Diesel Market in Canada Part 2

Delivered July 23rd, 2019. Contributors: Victor E., Tarik T., Joshua M. and

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Diesel Fuel in Canada - Key Industries

We estimated the required consumption info using data from Canada's National Energy Board and National Resources Canada due to the lack of this data in the public domain. In 2018, our calculation showed that Canada's entire transportation section sector consumed 7,227 trillion liters of diesel fuel. The industrial sector (mining, manufacturing, and the oil and gas extraction industries) consumed 3,613 trillion liters; the agricultural and commercial sectors consumed 1,084 trillion liters, and the domestic sector consumed 240 billion liters. However, Statistics Canada reported that in 2017, Canada's railway industry consumed 2,040,497,000 liters of diesel fuel while the urban transit and passenger bus sectors consumed 784,580,000 liters. 
INDUSTRIES THAT USE THE MOST DIESEL FUEL IN CANADAA 2018 report by Canada's National Energy Board revealed the industries with the most demand for petroleum products. As per the report, they included the transportation sector (60%); the industrial sector, which includes mining, manufacturing, and the oil and gas extraction sectors (30%); the agricultural and commercial sectors (9%), and the domestic sector (2%). 
In 2018, Canadians consumed 110 billion liters of petroleum products per day, according to the Natural Resources Canada's report; diesel fuel accounted for 30% of this daily consumption. 
In 2018, our calculation showed that Canada's entire transportation section sector consumed 7,227 trillion liters of diesel fuel. The industrial sector (mining, manufacturing, and the oil and gas extraction industries) consumed 3,613 trillion liters; the agricultural and commercial sectors consumed 1,084 trillion liters, and the domestic sector consumed 240 billion liters.
As of 2017, Canada's railway industry consumed 2,040,497,000 liters of diesel fuel while the urban transit and passenger bus sectors consumed 784,580,000 liters, as per data by Statistics Canada. 
RESEARCH STRATEGYWe investigated official Canadian directories relevant to the oil industry such as Natural Resources Canada, the National Energy Board, and the Canadian Fuels Association in search of studies, surveys, or statistics, which revealed the annual consumption of diesel fuel in the country. Unfortunately, there was no report by these domains with data specific to the use of diesel fuel by industries. Instead, we discovered a report by Canada's National Energy Board, which disclosed the industries with the most demand for all petroleum products combined. Also, we found another report by Natural Resources Canada with insights into the daily consumption of petroleum products in Canada, including diesel oil. 

Therefore, we proceeded to investigate the Statistics Canada portal with the hope of locating statistical reports of the consumption of diesel fuel by industry in Canada. This investigation produced only two reports showing that in 2017, Canada's railway industry consumed 2,040,497,000 liters of diesel fuel while the urban transit and passenger bus sectors consumed 784,580,000 liters. Again, there were no statistics in the public domain by the Statistics Canada portal relevant to the consumption of diesel fuel in Canada for all industries; neither was there any report revealing those that consumed it the most. 

Next, we examined reports by trusted media and energy websites in Canada, hoping to find info specific to the most consumption of diesel fuel in Canada by industry. For this, we researched Energynow.ca, Bore Report, Calgary Herald, and others. This research did not yield any info relevant to the consumption of diesel fuel in Canada by industries; instead, we only found reports with insights into data already discovered in our earlier research. Hence, due to the lack of required data in the public domain pertinent to the industries with the most consumption of diesel fuel in Canada, we estimated the requested information using data available in the public domain. 
CALCULATIONSIn 2018, Canada's domestic consumption of petroleum products was 110 billion liters per day. Out of this volume, diesel fuel accounted for 30% of this daily consumption, according to Natural Resources Canada's 2018 report. From this info, we estimated the 2018 domestic consumption of diesel in Canada as follows: [(daily consumption of diesel fuel) x (one year)]
= [(110 billion liters*30%) x (365)] = 12,045 trillion liters of diesel oil consumed in 2018. 

Also, in 2018, as a report by the National Energy Board in Canada, the industries with the most demand for petroleum products were the transportation sector (60%); the industrial sector, which includes mining, manufacturing sectors, and the oil and gas extraction sectors (30%); the agricultural and commercial sectors (9%), and the domestic sector (2%).

Next, we took it that the industries with the most demand for petroleum products, based on a 2018 report by Canada's National Energy Board, also consumed the most diesel fuel in the country. Thus, we estimated the consumption for each industry in 2018, as follows: 

1. The transportation industry (60%) = [(estimated volume of diesel fuel consumed in 2018)*percentage demanded by the transportation industry in 2018]
= [(12,045 trillion liters)*60%] = 7,227 trillion liters.

