Canada's Energy Mix

Crude Oil

From transportation and heating to electricity production and manufacturing, crude oil plays a big role in modern society—but how is it extracted from the ground and transformed into the petroleum products that we use in our everyday lives?

Valero Energy, Commerce City Colorado Refinery, Suncor Energy,, (CC BY-NC-ND 2.0)

What is crude oil?

Crude oil is a natural resource that is found in large underground deposits, which exist both on land and underwater in the ocean floor. It is a hydrocarbon mixture that varies in viscosity (i.e., how thick or fluid a liquid is). Hydrocarbons are chemical compounds made up of hydrogen and carbon atoms.

These underground deposits of crude oil formed a long time ago, when the world’s continents looked very different and there were vast ancient seas. Organic materials, such as the remains of plants and animals, would sink to the bottom of the sea and become covered by sediment (i.e., rocks and sand) and compacted. Over the course of millions of years, the organic matter was transformed under high pressure and very hot temperatures, resulting in what we refer to today as fossil fuels—crude oil, natural gas, and coal.

In its natural state, crude oil can either be light (more fluid and requiring less processing) or heavy (more viscous and requiring more processing). The heavier crude oil is called bitumen, which is composed of heavy oil, sand, clay, and water.

Government of Alberta, Oil and energy,, (CC BY-NC-ND 2.0)

How is crude oil extracted from the ground?

Extraction in the early days (late 1800s) was much simpler—in some places, the pressure was so great that oil would shoot out of the ground. This is no longer the case. In Canada, there are three methods used in crude oil production: conventional extraction, mining, and in situ. Conventional crude oil is extracted from a well using a drilling rig that pumps the oil to the surface. In Canada’s oil sands, the two main methods of extraction are in situ (which means “in place”) and mining. Oil sands found deep underground—below about 75 metres—are extracted in situ, while oil sands found above about 75 metres are mined (surface mining).

In mining, the surface layer of the boreal forest (which is the primary landcover in the oil sands region) and topsoil is removed to expose the oil sands. Then, some of the world’s largest digging machines scoop the heavy sands into giant trucks, which bring it to facilities for processing. It takes about two tonnes of oil sands and at least two barrels of water to produce one barrel of synthetic crude oil.

In situ production involves heating water and injecting the steam into pockets of bitumen. The steam warms the viscous substance to make it easier to extract and pump out. In situ extraction using steam-assisted gravity drainage (SAGD) technology has been around for a while now and has a smaller environmental footprint than oil sands mining—it also uses less water and doesn’t produce tailings ponds. There are still improvements to be made and research is being conducted into new ways to produce oil in situ. Direct contact steam generation (DCSG) is a new technology for producing the steam in situ production, which is used to heat bitumen so that it can be pumped to the surface. In SAGD, conventional boilers are used to heat water and produce steam, a process that produces greenhouse gas emissions, as well as pollutants that need to be removed from the air. This process is not as efficient as DCSG, which use a special type of burner that puts water in direct contact with the oxygen-fuel mix used in combustion. This creates steam and carbon dioxide, which can then be pumped underground for bitumen extraction. In addition, water in this type of system can be recycled multiple times.

Jason Woodhead, suncor 2011,, (CC BY 2.0), image brightened and cropped


In Canada, we also have offshore oil production, which means that drilling rigs are installed over the ocean floor. The main facility (the platform) is above the water and either floats on the surface or has a base that sits on the seafloor. The drilling rig and flowlines which extract the oil are under the water.

J. Stephen Conn, Offshore Oil Rig,, (CC BY-NC 2.0)

How is crude oil transported?

Oil is primarily transported by pipelines that run mainly underground (sometimes, pipelines may run above ground, such as in permafrost regions), and it is also moved by rail and ship. Liquid pipelines are used for transporting crude oil or natural gas liquids. Refineries convert these liquids into gasoline, diesel and other petroleum products. 

Pipelines are divided according to their purpose: gathering lines transport oil from wells to gathering facilities, then feeder lines bring oil to processing facilities and to the long-distance pipelines called transmission lines. The transmission lines deliver crude oil to its final destination at refineries, where it is processed into usable products. Oil travels through the pipelines at about four to eight kilometres per hour, pushed along by pumps. 

