Petrochemical Industry | The Canadian Encyclopedia


Petrochemical Industry

The petrochemical industry, which produces chemicals using OIL AND NATURAL GAS as major raw materials, occupies an important position in Canada's MANUFACTURING and consuming sectors. Oil and natural gas are composed primarily of hydrocarbons. Most petrochemicals contain hydrogen or carbon or both.

Petrochemical Industry

The petrochemical industry, which produces chemicals using OIL AND NATURAL GAS as major raw materials, occupies an important position in Canada's MANUFACTURING and consuming sectors. Oil and natural gas are composed primarily of hydrocarbons. Most petrochemicals contain hydrogen or carbon or both. Petrochemicals can be converted into thousands of industrial and consumer products, including PLASTICS, paints, RUBBER, fertilizers, detergents, dyes, TEXTILES and solvents. The industry consists of 2 major divisions. The primary petrochemical industry produces basic chemicals, such as ethylene, from oil or gas. The secondary industries convert the basic petrochemicals into materials that may be directly used by other industries.

Canada's standard of living is dependent to a significant degree on domestic petrochemical production. The availability of economic petrochemicals allows the domestic production of numerous items that could be more costly if imported. The Canadian industry was growing more rapidly than its counterparts in Europe, Japan and the US, which are the dominant world producers, but investment in the mid-to-late 1980s dropped significantly. Investment is growing in the late 1990s. FOREIGN INVESTMENT is attracted to Canada because abundant energy resources can be profitably upgraded to supply growing world needs.

Many compounds now considered petrochemicals were formerly made from wood and COAL. By the late 19th century, a wood-based industry made methanol, acetic acid and other products. In 1904 an industry began in SHAWINIGAN, Québec, making acetylene and related chemicals from coke and limestone. Following WWI, Shawinigan Chemicals expanded to make vinyl resins, now an integral part of the petrochemical industry. Canadian research played a key role in the development of this important class of plastics and adhesives.

The discovery of oil in Lambton County, Ontario, in 1857 eventually led to a petrochemical industry that replaced the one established on acetylene. Within 7 years, 27 small oil refineries were established in Petrolia, Ontario. Abraham GESNER, one of Canada's industrial pioneers, was responsible for major technological breakthroughs in refining oil. Early efforts were aimed at producing lamp and stove oil, but as automobile use grew, refineries were adapted to produce TRANSPORTATION fuel. The new refinery processes also produced hydrocarbon mixtures suitable for petrochemical raw material (feedstock) but these were little exploited before WWII.

The outbreak of WWII made Canada an important petrochemical producer for the Allied war effort. POLYMER CORPORATION LTD (later renamed Polysar) was established by the federal government in 1942 at Sarnia, Ontario, to make synthetic butadienestyrene rubber. St Clair Processing Corp Ltd (a former subsidiary of Imperial Oil Ltd) and Dow Chemical of Canada Ltd built plants nearby to make the petrochemicals for the synthetic rubber process. Also in 1942, Alberta Nitrogen Products began production of ammonia from natural gas at Calgary, Alberta. These efforts spawned the modern Canadian industry.

The Modern Industry

After the war, the industry grew to supply the increasing demand for synthetic consumer products. The first industry-owned chemical plant based on oil was built at Sarnia by Dow in 1942, to produce polystyrene, a widely used plastic. Manufacture of many other chemical products soon developed at Sarnia including antifreeze, polyethylene, solvents and detergent materials. Montréal also grew as a petrochemical centre, especially after 1957, when Union Carbide Canada Ltd launched ethylene chemicals and polyethylene operations. The early industry in Sarnia and Montréal relied heavily on feedstocks from oil-refining plants. Meanwhile a gas-based industry was developing in Alberta. Canadian Industries Ltd established the first Canadian polyethylene plant near Edmonton in 1953, using ethane extracted from natural gas by Imperial Oil. The ethane-based industry remains the cornerstone of Alberta's petrochemical production, but the oil-based counterpart has grown since its beginning in 1953.

