Energy Centre, the Alberta Indigenous Opportunities Corporation (AIOC) – which has backstopped more than 40 communities in energy project ownership agreements with a total value of over $725 million – highlighted the importance of seizing the moment:

“The time is now. Canada has a chance to rethink how we build and invest in infrastructure,” said AIOC CEO Chana Martineau.

“Indigenous partnerships are key to making true nation-building projects happen by ensuring critical infrastructure is built in a way that is competitive, inclusive and beneficial for all Canadians. Indigenous Nations are essential partners in the country’s economic future.”

Key to this will be provincial and federal programs such as loan guarantees to reduce the risk for Indigenous groups and industry participants.

“There are a number of instruments that would facilitate ownership that we’ve seen grow and develop…such as the loan guarantee programs, which provide affordable access to capital for communities to invest,” Desjarlais said.

Workers lay pipe during construction of the Trans Mountain pipeline expansion on farmland in Abbotsford, B.C. on Wednesday, May 3, 2023. CP Images photo

Outside Alberta, there are now Indigenous loan guarantee programs federally and in Saskatchewan. A program in British Columbia is in development.

The Indigenous Resource Network highlights a partnership between Enbridge and the Willow Lake Métis Nation that led to a land purchase of a nearby campground the band plans to turn into a tourist destination.

“Tourism provides an opportunity for Willow Lake to tell its story and the story of the Métis. That is as important to our elders as the economic considerations,” Willow Lake chief financial officer Michael Robert told the Canadian Energy Centre.

The AIOC reiterates the importance of Indigenous project ownership in a call to action for all parties:

“It is essential that Indigenous communities have access to large-scale capital to support this critical development. With the right financial tools, we can build a more resilient, self-sufficient and prosperous economy together. This cannot wait any longer.”

In an open letter to the leaders of all four federal political parties, the CEOs of 14 of Canada’s largest oil and gas producers and pipeline operators highlighted the need for the federal government to step up its participation in a changing public mood surrounding the construction of resource projects:

“The federal government needs to provide Indigenous loan guarantees at scale so industry may create infrastructure ownership opportunities to increase prosperity for communities and to ensure that Indigenous communities benefit from development,” they wrote.

For Desjarlais, it is critical that communities ultimately make their own decisions about resource project ownership.

“We absolutely have to respect that communities want to self-determine and choose how they want to invest, choose how they manage a lot of the risk and how they mitigate it. And, of course, how they pursue the rewards that come from major project investment,” he said.