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The story of the Co-op Refinery Complex

By Dan Yates

June 9, 2015

The Co-op Refinery Complex is celebrating its 80th anniversary in 2015. Watch for a weekly feature on one area of the refinery this month.

The story of Co-op Refinery Complex (CRC) began in the 1930s. Horses, which had been the dominant source of farm power for centuries, were giving way to petroleum-fuelled tractors. This was especially true in the area around Regina, where the broad level prairie was well suited to the first tractors and combine harvesters.

As petroleum use increased, farmers looked for the ways to reduce the cost of this important crop input. Many farmers had experience in the benefits of co-operation through joint purchases of inputs such as fence posts, binder twine and coal. These efforts often resulted in the formation of local co-ops. With this strong and successful co-operative tradition, farmers formed oil co-ops to reduce the cost of fuel.

Co-ops were formed at Milestone, Wilcox, Sherwood at Regina, Moose Jaw, Riceton, Lewvan, Rouleau, Lang, Weyburn and Pense, among other locations. The co-ops often bought gasoline from US refiners and sold it at margins of up to seven cents a gallon, returning the savings to their members.

Search for solutions

In 1933, the Canadian government established a tariff of 3.7 cents a gallon on gasoline imported from the United States, effectively cutting the co-ops off from this source of supply. The co-ops turned to small, independent refiners at Coutts in Alberta and Moose Jaw in Saskatchewan.

By 1933, the independent refiners had been bought up by the major oil companies and the wholesale price of gasoline was raised two cents a gallon. It was apparent that the major integrated oil companies were shifting the petroleum profits from the retail sector to the refinery where the co-ops were not represented. The bold response by the oil co-ops in the winter of 1933-34 was to launch a drive to build their own refinery! It was the midst of the great depression. Wheat prices had fallen to less than 30 cents a bushel. Many farmers had been forced off their land. Thousands were riding the rails looking for jobs. Of those who remained on their farms, many returned to horse power for they could no longer afford the price of fuel. Horses were even hitched to cars—a mode of transportation known as the Bennett Buggy.

Yet in the middle of this economic catastrophe, a handful of visionaries believed they could build their own refinery. Although novices in the oil business, these pioneers were experts in co-operation. Among the leaders was Harry Fowler, the Manager of the Wilcox Co-op, who later became the refinery’s first Secretary-Treasurer and Manager when the Refinery was incorporated in 1934.

The Refinery’s first President was Ernest Frisk of Kronau, long-time Secretary of Riceton Co-op. Original Board Member, Sid Gough of Lewvan, distinguished himself by pledging the title to his own farm as security for the line of credit with the railroad. His faith allowed the refinery to continue operating at a critical point.

A fundraising drive among southern Saskatchewan farmers raised a total of $32,000. It wasn’t enough to build the cracking plant that was desired, but the Board of Directors pressed ahead with construction of what their meagre resources could afford. The world’s first co-operative refinery, a 500 barrel per day Skimming Plant went “on stream” on May 27, 1935, at about eleven o’clock in the morning. In its first year of operation, the plant had sales of $253,000 and achieved savings of $30,000—almost equal to the initial investment!

Success brings expansion

In 1939, CRC signed a contract to build a cracking plant at a cost of some $250,000. The long awaited cracking plant was essential to increase the yield of gasoline. It also expanded production to 1,500 barrels of crude oil a day. Harry Fowler called it our “off the farm power plant.” It was dedicated to serving the needs of agricultural producers.

Relations between CRC and the Saskatchewan Co-operative Wholesale Society had been close from the beginning, with the wholesale purchasing fuel from the Refinery for resale to retail co-operatives across the province. The relationship became formal in 1944 when delegates for both organizations voted in favour of merging under the name Saskatchewan Federated Co-operatives Limited. Since then, CRC has operated as a wholly owned subsidiary of the Central Wholesale, which grew into Federated Co-operatives Limited, providing goods and services to retail co-operatives from the Lakehead to the Queen Charlotte Islands.

An expansion of CRC to 5,000 barrels a day was officially opened on August 24, 1951, which was declared “Co-op Day” in Saskatchewan.

A $1.7 million expansion in 1954 doubled production to 12,000 barrels a day. More important, it made the Refinery a thoroughly modern plant through the addition of a Cat Cracker and several other processing units.

One of the most memorable days in the Refinery’s proud history occurred on June 18, 1960, in celebration of CRC’s 25th year of operations. The streams of trucks, cars and buses kept coming and coming. They brought supporters from all across Saskatchewan and southwestern Manitoba. When the day was over, some 40,000 well-wishers had arrived to celebrate the 25th anniversary of the world’s first Co-op Refinery. It was the largest crowd ever to attend a single event in the history of Saskatchewan. The massive outpouring of support expressed more eloquently than words, the strength of the bond between the Co-op Refinery and the people it serves.

By 1974, Refinery production had grown to 28,000 barrels of crude a day. A phased $30 million expansion program was announced to bring capacity up to 50,000 barrels a day.

The early 1980s brought a new chapter in the CRC story. Canada and the rest of the world faced an energy crisis, as the price of crude oil escalated and domestic supplies of light sweet crude dwindled. Saskatchewan and Canada were determined to secure the nation’s energy future by developing the vast reserves of heavy oil. To do so, our country needed a heavy oil upgrader to change heavy crude into a product suitable for further processing by conventional refineries.

Upgrader adds heavy oil

After intensive studies, it was agreed that an upgrader would be integrated with CRC’s existing refining units. Integrating the upgrader with the Co-op Refinery reduced the cost of the Upgrader Project to about $700 million—or about half of what would have cost to build a stand-alone upgrader. CRC continued to own its refining units, and also became a partner with the Saskatchewan Government in the ownership of the new NewGrade Energy Incorporated Heavy Oil Upgrader. The Canadian Government supported the project through loan guarantees.

Construction officially began in October 1985. It was truly a mega project, requiring hundreds of thousands of hours of engineering. Some 6,000 tradespeople worked on the site for an estimated 4,500 person years of employment in construction. The main 750 ton ARDS vessels were, at that time, the largest loads ever moved by rail in Canada. The three-year construction phase was completed on time and on budget, and the Co-op Refinery/Upgrader Complex went on stream in November 1988.

In 2008, Federated Co-operatives Limited (FCL) announced a major expansion to its Co-op Refinery Complex. The Section V expansion and associated revamps led to over $2.7 billion in new investment into the refinery’s infrastructure.

The Section V expansion involved building five new processing units, 14 additional storage tanks, a new cooling tower and electrical substation as well as new firewater, flare, plant and instrument systems.

The project was completed on October 17, 2012. The project allows the refinery to process 30 per cent more crude oil per day in the immediate term, with plans for continued capital investments that will see capacity increase by 45 per cent. The expansion also created roughly 100 new full-time jobs at the refinery.

Today, the Complex has enjoyed years of successful operation, managed and operated by CRC with a staff of experienced and dedicated employees. It processes an important natural resource. It continues to be an important source of the energy needed to drive the agricultural industry as well as serving the needs of other petroleum users.

CRC’s success has fostered the growth of the Co-operative Retailing System throughout the west. The story of Consumers’ Co-operative Refineries Limited is more than a story of an oil refinery. It is a story of leadership. It is a story of success against almost impossible odds. And mostly, it is a story of people and the power they can harness through co-operation. The Refinery units continue to stand as towers of hope, embodying not only what has been done, but also what can be done…when people work together.