2. The industrial industry (mining, manufacturing sectors, and the oil and gas extraction sectors) (30%) = [(estimated volume of diesel fuel consumed in 2018)*percentage demanded by the industrial industry in 2018]
= [(12,045 trillion liters)*30%] = 3,613 trillion liters.

3. The agricultural and commercial sectors (9%) = [(estimated volume of diesel fuel consumed in 2018)*percentage demanded by the agricultural and commercial sectors in 2018]
= [(12,045 trillion liters)*9%] = 1,084 trillion liters. 

4. The domestic sector (2%) = [(estimated volume of diesel fuel consumed in 2018)*percentage demanded by the domestic sector in 2018]
= [(12,045 trillion liters)*2%] = 240 billion liters.

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Diesel Fuel in Canada - Key Leaders

In 2018, TFI, Canadian National Transportation, and Mullen Group were three of the top five companies using diesel fuel in Canada.
DIESEL FUEL IN CANADA — KEY LEADERSIn 2018, Canadians used a total of 110 billion liters (L) of petroleum products. Diesel fuel comprised 30% (33 billion L) of that total.
In Canada, the primary uses of diesel fuel are road vehicles (e.g., transport/logistics trucks and public transport), rail transport, power generation, and agricultural vehicles (e.g., tractors). Canadian motor vehicles consumed 18,016,829,000 L of diesel in 2018, which is 54.6% of total diesel usage. Urban bus transports accounted for 784,580,000 L (2.4%) of Canada's 2018 diesel usage.
Rail transport accounted for 2,040,497,000 L (6.1%) of diesel fuel usage in 2018. And power generation required 156,657,000 L (0.5%) during the same period.
As the above figures would suggest, motor vehicles, especially the Canadian trucking industry, are the largest consumer of diesel per year. Therefore, it seems reasonable to assume that the top three to five corporate consumers of diesel in Canada are trucking companies. The three largest trucking companies in Canada (by the size of their fleets) are TFI International, Canadian National Transportation, and Mullen Group. 
TFI INTERNATIONALTFI International is a market leader in the field of transportation and logistics in North America, with operations in Canada, the US, and Mexico. The company is composed of 80 operating entities and employs 17,000 persons. TFI's growth strategy is based firmly on acquisition, and the company has made 75 since 2008.
TFI offers four types of services: Package and courier, Less-than-truckload, Truckload logistics, and Last mile.
According to TFI's expense data, the company spent C$859,229,000 on vehicle operating expenses, and fuel costs usually account for 50%-75% of those expenses. Those data suggest that the estimated average consumption was C$537,018,125, which would be approximately 429,614,500
 L (at the Q1 FY2018 diesel price of C$1.25).
CANADIAN NATIONAL TRANSPORTATION Canadian National Transportation is another North American market leader in the field of transportation and logistics. The company employs 24,000 individuals and transports over C$25 billion in products per annum. Canadian National Transportation has the resources to connect maritime ports on three coasts, using its trains to transport products from production sites to markets.
In 2018, the company used 462 million gallons (1,748,000,000 L) of diesel.
MULLEN GROUPThe Mullen Group, which is a web of subsidiaries and partnerships, is another leader in the Canadian trucking and logistics industry. The Mullen Group's services include general trucking/logistics and specialized transport for western Canada's oil and gas industry. (26)
The Mullen Group reports that its 2018 fuel expenses accounted for C$90.7 million of that fiscal year's expenditures. The data would suggest that the Mullen Group consumed an estimated 72,560,000 L of diesel (at the Q1 FY2018 diesel price of C$1.25) 
RESEARCH STRATEGYWe began our investigation into petroleum and diesel industry reports and databases with an inquiry into which Canadian companies were consuming the most diesel. Though the information was not directly available, we did locate a report on the main uses of diesel fuel in Canada by sector. We were able to use this data to determine that the largest diesel consumer was the trucking industry. As we stated above, we assumed that the companies in the sector consuming the most diesel would, therefore, be the largest diesel consumers. Our next step was to determine the largest trucking/logistics companies by fleet size, under the logic that a company with a larger number of diesel-consuming vehicles would account for a significant amount of diesel consumption. While some companies like Canadian National Transportation publicly reports its annual diesel consumption, the others required some calculation using the available data (i.e., annual fuel expenditure in CAD). 

For TFI, we first determined the average percentage cost of operating vehicle expenses through the equation: [(.5 + .75) / 2] x 100 = 62.5%.

