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Fuel company uses canola oil

Parkland operates a refinery in Burnaby, B.C., that co-processes crude, canola oil and animal fat into fuel. | Submitted photo

In 2020, Parkland had revenues of slightly more than $14 billion.

In 2019, the Calgary company sold more than 22 billion litres of petroleum products through its retail, wholesale and commercial operations in Canada, the United States and the Caribbean.

Despite its size and hefty revenues, Parkland is not a household name in Western Canada.

But most farmers are likely familiar with Parkland’s retail brands. The publicly traded company operates more than 200 Fas Gas stations, 580 Esso stations in Canada, Chevron stations in Alberta and British Columbia and Bluewave, which sells diesel fuel and propane to the ag sector across the Prairies.

In Eastern Canada, Parkland operates more than 630 retail fuel stations under the Ultramar brand.

“We go to market in Western Canada under different brand names,” said Ryan Krogmeier, senior vice-president for supply, trading and refining with Parkland.

More than $14 billion in annual revenue is impressive, seeing how Parkland began with a single Fas Gas station in Red Deer, about five decades ago.

The publicly traded company now has operations in 25 countries.

Parkland also operates a refinery in Burnaby, B.C., that processes “55,000 barrels/day of crude and synthetic oil into gasoline, diesel, jet fuels, asphalts, heating fuels, heavy fuel oils, butanes, and propane,” the Parkland website says.

The Parkland refinery also does co-processing, which uses conventional petroleum and agricultural feedstocks (canola oil and animal fat) to produce low carbon-intensity fuels.

“It’s really a life cycle we have, with our farming community,” Krogmeier said. “We supply the diesel the farmers use…. Then we buy canola from Canadian farmers… which we co-process into those low carbon fuels, like diesel.”

Parkland doesn’t actually buy canola from farmers. It purchases canola oil from crushing plants across the Prairies and the oil is railed to Burnaby for refining.

Co-processing is different from biodiesel, where a small percentage of the bio-fuel is blended into conventional diesel. Co-processing means the canola oil and animal fat is refined in combination with crude oil to produce a commercial fuel.

Krogmeier compared co-processing to making soup with chicken broth and water.

Conventional crude oil is the water. Canola oil and tallow (animal fat) is the chicken stock.

“You boil it together to make your soup.”

The percentage of bio-feedstock used in co-processing varies, but it can be anywhere from five to 20 percent. But the volumes can be significant.

“In January 2021, our Burnaby refinery set a new monthly record by co-processing approximately 10 million litres of Canadian sourced canola and tallow bio-feedstocks, well on our way to our 2021 target of co-processing up to 100 million litres of bio-feedstocks,” Parkland says on its website.

Krogmeier, who grew up in southeastern Iowa and worked for Chevron before joining Parkland, said processing canola oil and animal fat into fuel is preferable to exporting agricultural commodities to other countries.

As an example, Canada exports cattle fat from the beef processing plants in Alberta to Singapore, where a Finnish company (Neste) converts the fat into renewable diesel.

Statistics Canada data shows that Singapore exported 85 million litres of renewable diesel to Canada in 2019. The value of the renewable fuel is between $100 and $175 million.

“We (Parkland) keep the value add from the consumption and manufacturing process and all the jobs (related) to re-distribution (in Canada),” Krogmeier said.

Western Canada needs more refineries like the Parkland plant in Burnaby because Canada imports a surprising amount of commercial fuel.

“On the refined products, from Quebec to B.C., we import 11 billion litres a year of gasoline, diesel and jet (fuel),” said Ian Thomson, president of Advanced Biofuels Canada. “Our domestic refining capacity… everything outside of Atlantic Canada, 20 percent of our whole finished product is import reliant.”

The 11 billion litres in imports could soon decline because a number of companies are proposing to build renewable diesel refineries across Canada.

Renewable diesel is different from biodiesel and is often described as a second generation biofuel. Renewable diesel, or hydrogenation-derived renewable diesel (HDRD) is produced by refining fats or vegetable oils in a hydrotreating process.

HDRD doesn’t have the same cold-weather flowability and shelf-life problems that biodiesel has. It is so similar to petroleum diesel that it can be used as a “drop-in” fuel with no blending limits.

One of the proposed projects is by True North Renewable Fuels, a Calgary company that plans to construct a renewable diesel mega-project in Regina at a cost of $2.4 billion.

Parkland is also studying an HDRD refinery, which would produce 9,000 to 10,000 barrels per day of renewable diesel and jet fuel.

“It’s either renewable diesel or a combination of renewable diesel and sustainable aviation fuel,” Krogmeier said, noting the facility would be built at Parkland’s site in Burnaby.

“We are looking (at) and evaluating a renewable fuels manufacturing facility.”

Demand for renewable diesel and other low-carbon fuels is expected to boom in the next decade as countries, states and regions create new regulations to cut greenhouse gas emissions from transportation.

In Canada, the federal government is developing the Clean Fuel Standard, which will encourage the use of lower carbon fuels like renewable diesel. The final draft of the CFS is expected this fall.

California already has a low carbon fuel standard, as does B.C.

Electric vehicles will be part of the solution. But shifting from liquid fuels to a transportation system based on electricity could take decades.

“You just can’t go out and replace all the cars and trucks… that utilize liquid fuels. But we can make them lower carbon intensity,” Krogmeier said.

“I suspect even more developing countries will start to put together biofuel blend mandates and lower carbon intensity mandates…. This is going to be a big area, in terms of the change in the percentage of transportation fuels that are derived from agricultural feedstocks.”

A study funded by Advanced Biofuels Canada found usage of 316 million litres HDRD and 345 million litres of biodiesel, across Canada, in 2019.

That represents about 2.5 percent of the country’s total diesel pool volume. In 2019, domestic consumption of diesel was around 26 billion litres.

The volume of renewables could grow substantially, once the Clean Fuel Standard is in place in Canada.

“Longer term, I think you will see fuel blends that have a combined biodiesel, plus renewable diesel content,” Krogmeier said. “Let’s say by 2030, I think… you will see 10 to 15 percent of renewable diesel (and biodiesel) in the fuels pool.”

If Krogmeier is right, that would be around 3.0 billion litres of renewable and biodiesel consumed per year.

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