There are more than 840,000 kilometres of pipeline in Canada, which vary in size from half an inch to more than a metre in diameter. The federal government regulates about 73,000 kilometres of that network, which includes pipelines that cross provincial borders. Pipelines that stay within a province are regulated by that province’s government.

Pipelines are generally considered to be a safer and more efficient way to transport oil and gas compared to other transport methods, such as ships or trucks. While oil spills and gas leaks do happen with pipelines, they are uncommon. On average each year, 99 per cent of oil transported through federally regulated pipelines is done so safely, according to the Ministry of Natural Resources Canada.

Gillfoto / CC BY-SA (

What is crude oil used for?

Crude oil is transformed into products you use in your everyday life. It is processed into a wide range of products (called refined petroleum products or RPPs for short), which are used for transportation, heating, electricity production, and manufacturing. From things like toothbrushes and cosmetics to running shoes and sunglasses, crude oil makes its way into every part of our everyday routine. Consider the gasoline that fuels our cars on our daily commutes to school or work; or the diesel used in trucks and trains to transport goods from factories to stores; or the jet fuel that gets big jumbo jets full of travellers into the air and to their next destination.

When oil is extracted from the ground it is transported to upgraders and refineries via pipelines, tanker ships, or trains. Upgraders essentially create usable oil (called synthetic crude oil) from heavy unconventional crude oil that is excavated as bitumen (a mixture of sand, clay, heavy oil and water). Other crude oils, usually referred to as conventional crude oil, is processed at refineries into usable products for the petroleum industry.

Oil is classified by its density: light oil is the most valuable, while heavy oil is less valuable — it requires more processing to be converted into gasoline or other petroleum products. Bitumen, separated from the oil sands, is extra-heavy grade, so it requires a great deal of energy and water to be processed into usable products.

But how does bitumen get turned into gasoline to fuel your car? Or into propane that you can use to fire up the BBQ? Or the jet fuel for the airplane that takes you on your next vacation? Even paving roads with asphalt requires crude oil.

Kurt Bauschardt, Radiant Refinery,, (CC BY-SA 2.0)

Refining oil into petroleum products

To produce RPPs, crude oil has to be processed and separated out into its various components through refinement. Refineries are large industrial structures (they can look like small towns because of their sheer size and complexity) comprising many different parts and processes that produce different RPPs.

The very first step of refining is distillation (or separation). Crude oil, which is heavy and viscous, is heated in a large furnace until it turns into a liquid or vapour. The different chemical components (hydrocarbons) of crude oil boil at different temperatures. As the different vapours rise to the top of the distillation tower they begin to cool and turn into liquids. The distillation tower collects the hydrocarbons (which are called fractions at this point) with similar boiling points by weight. The lighter fractions, such as gasoline, are collected at the top of the distillation tower and require less processing before they can go to market. Heavier fractions require additional steps before they can be made into lighter and more valuable RPPs.

Cracking refines heavier fractions by breaking long hydrocarbon molecule chains into smaller ones using heat and pressure. Often, catalysts are uses to speed up the process. Cracking is referred to as a conversion process because it changes the structure of a hydrocarbon. Coking, a process that produces a coal-like material, is used on the heaviest hydrocarbons, the residue at the bottom of the distillation unit. Coking also relies on heat and pressure to break apart hydrocarbons. Petroleum coke is used for electricity generation and as an industrial fuel.

Another conversion process is called reforming, which rearranges hydrocarbons to make new ones. Naphtha is one of the hydrocarbon fractions produced in distillation and it has a complex molecular structure. Naphtha is useful because it has the same number of atoms as gasoline. Reforming uses a catalyst to create a chemical reaction that rearranges the naphtha molecule into a molecule called a reformate, which is then blended into gasoline.

Alkylation is similar to reforming in that it combines lighter hydrocarbons into more complex ones—essentially the opposite of cracking. It takes the gas by-products from cracking and, using a catalyst, combines them into a new molecular compound.

The next step in refining is treatment to remove impurities, which are unnecessary atoms such as sulfur or nitrogen that might reduce the quality of the end-product. This is done in a few different ways. For example, one method uses an acid to dissolve the unwanted compounds in the fractions. And another method “dries out” the product by removing water molecules through absorbing agents.

Blending can be considered the final step of the refining process when the different fractions and compounds that have been distilled, converted, and treated are then mixed together to produce different variations of gasoline (think of the different types of gasoline you can get at the fuel pump when filling up a car). This produces different grades of gasoline to meet different specifications for vehicles.

