Natural Gas in Canada

Canadian Gas Association

CAMPUT Regulatory Course

JUNE 2015

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THE CANADIAN GAS ASSOCIATION

NATURAL GAS

NATURAL GAS

• Natural gas is more than 95% methane (CH4).

• It is generally located deep under ground in porous rock formations sandwiched or trapped between more solid rock formations.

• Biomethane, Biogas, RNG, CNG, LNG all are forms of natural gas.

NATURAL GAS ATTRIBUTES

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Affordable

Annual production of over 2.8 trillion cubic feet to meet over 30% of Canada’s energy needs in more than 6.5 million homes, businesses, and industry; Canada’s robust supply outlook provides increased confidence in future price competitiveness.

AbundantMore than 100 years of supply at current production levels. Unconventional gas has fundamentally changed North America’s supply picture, providing long-term security and reliability.

Clean Efficient and clean burning energy choice; fewer emissions than many other fuels; important partner for renewables and emerging low-emission technologies.

Versatile Can improve end-use efficiency, contribute to lower emissions, and provide flexible partner in power generation and transportation.

Reliable Comes from a variety of sources and is supported by extensive storage and pipeline networks.

Safe Leaders in complying with stringent safety standards and regulations at all stages of natural gas exploration, production, transportation, distribution and use.

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Conventional (excl tight gas)

83.08%

Tight Gas530.049%

CBM35.03%

Shale Gas222.020%

Frontier223.020%

Natural gas resources & reserves - Canada(trillions of cubic feet)

Source: National Energy Board, US Geological Survey

NATURAL GAS RESOURCES

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NATURAL GAS EXPLORATION

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NATURAL GAS TRADE

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NATURAL GAS PRODUCTION

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Natural gas30.8%

Electricity (hydro, nuclear)22.5%

RPP38.1%

All others*8.5%

Energy final demand - Canada - by type (%)

Source: StatCan 128-0016

*Coal, NGLs, coke, coke oven gas, steam

ENERGY USE

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NATURAL GAS USE – BY SECTOR

Industrial32.8%

Road Transport0.0%

Pipelines2.9%

Agriculture1.0%

Residential16.3%

Public Admin./Commercial

12.0%

Power gen.14.7%

All others *20.3%

Natural gas - final demand- by sector (TJ,%)

Source: Statcan 128-0016

* RPP, steam, producer consumption and non-energy use

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NATURAL GAS EMPLOYMENT

0

20000

40000

60000

80000

100000

120000

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

Direct Employment - Natural Gas Sector (full time equivalent)

Natural gas distribution Pipeline transmission

Natural gas extraction Support for extraction

Source: StatCan 281-0024, CGA

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NATURAL GAS INVESTMENT

$-

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

$45,000

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

Capital Investment - Natural Gas Sector($C millions)

Natural gas distribution Pipeline transmission

Natural gas extraction Support for extraction

Source: StatCan 031-0002, CGA

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NATURAL GAS GDP

Natural gas extraction

$24,211

Support for extraction

$2,121

Pipeline transmission

$2,939

Natural gas distribution

$5,042

GDP - Natural gas Sector 2013 ($C 2007 millions)

Source: StatCan 379-0031, CGA

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NATURAL GAS PIPELINES

Distribution mains

243,819

Transmission mains67,160

Service lines134,863

Natural gas distribution systems - Canada 2013(kilometres)

Source: Canadian Gas Association

445,842Total Kilometres

of Pipleline

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NATURAL GAS STORAGE

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ENERGY COMMODITY PRICES

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GLOBAL NATURAL GAS PRICES

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NATURAL GAS CONSUMERS – BY TYPE

Industrial22,206 0.3%

Commercial565,627

8.6%

Residential5,973,983

91.0%

Natural gas customers - Canada - by type (number)

Source: StatCan 129-0003

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NATURAL GAS CONSUMERS – BY REGION

BC983,154 15.0%

Alta1,250,944

19.1%

Sask365,786

5.6%

Man253,527

3.9%

Ont3,477,627

53.0%

Que213,949

3.3%

NB12,054 0.2%

NS4,784 0.1%

Natural gas customers - by province (number)

Source: StatCan 129-0003

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NATURAL GAS CONSUMER SPENDING

Electricity $18,901

26%

Natural gas $6,374

8%

Other fuels $4,358

6%

Motor fuels and lubricants

$44,052 60%

Energy spending - Canada($millions/%)

Source: StatCan 380-0085

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NATURAL GAS RESIDENTIAL CONSUMERS

Electricity24%

Natural gas56%

Heating oil10%

Wood9%

Propane & Coal1%

Space & Water Heating - Canada

Source: NRCan End Use Database

NATURAL GAS – IN HOMES

• Statistics Canada reports that total household spending on natural gas has declined from $8.1 billion in 2008 to $6.4billion in 2013.

• Meanwhile, StatsCan reports that electricity spending has increased from $15.5 billion in 2008 to $18.9 billion in 2013.

• This chart illustrates a cost-comparison of natural gas, electricity, heating oil, and propane in 2013.

• In 2013, the average household spent between $1,358 to $4,191 to heat their home - with a savings of over $3,000 by choosing natural gas over home heating oil.

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NATURAL GAS – IN TRANSPORTATION

On Road:• Commercial Canadian heavy engine technologies:

• Reduce lifecycle carbon emissions by 20-25% and 85-90% using renewable natural gas (RNG)

• Lower cost fuel for trucking, refuse, transit, vocational trucks.

For Marine:• Opportunities on Great Lakes.• Ferry applications.

For Rail:• Strategic re-fuelling hubs can create a cleaner,

safer, more economic North American rail re-fuelling network.

For Off-Road• LNG in Canadian mining and other vehicle

operations to improve competitiveness, attract investment and lower cost and emissions.

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Freight rail: 3% of Canadian Transportation Energy Use

Marine: 4% of Canadian Transportation Energy Use

Heavy duty, medium, and freight light duty: 35% of Canadian Transportation Energy Use

Off road: 4% of Canadian Transportation Energy Use

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NATURAL GAS – IN POWER GENERATION

Hydraulic turbine60.06%

Tidal power turbine0.00%

Wind power turbine1.63%

Solar0.04%

Other types of electricity generation

0.41%

Nuclear steam turbine14.25%

Coal11.52%

Natural gas9.06%

Diesel and light fuel oil0.17%

Heavy fuel oil0.74%

Wood and spent pulping liquor

0.82%

Propane & other fuels

1.30%

Power generation - by source

Source: StatCan 128-0014

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NATURAL GAS – DECISION TRACKER www.trackenergyregs.ca

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NATURAL GAS – ENERGY REGULATION QUARTERLYwww.energyregulationquarterly.ca

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ENJOY THE REST OF THE COURSE