Location of Plants

Today, most petrochemical plants are located near oil-producing and oil-refining centres or near natural-gas sources and transmission pipelines. They are concentrated in Ontario, Québec and Alberta, but plants are also present in most other provinces. Petrochemical plants are costly, some requiring more than $500 million to build. The gross investment of Canadian petrochemical plants totalled nearly $10.3 billion in 1995.


Many multinational petrochemical companies have established Canadian subsidiary companies and operations. These tend to be dominated by foreign shareholders, although Canadians also hold equity in some of the subsidiaries. Joint ventures between foreign-controlled and Canadian-controlled companies are important to the industry. Canadian investment is increasing, though the industry is still dominated by foreign ownership.

Economic Status

Annual sales of petrochemicals were about $10.7 billion in Canada in 1995, about 40% of the value of all chemical shipments excluding fertilizers. The sales volume represents 2.7% of all manufacturing sales and nearly 1.4% of the Gross Domestic Product. The industry grew rapidly until the early 1980s when it found itself overbuilt for the worldwide economic downturn. Alberta's industry is growing rapidly again in the late 1990s.

Nearly 44% of petrochemical production was consumed domestically in 1995. The amount exported has been increasing over the 10 years since 1985, and there have been no negative trade balances since 1986. In 1995 $1.2 billion more petrochemicals were exported than imported.

About 75% of all exports go to the US. Other large markets include Japan and other Pacific nations, Europe and South America. Imports, mainly chemicals for which the Canadian market is too small to warrant domestic production on an economic scale, come mostly from the US.


In 1995 the industry consumed about 5% of Canada's oil production and some 20% of gas. Purchases of energy and feedstocks are the largest operating costs of a petrochemical plant, typically 50%. Other major costs are related to equipment and maintenance services.

Work Force

The industry employs over 15 000 persons in jobs ranging from equipment operators to research scientists. Wages and salaries are higher than for most other manufacturing sectors. Productivity per worker is high because of the large investment in equipment. Plants normally operate 24 hours a day so that equipment can run continuously. The largest union in the industry is the Communications, Energy and Paperworkers Union of Canada, although a significant number of workers are nonunionized.


Petrochemical technology employs high pressures and temperatures, requiring sophisticated ENGINEERING and equipment in order to use energy efficiently. Most modern technology has been developed at great expense in laboratories run by multinational firms and located outside Canada.

However, Canadian research efforts have resulted in notable discoveries, such as DuPont Canada's development of linear-low-density polyethylene (a plastic resin) at Kingston and Sarnia in the 1960s. This product became an important material for flexible packaging. Funds spent on petrochemical research in Canada are small compared with other industrialized nations, averaging about 2% of industry sales. Most of these funds are generated by industry.

Government Control

The pricing of oil and gas is critical to the international competitiveness of the industry. It has advocated a market responsive regime for oil and natural gas pricing in Canada. The availability of feedstocks at market-related prices in combination with world-scale modern plants provide the Canadian industry with an excellent competitive base.

Environmental Status

The industry has made great strides in controlling unwanted emissions; compared with other resource industries, its emissions are low per unit of output. Emissions are generally gaseous and can arise from production processes, handling and storage. Provincial regulations establish maximum emission levels that are complied with by the use of well-designed and well-maintained equipment. The industry does not generate large volumes of contaminated water. Most companies adhere to the Responsible Care environmental stewardship program of the Canadian Chemical Producers' Association.


Although there is no petrochemical industry association in Canada, companies are members of the Canadian Chemical Producers' Association (Ottawa), which represents most large industrial chemical manufacturers. The Chemical Institute of Canada (Ottawa) and its affiliate, the Canadian Society for Chemical Engineering, are important bodies for professional development. Trade publications include Camford Chemical Report, published by Camford Information Services, Canadian Oil Register and Nickles Daily Oil Bulletin, all published by Southam Communications Ltd; Process Industries Canada, published by Zanny Ltd.; and Oilweek, published by Maclean Hunter Ltd.

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