Canada Oil and Gas Profile
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Introduction
- Canada is one of the world's five largest energy producers and is the principal source of U.S. energy imports.
- Canada is a net exporter of most energy commodities and is an especially significant producer of conventional and unconventional oil, natural gas, and hydroelectricity. It stands out as the largest foreign supplier of energy to the United States, its southern neighbor and one of the world's largest consumers of energy. Just as the United States depends on Canada for much of its energy needs, so is Canada profoundly dependent on the United States as an export market. However, economic and political considerations are leading Canada to consider ways to diversify its trading partners, especially by expanding ties with emerging markets in Asia.
- Canada's large territory is endowed with an exceptionally rich and varied set of natural resources, which enables it to rank among the five largest energy producers in the world. It produced an estimated 18.2 quadrillion British thermal units (Btu) of primary energy in 2009, relative to 13.0 quadrillion Btu of primary energy consumed. Its economy is relatively energy-intensive when compared to other industrialized countries, and is largely fueled by petroleum for transportation purposes, natural gas, and hydroelectricity.
Regulation
- Canada has a privatized oil sector that has seen consolidation and specialization in the wake of the global economic downturn. International participation has risen rapidly in Canada's oil sector, although this has been for non-controlling stakes in projects.
- A recent regulation of foreign investment in Canada titled the “Invest Canada Act” outlines that any large investment in Canada must be of “net benefit” to Canada, indicating a limit on foreign control of strategic commodities.
- Numerous Canadian oil firms went through significant strategic corporate restructuring in the past two years. In August of 2009, Suncor completed its acquisition of Petro-Canada, the former state oil firm, creating Canada's largest oil and gas firm. In December 2009, Encana completed its plans to spin-off its oil and traditional gas assets into a new, wholly independent firm, Cenovus.
- Other Canadian firms, such as Talisman Energy and Petrobank, have sought increased specialization by creating separate entities to focus on specific areas, such as shale gas in British Columbia or shale oil in Saskatchewan and Manitoba. Asian firms have also been buying up Canadian assets through corporate acquisition.
- Canada's regulatory framework is one in which federal and provincial bodies coordinate policy and regulation. Provincial authorities handle most of the oversight in the sector. The national regulatory body is the National Energy Board (NEB). The largest and most influential of the provincial regulators is the Alberta Energy Resources Conservation Board (ERCB)
- The C-NLOPB oversees operations in Newfoundland and Labrador Offshore
Upstream
- Canada produced almost 3.7 million barrels per day (bbl/d) of total oil in 2011, an increase of nearly 200 thousand bbl/d from 2010. Of this, 2.9 million bbl/d was crude oil and a small amount of lease condensate.
- Oil production in Canada comes from three principal sources: the oil sands of Alberta, the conventional resources in the broader Western Canada Sedimentary Basin (WCSB), and the offshore oil fields in the Atlantic. Production from the oil sands accounted for over half of Canadian oil output in 2011, a proportion that has steadily increased in recent decades. In total, Alberta was responsible for almost 75 percent of Canadian oil production in 2011, according to an analysis of data from Statistics Canada. Other noteworthy producing provinces are Saskatchewan, with almost 14 percent of national output from its share of the WCSB, and offshore areas of Newfoundland and Labrador. Production in conventional offshore reserves off of the eastern provinces comes from mature oilfields, with few opportunities to mitigate decline rates. Accordingly, western provinces are expected to comprise an increasing proportion of overall Canadian oil production in the future.
- Canada is expected to be one of the largest sources of growth in global liquid fuel supply, in both the near-term and long-term. Recent editions of EIA's Short-Term Energy Outlook forecast that Canada's production will grow by an annual average of approximately 200 thousand bbl/d in 2012 and 2013. Looking forward, the 2011 International Energy Outlook projects that Canadian production could grow to 6.6 million bbl/d by 2035 due to an expansion of unconventional output from the oil sands.
Oil Sands
- Canada's most important oil producing region is the Alberta sands, especially the Athabasca deposit. The oil sands – also referred to, often pejoratively, as the "tar sands" – are permeated with bitumen, which is a form of petroleum in solid or semi-solid state that is typically found blended with sand, clay, and water in its natural state.