We used that figure to estimate TFI's 2018 fuel cost using its total vehicle operation expenses: 859,229,000 x .625 = 537,018,125.

We then estimated TFI's total 2018 diesel fuel usage volume using TFI's estimated fuel cost and the Q1 FY2018 diesel price (C$1.25): 537,018,125 / 1.25 = 429,614,500 L

For the Mullen Group, we used a similar process. However, the company provided its annual fuel cost, which allowed us to directly calculate their usage volume using the Q1 FY2018 diesel price (C$1.25): 90,700,000 / 1.25 = 72,560,000 L.

Additionally, we calculated the percentage of fuel use by sector using simple percentage equations.

Motor vehicle usage: (18,016,829,000 / 33,000,000,000) x 100= 54.6%

Urban bus transports: (784,580,000 / 33,000,000,000) x 100 = 2.4%

Rail transports: (2,040,497,000 / 33,000,000,000) x 100 = 6.1%

Power generation: 156,657,000 /33,000,000,000 x 100 = 0.5%

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Diesel Fuel in Canada - Key Sales Leaders

The information on the top three to five companies in the diesel fuel industry in Canada based on the volume of diesel sold is not publicly available. However, research has shown that the top four diesel refiners in Canada are Imperial, Suncor, Irving, and North Atlantic Refinery. Below, is our findings, as well as research strategies, to better understand why the requested information is not publicly available.
Top Diesel Refiners in CanadaImperial Volume: 419 kb/d 
Description: Imperial Oil existed as a Canadian company since 1880. Imperial is an integrated oil company that is committed to research and development and refinement.
SuncorVolume: 364 kb/d 
Description: Suncor refines oil in several provinces in Canada including Alberta, Ontario, and Quebec. Suncor is one of the major Canadian refiners as they were one of the first companies to refine Canadian oil sands.
IrvingVolume: 318 kb/d 
Description: Irving is one of the top 100 employers in Canada. The company has been refining oil since 1924. Recently, Irving acquired Top Oil in Ireland and thus, expanded past Canada.
North Atlantic RefineryVolume: 130 kb/d 
Description: North Atlantic Refinery is the province-wide leader in oil refining for Newfoundland. North Atlantic claims that it places "people first," as it hires people directly from the province and works towards their betterment with their oil products.
Research Strategy:To address this request, we began by looking through the Canadian government's statistics pages, as well as business papers and news sites.  Governmental stats are reputable and often have data covering economic and energy matters. Because only a small amount of oil refiners operate in Canada, it was reasonable to expect some metrics on their performance to be available, considering their influence on the economic status of Canada. The Canadian government's statistics mostly consisted of information on the environmental problems of fuels and efforts to combat climate change. We checked business and media reports such as the Wall Street Journal, Forbes, The Globe and Mail, and the Toronto Star for information on sales, but the news sites mostly covered basic news about the activities of their business operations.

Next, we individually checked companies that sold diesel fuel for data on the number of liters sold by using a top list of petroleum producers. We also checked investor reports, but for some companies the investor reports were unavailable. For the companies where we could find their investor reports, the sources lacked sales numbers for diesel fuel, as seen for Suncor.

Lastly, we went through multiple reports from professional and consulting services companies, such as EY, Deloitte, KPMG, and PwC, as well as other market research firms such as MarketResearch and IBISWorld. The Big Four firms often perform heavy-duty economic research, thus they were good sources to check. Market research firms, such as IBISWorld, often provide key market research information on various sectors. However, the information found from these sources involved consulting, investing, marketing, and market outlooks based on barrels produced rather than barrels/liters sold.

After these steps, the information on the amount of diesel sold by Canadian oil companies could not be found. As an alternative, we've listed the top four Canadian diesel refiners, as provided by a Canadian refinery association. This information does not cover diesel oil specifically but consists of barrels produced rather than liters sold. Also, we ensured that the companies provided are producers of diesel fuel (Imperial, Suncor, Irving, and North Atlantic Refinery). Companies that do not produce diesel fuel were obviously not considered and/or listed.

Sources

From Part 01

Petroleum Products Facts | Canada Natural Resources

nrcan.gc.ca

Publication Year: 2019

Quotes

"Domestic sales of petroleum products was 1.9 million barrels per day (110 billion litres)"
"Gasoline is the refined product with the highest sales volumes at 42%, followed by diesel at 30%, aviation fuels at 8%, heavy fuel oil at 3% and heating oil at 1%."