Refineries produce transportation fuels, heating oil (used for electricity generation), liquid petroleum gases (like the propane you use to do BBQ), petrochemical feedstock (these are used to manufacture things like rubber and plastic) and a variety of other products (such as lubricating oils for your car or asphalt for paving roads).

Jeff Wallace, The Herd,, (CC BY-NC 2.0)

Where do we find oil production and refineries in Canada?

There are oil production facilities and refineries in several provinces and territories in Canada. The following are the biggest producers in the country:

  • Alberta is the largest crude oil producer in Canada, accounting for more than 82 per cent of the country’s production. Two-thirds of this oil comes from the oil sands, which are found in three main deposits in Alberta: Athabasca, Cold Lake and Peace River. Alberta produces more than 80 pera cent of hydrocarbon gas liquids. Alberta also has the largest refining capacity in Canada with five refineries.
  • Saskatchewan is the second-largest producer of crude oil in Canada.
  • Newfoundland and Labrador is the third-largest crude oil producer in Canada and has the only offshore oil platforms in the country: Hibernia, Terra Nova, White Rose and Hebron. 
  • Ontario has the second-largest refining capacity in Canada.
  • Quebec has the third-largest refining capacity in Canada.
Syncrude Canada, Shovel Operator Shift Change,, (CC BY-NC-ND 2.0)

How does crude oil production impact the environment?

There are various methods used in crude oil production, including drilling, mining, and steam-assisted gravity drainage. In drilling, the greenhouse gas methane may be produced, which is then vented or flared (both methods release emissions into the atmosphere). Various extraction methods for crude oil also rely very heavily on water. Tailings ponds allow sand, clay and trace amounts of residual hydrocarbons to settle so that water at the top can be recycled for use in oil sands extraction processes. Tailings ponds are constructed and managed to prevent contaminated water from entering rivers, lakes or underground aquifers. For surface-mining, land may be cleared of vegetation in order to be mined. It may take many years to return the land back to its original state through land reclamation practices.

Canada’s oil and natural gas sector made up between 21 to 26 per cent (depending on how downstream pipeline activities are counted) of greenhouse gas (GHG) emissions in 2016. In Canada’s oil sands, the government requires that mining operators keep track of their carbon dioxide and methane emissions. Although GHG emissions in Canada have increased between 2005 and 2017, the GHG emissions per barrel of oil produced in the oil sands have dropped 28 per cent. This decrease is due to technological innovation and improvements in efficiency.

There are also technologies that are being developed to reduce the amount of carbon emissions from power plants, such as carbon capture storage (CSS). CSS is a technology that essentially pulls carbon from the air and stores it underground. First, carbon dioxide is separated out from other gases produced from burning fossil fuels or from industrial processes. Next, it is compressed and transported by pipelines (or other methods) to a suitable storage location, where it is injected several kilometres underground. It is stored in porous rock layers, where the pressure and temperature keep it in a liquid state. An impermeable rock layer exists above the storage reservoirs, keeping the carbon dioxide contained underground. These sites are monitored to ensure that carbon dioxide isn’t leaking into the air, soil or water.

Burning petroleum products releases greenhouse gas emissions, which contribute to climate change. Petroleum products and petrochemicals are a big part of our everyday lives and understanding the environmental cost of consumer culture can be a way to reduce those greenhouse gas emissions. 

Alberta Newsroom, Jul 10, 2020 Shell Quest milestone 25043,, (CC BY-NC-ND 2.0)

Did you know?

  • There are about 170 billion barrels of proven crude oil reserves in Canada, which makes it the third-largest supply in the world.
  • Canada is the fourth-largest producer and exporter of oil in the world. Two-thirds of Canada’s crude oil is exported, with the majority going to the United States.
  • Nunavut relies completely on diesel (a petroleum product) for generating electricity. 
  • There is potential for oil and natural gas extraction in northern Canada. It’s estimated that the Northwest Territories hold about 35 per cent of Canada’s remaining marketable natural gas resources and 37 per cent of the remaining recoverable light crude oil. Oil and natural gas projects could potentially reduce the reliance on imported fossil fuel, but few projects have been developed, because of environmental and land-use concerns and the cost of infrastructure.