- Unconventional techniques are required of operators in the oil sands, which use two predominant methods to extract petroleum: traditional pit mining on the surface and in-situ production underground. When mined at the surface, bitumen-rich earth is shoveled into trucks for separation at a processing facility. Surface mining has historically been the largest source of production from the oil sands, but its share is expected to decline over time because approximately 80 percent of bitumen reserves are situated too deeply underground to be accessible to surface mining.
- The other method, in-situ extraction, entails the injection of steam into underground formations to soften the bitumen and pump it to the surface through wells. Steam-Assisted Gravity Drainage (SAGD) and Cyclic Steam Stimulation (CSS) are the two leading in-situ extraction techniques. Given the sophisticated and expensive techniques involved, oil sands production has a relatively high break-even price: commonly cited ranges are $40-70/bbl for new in-situ projects and $80-100/bbl for new surface mining projects. Consequently, oil sands investments are uniquely sensitive to sustained changes in oil prices.
- These projects utilise upgraders to convert the bitumen into synthetic crude. The upgraders in operation are:
- For further information, see Exploration And Production In Canada
- For details of Tar Sands Projects: Canadian Oil Sands Upgraders and Projects
Active Companies
- Nearly all of the world's major oil companies are active in Canada
- U.S. private sector firms involved in Canada's upstream and/or downstream oil industry include Chevron, ConocoPhillips, Devon Energy, and ExxonMobil.
- BP, Shell, Statoil, and Total are among the other major IOCs with producing or planned projects in the oil sands.
- Chinese companies, including PetroChina and its China National Petroleum Corporation (CNPC) parent company, the China National Offshore Oil Corporation (CNOOC), and Sinopec, have invested in the oil sands and other parts of Canada's energy sector.
Crude Oils
- Major crude grades include:
Midstream
- Pipelines connect the centers of Canadian production with refining and export centers in eastern provinces, the West Coast, and especially the United States. Pembina, Plains Midstream, Spectra Energy, Access Pipeline, and Inter Pipeline operate some of the largest domestic pipeline systems in Western Canada. Three companies operate the most export pipelines: Enbridge, Kinder Morgan, and TransCanada. In total, members of the Canadian Energy Pipeline Association transport 3.2 million bbl/d of oil over almost 25 thousand miles of pipeline. However, an increasing amount of oil is transported by rail to overcome infrastructural constraints in the midcontinent region.
- Canada's natural gas pipeline system is highly interconnected with the U.S. pipeline system. TransCanada operates the largest network of natural gas pipelines in North America, including thirteen major pipeline systems and approximately 37,000 miles of gas pipelines in operation. Within Canada, TransCanada Pipeline operates a 25,600-mile network that includes the 10.6-Bcf/d Alberta System and the 7.2-Bcf/d Canadian Mainline. Spectra Energy operates a 3,540-mile, 2.2-Bcf/d pipeline system connecting western Canadian gas supply regions with markets in the U.S. and Canada.
- Spectra Energy also operates the Maritimes and Northeast Pipeline linking eastern Canadian supplies with consumers in the eastern United States. Finally, the Alliance Pipeline, a 2,311-mile pipeline system, is a significant source of natural gas for the U.S. Midwest that delivers 4.6 Bcf/d to both Canadian and U.S. markets.
- For further information, see Oil and Gas Pipelines In Canada
Downstream
- According to OGJ, Canada has 17 refineries with a total crude processing capacity of 1.9 million bbl/d. Ontario (470 thousand bbl/d), Alberta (460 thousand bbl/d), and Quebec (370 thousand bbl/d) possess the most capacity, but Canada's refineries are spread across eight provinces and the single largest is is the 300,000 bpd St. John Refinery in New Brunswick.
- Imperial Oil is Canada's largest refiner, with significant capacity also operated by Suncor, Irving Oil, Valero, Shell, and Husky. According to data from Statistics Canada, Canada's refineries produced 1.9 million bbl/d of petroleum products in 2011 (including refinery processing gain).
- Many smaller refineries have been shuttered over the years. For a full list see Refineries that have been Closed Down in Canada
Relevant Links
- EIA Country Profile
- The Canadian Association of Petroleum Producers (CAPP)
- Canadian Society for Unconventional Resources
- The Canada-Newfoundland and Labrador Offshore Petroleum Board, C-NLOPB
- Google Earth map of oil and gas infrastructure in Canada
page revision: 21, last edited: 05 Oct 2015 07:01