The Federated Co-op Refinery (FCR) was established in Regina in 1935 as a small 500-barrel/day refinery, in response to concerns about the buying up of independent oil refineries in Saskatchewan by major oil companies in 1933 and 1934, which led to price increases of 3¢/gallon. Expanded many times over the past sixty years, the Co-op refinery had a capacity of 80,000 bbl/day at the end of 2003.
The refining industry in Saskatchewan and western Canada in general began in the first half of the 20th century. In Saskatchewan alone, in 1951, there were nine refineries ranged across the province: three in Moose Jaw, two in Regina, and single refineries in Saskatoon, Rosetown, Prince Albert and Kamsack. Many of the refineries were very small, unsophisticated operations with production of only a few hundreds or thousands of barrels a day. The second half of the 20th century saw large consolidation and shut-down of refinery operations across the region, with the result for Saskatchewan that, except for FCR, the nearest refineries are now near Edmonton; the next Canadian refinery to the east of Regina is roughly 2,000 km away in Sarnia, Ontario. Besides products from the FCR, refined petroleum products are also transported from the Edmonton area to Saskatchewan and Manitoba.
FCR has an associated operation, the NewGrade Upgrader, located next to the refinery which transforms heavy oil from the Loydminster deposits into light synthetic oil. The NewGrade Upgrader began operations in 1988 and has a capacity of 55,000 barrels/day. The NewGrade refinery received substantial financial investment from the federal and the Saskatchewan governments, which had not been recovered as of 2004 because of initial operational difficulties and because the price differential between heavy oil and light synthetic oil was often too small during the 1990s to cover the cost of the upgrading process. The Newgrade Upgrader and the Bi-provincial Upgrader at Lloydminster, owned by Husky Energy, provide an important source of demand for heavy oil. Both operations have made a substantial contribution to encouraging the development of Saskatchewan’s heavy oil resources by raising the expected value of heavy oil.