When oil is refined, it is heated, which causes it to seperate into layers based on its density. In the actual refining process, the oil is simply seperated and none is wasted. Oil that cannot be used is then shipped off to a company that can use it. Toxic waste is usually small things that are a result of the refinery. For example, numerous minor oil spills which add up to lots of oil, or other chemicals that are used around the refinery (paint, solvents, etc.).
Oil spills
Occasionally, a large oil tanker will rupture, causing its cargo of crude oil to be released into the ocean. The oil is lighter than the water, and floats at the surface. The oil pollutes the water, causing fish and birds to die.