November 7, 1941 (19th Parliament, 2nd Session)

LIB

Clarence Decatur Howe (Minister of Munitions and Supply)

Liberal

Mr. HOWE:

Mr. Chairman, I am very glad to place before the committee a rather complete statement of the oil situation. I feel that the situation has been misunderstood; the cooperation extended to the department when we asked for the conservation of oil was very willingly given, but the statement made by the Joy Oil company has shaken the confidence of the people. Therefore I feel it is only fair, both to those who have been cooperating and to those who have not, to state the position as a matter of record. Accordingly I will give the oil position in Canada, with statistics which we have regarded as confidential but which I have ascertained can be placed on record here.
As nearly as we can anticipate war demands upon us, there appears to be no doubt that our requirements for crude oil and finished products without conservation in the coming year will be at least 64,000,000 barrels, an increase of approximately 10,000,000 barrels over the year 1940. This total requirement must be provided for in the following refinery areas:
Barrels
Maritimes 10,500,000
Quebec 16,000,000
Ontario 20,500,000
Prairies 9,500,000
British Columbia 7,500,000
Total 64,000,000
It is difficult to estimate at this time what the Canadian production will be over the coming twelve months, but it is doubtful if it will exceed in volume that of the year 1941, namely, 9,500,000 barrels. Thus 54,500,000 barrels must be brought in from the outside. Having regard to our tanker position and the importance of getting along with the minimum of ocean tanker tonnage, the pipeline into Sarnia and tankers on the inland waterway must be operated to capacity. The plan proposed is as follows:
Barrels
Import via the Sarnia pipeline.. 10,700,000
Import by lake tanker 13,800,000
Import by ocean tanker 30,000,000
Imports by the Sarnia pipeline amount to the full capacity of that line, while imports
The War-Oil Situation

by lake tanker come from other points on the great lakes which are supplied by pipeline, such as Buffalo, Toledo, and one or two other points.
Having regard to the geographical locations of refineries in relation to available sources of supply, there appears to be no alternative plan but the following:
Refining area Canadian production Barrels Via pipeline (Sarnia) Barrels Via lake tankers Barrels Via ocean tankers (including via Portland-Montreal pipeline) Barrels 10,500,000 12,000,000 Total Barrels 10.500.000 16,000,000 20.500.000 9.500.000 7.500.000
4,000,000 9,800,000
10,700,000
9,500,000
7,500,000

Total
9,500,000 10,700,000 13,800,000 30,000,000 64,000,000Percentage
14-8 16-7 21-5 47 100
The Sarnia pipeline is the only pipeline feeding Canadian refineries direct from United States crude-producing areas, namely the midcontinent and Illinois fields. This pipeline operating to capacity is capable of handling the 10,700,000 barrels hereinbefore referred to. This pipeline serves the Sarnia refinery only, yet it has not sufficient capacity to take care of the entire needs of this refinery. The remaining requirements of the Sarnia refinery, as well as the requirements of the other refineries in Ontario total 9,800,000 barrels, which must be brought in by lake tankers. In addition to this movement of crude, it is planned to move 4,000,000 barrels of crude
from Toledo to Montreal by lake tankers, to save ocean tanker movement. Thus we shall have a total contemplated movement of crude by lake tanker to the extent of 13,800,000 barrels.
With regard to the question of lake tankers, it must not be overlooked that these same vessels back-haul to various marine terminals over 20,000,000 barrels of finished petroleum products. In order to bring in the 30,000,000 barrels to the refinery areas where this product is needed, we will require the equivalent of 16'8 ocean tankers with a capacity of
100,000 barrels each. The ocean tanker capacity required for this movement is as follows:
Tanker No. of Tankers Crude capacity 100,000 bbls.
required required each
Bbls. Bbls.
Halifax
10,500,000 680,000 6-8Montreal refineries
12,000,000 750,000 7'5British Columbia
7,500,000 250,000 2-5Total
30,000,000 1,680,000 16-8
We have available to-day eight Canadian-flag and six Norwegian-flag Canadian chartered ocean tankers having an average capacity of approximately 95,000 barrels each, or the equivalent of 13-3 vessels of 100,000 barrel capacity each. Therefore, the total ocean tanker capacity at present under Canadian control amounts to 1,330,000 barrels. Assuming that we shall be able to hold all these vessels, particularly the Norwegian, and experience no sinkings, we are short ocean tanker capacity of 350,000 barrels, or 3-5 vessels of 100,000 barrel capacity each.
As before stated, it is planned to move
4,000,000 barrels of crude from Toledo to Montreal by lake tanker in order to relieve the pressure on ocean tankers. In order to do this we will require 10-2 additional lake

tankers of 21,000 barrel capacity each over and above the lake tankers owned or controlled in the Canadian service. It is possible that by an exchange of products the refiners may be able to reduce the requirements of 10-2 lake tankers to 7-2 lake tankers. If the American flag lake tanker tonnage now on the great lakes and available to Canadian companies in the past remains available in the future, it may be possible to overcome this lake tanker tonnage by chartering American vessels. The fact, however, remains that we are short 3-5 ocean vessels having a capacity of 100,000 barrels each, and at least 7-2 lake tankers over and above those owned or at present controlled in the Canadian service in order to bring in the 43,800,000 barrels which must be provided by ocean or lake transportation.

The War-Oil Situation
It must also be borne in mind that six of the Canadian chartered tankers are Norwegian flag. By arrangement between the sovereign government of Norway and the government of Great Britain, all Norwegian tanker tonnage is earmarked for the battle zone. Two Norwegian tankers which were in the Canadian service earlier this year were taken at the time Norwegian tanker tonnage was turned over by the United States government. Should sinkings again become excessive and/or should Britain require additional tanker tonnage over that which she now has, there is every likelihood that these six Norwegian tankers would be taken. In any event there is no certainty that they can be held in the Canadian trade for the duration of the war.
It must be noted that the refinery operations and supplies required at Halifax are almost entirely war effort. The refinery at Halifax is being operated to capacity on a heavy crude in order to produce the maximum yield of heavy oil. Strange as it may seem, gasoline is a by-product. Although operating this refinery to capacity, it will be necessary to bring in at least 800,000 barrels of diesel oil as such to meet our war demands.
It must also not be overlooked that a substantial part of our requirements on the Pacific coast are also war effort. The storage on the Pacific coast must at all times be filled to capacity, and as the fuel oil is drawn from the storage it must be replaced without delay. In addition to the requirements on the Pacific coast for war effort, our railways must have at least 2,6t)0,000 barrels of fuel oil in order to provide the service expected of them.

Topic:   THE WAR
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