Average Volumes of
Crude Oil Processed/Calendar Day Daily Rated Capacity1 Years Ended December 31,
Refinery Location 2006 2005 2004 As at December 31, 2006
Edmonton, Alberta 18.9 20.8 19.6 19.9 Montreal, Quebec2 18.9 18.1 16.0 20.6 Oakville, Ontario3 – 2.0 12.6 - Total 37.8 40.9 48.2 40.5
1 Daily rated capacity is based on calendar days and defined specifications as to types of crude oil, the products to be obtained and the refinery processes required. Variations in these factors may result in actual capacity being higher or lower than rated capacities.
2 Includes capacity expansion completed at Montreal in December 2004 and rated in 2005 at an additional 3,900 m3/d.
3 The second of two crude processing trains at the Oakville refinery was permanently closed on April 11, 2005. This was part of the previously announced consolidation of Eastern Canada refinery operations. Prior to such closure, daily rated capacity was 7,000 m3/d.
With the major regulatory projects completed, Petro-Canada is well positioned with the supply capability to optimize profitability within a range of future business scenarios.
Looking forward, Petro-Canada intends to take advantage of the trend toward increased production of cheaper, heavier crudes. In 2006, Downstream completed detailed engineering work and started construction to convert the Edmonton refinery to process 100% bitumen-based feedstock and furthered work to evaluate the feasibility of adding a coker to the Montreal refinery.
Edmonton Refinery
The Edmonton refinery is Petro-Canada's most efficient refinery, producing a high yield of light oils. It uses synthetic crude oil for up to 40% of its crude charge. Synthetic crude oil produces a higher yield of gasoline and middle distillates than conventional crude oil. The remainder of the refinery's crude charge is conventional light sweet and sour crude oil.
At the Edmonton refinery, Petro-Canada is building new crude and vacuum units, and expanding coker capacity and sulphur removal capability to upgrade and refine bitumen-based feedstock. The new configuration, targeted for completion in 2008, will allow the refinery to directly upgrade an Athabasca blend feed of 5,500 m3/d (comprised of
4,100 m3/d of bitumen and 1,400 m3/d of diluent) and process 7,600 m3/d of sour synthetic crude oil, displacing the
conventional crude that is refined today. The refinery will also continue to process sweet synthetic crude through its synthetic train. Refer to Oil Sands in the Upstream section of this AIF for long-term arrangement for the supply of bitumen and sour crude oil feedstock to the Edmonton refinery on completion of the planned reconfiguration.
Montreal Refinery
The Montreal refinery, supplied with imported crude oil primarily through the Portland-Montreal pipeline, has a flexible configuration allowing it to process a variety of crude oils, including heavy grades and intermediate feedstock. The refinery produces gasoline, distillates, asphalts, petrochemicals, solvents and feedstock for lubricants.
Petro-Canada continues its assessment of the potential addition of a 25,000 b/d coker unit, which would allow the Montreal refinery to leverage lower cost heavier crude feedstock and upgrade existing lower value asphalt and heavy fuel oil into diesel and gasoline fuel. The assessment is expected to be completed in 2007, at which time a decision will be made on whether to proceed with the project.
Oakville Refinery
As part of the Eastern Canada refining and supply consolidation project, the former Oakville refinery completed a phased shutdown of its operations during the second quarter of 2005. Oakville's terminal facilities were expanded to handle receipt of finished light oil product from Montreal via the TNPI pipeline. In total, the expanded Oakville terminal, in combination with existing industry terminal facilities in north Toronto, is capable of receiving TNPI's full
ParaChem Chemicals Plant
Petro-Canada holds a 51% working interest in ParaChem Chemicals L.P., which owns and operates a petrochemicals plant located adjacent to the Montreal refinery. The plant primarily produces up to 350,000 metric tons per year of paraxylene (PX), which is used to manufacture polyester textiles and plastic bottles. ParaChem also produces benzene, hydrogen and heavy aromatics. The 75-hectare plant site is located in Montreal's industrial district, with access to pipelines, the sea and rail shipping facilities. Its hydrocarbon storage capacity exceeds 300 million litres.
Petro-Canada currently supplies mixed xylenes and toluene to ParaChem. The integration of the Parachem plant with the Montreal refinery provides several synergies, including the ability to capture more of the petrochemicals value chain through vertical integration. In 2006, a tunnel and pipeline were completed between the Montreal refinery and the ParaChem plant, facilitating the safe and cost-effective transfer of products. Additional pipelines will be added in 2007. Parachem continues to assess various long-term growth projects that would leverage its strategic position in Quebec's petrochemical market.
Supply and Distribution
Petro-Canada purchases crude oil and other refinery feedstock from Canadian and international sources under a number of different contractual arrangements. The Downstream sector is responsible for arranging domestic and foreign crude supply for the Company's refineries. There is a well-developed infrastructure for third-party supply of both domestic and imported crudes to markets in North America. Purchases are generally through short-term, renewable contracts. Petro-Canada is not dependent on any single source of supply for conventional crude oil and does not anticipate any difficulty in obtaining an adequate supply in the foreseeable future.
Efficiencies are achieved through refined product exchange, purchase, sale and short-term storage arrangements with other petroleum companies. These arrangements reduce capital and transportation costs, assist in the maintenance of supply to customers and enable Petro-Canada to participate in geographical areas without the need to invest capital in distribution facilities. Applicable agreements contain appropriate provisions for consistent product quality to be maintained for the Company's customers.
Petro-Canada operates an extensive distribution network, using pipeline, road, rail and marine transportation, to deliver refined products to retail outlets and commercial and industrial customers. The Company holds interests in two refined product pipelines, one crude pipeline and a joint venture interest in one major refined products terminal. Petro-Canada also operates 11 major refined products terminals across Canada.
Sales and Marketing
Petro-Canada is the second largest marketer of petroleum products in Canada. In 2006, Petro-Canada's petroleum product sales represented approximately 16% of total petroleum products sold in Canada. Petro-Canada markets a full range of petroleum products, including gasoline, diesel oils, heating oils, aviation fuels, heavy fuel oils, asphalts, lubricants, petrochemical feedstock and liquefied petroleum gases. Petro-Canada also generates non-petroleum revenue from convenience stores, car washes, and automotive repair and maintenance services. During 2006, the Company focused on profitable growth through initiatives directed at the retail and PETRO-PASS truck stop networks.
AVERAGE DAILY SALES OF PETROLEUM PRODUCTS