Canada’s Refining Industry 2018 Sector Performance Report | Canada Fuels Association

canadianfuels.ca

Publication Year: 2018

Quotes

"This is primarily due to the transportation sector, which accounts for 60% of Canadian oil demand. The relatively sparse population, number of vehicles on the road, and the long distances people and goods must be transported to cross the country may explain Canada’s relatively high transportation fuel consumption per capita"
"The industrial sector accounts for nearly 30% of Canada’s oil demand. Canada has relatively large mining, oil and gas extraction, and manufacturing sectors, which tend to be oil-intensive."
"Lastly, the commercial and agricultural sectors combined make up 9% of oil demand while the residential sector is 2%."

From Part 02

Petroleum products facts | Natural Resources Canada

nrcan.gc.ca

Publication Year: 2018

Quotes

"In 2018, 1.6 million barrels per day of oil (96 billion litres) was shipped to domestic refineries. Canadian production of petroleum products reached 1.9 million barrels per day (111 billion litres). Canada exported 0.5 million barrels per day (26 billion litres) and imported 0.3 million barrels per day (17 billion litres)."
"Domestic sales of petroleum products was 1.9 million barrels per day (110 billion litres)."

The Top 100: Ranking Canada’s largest for-hire fleets | Today’s Trucking

todaystrucking.com

Publication Year: 2018

Quotes

"The Today’s Trucking Top 100 has become the definitive ranking of for-hire fleet sizes in Canada, offering insights into those who are adding or retracting available capacity. And the 2018 edition has been released. Rankings are based on a sum of supplied truck, tractor, and trailer counts (shown at the bottom of each listing)."

Diesel Use in Canada

canadianfuels.ca

Publication Year: 2017

Quotes

"27.5 % Diesel – 29 billion l"
"An increase in freight transport is driving growth in diesel demand."

Sales of fuel used for road motor vehicles

www150.statcan.gc.ca

Publication Year: 2017

Quotes

"18,016,829,000 liters"

Usage of Diesel in Canada

equiterre.org

Quotes

"Diesel use is rising steadily in Canada, now accounting for 25% of the fuel consumption on the country’s roads. Heavy trucks run on it, individual drivers receive a tax incentive that makes diesel more attractive, and remote communities still depend on it for heating and electricity."

Railway Industry Fuel Consumption Canada

www150.statcan.gc.ca

Publication Year: 2017

Quotes

"2,040,497,000 liters"

Canadian passenger bus and urban transit industries, fuel consumption, by industry

www150.statcan.gc.ca

Publication Year: 2017

Quotes

"784,580,000 liters"

Electricity generated from fossil fuels, annual

www150.statcan.gc.ca

Publication Year: 2017

Quotes

"1,984.6 GWh"

Energy related conversion factors

deepresource.wordpress.com

Publication Year: 2014

Quotes

"1 litre of diesel-oil 10,0 kwh"

Convert GWh to kWh - Conversion of Measurement Units

convertunits.com

Diesel used in electricity generation Canada

www150.statcan.gc.ca

Publication Year: 2017

Quotes

"156,657,000 liters"

Uses: Fuels and Consumer Products

canadasoilsands.ca

Quotes

"Diesel: designed for engines commonly used in trucks that ship goods, buses and public transport, locomotives and farm and heavy equipment. Diesel contains more energy and power density than gasoline."

Canada Hikes Price of Diesel Fuel With New Carbon Tax

ttnews.com

Publication Year: 2019

Quotes

"CTA said that with about 270,000 large combination trucks in Canada, the Canadian trucking industry could contribute $945 million in 2019 carbon charge payments and close to $3.2 billion by 2022. (The average fuel efficiency of a Class 8 truck reporting to Natural Resource Canada’s Smartway program is 38.4 liters per 100 kilometers. This figure is based on a Class 8 longhaul tractor traveling 230,000 km a year."
"'The trucking industry is dominated by small businesses and competes on very tight margins, with operating ratios in the 0.94 range,' CTA Chairman Scott Smith said. 'With these operating ratios, the ability to absorb rising costs is a challenge.'"

TFI International tops Canada’s Top 100 fleet ranking | Today’s Trucking

todaystrucking.com

Publication Year: 2019

NEB – Market Snapshot: Canada’s agricultural sector is using less energy per dollar of economic output

neb-one.gc.ca

Trucking Report 2018

atri-online.org

Publication Year: 2018

Convert gallons to liters

gallonstoliters.com

Canada Trucking Industry

canadianfuels.ca

Quotes

"The trucking industry is Canada’s largest consumer of diesel fuel. Diesel accounts for between 15 and 40 percent of a company’s operating costs—and it’s the greatest single expense for the more than 45,000 individual owner-operators."