Lennie Kaplan, Author at Canadian Energy Centre

Over US$227 billion in government revenues from Canada’s natural gas sector expected through 2050

Lennie Kaplan — Tue, 31 Oct 2023 21:52:17 +0000

To sign up to receive the latest Canadian Energy Centre research to your inbox email: inbox@canadianenergycentre.ca

Download the PDF here

Download the charts here

Overview

With ongoing public discussions focusing on net zero emissions from Canada’s natural gas sector, it is a good time to examine projected government revenues and capital expenditures (capex) expected from the sector through 2050. This analysis illustrates how investment in low emitting technologies will help preserve government revenues and capex in Canada’s natural gas sector.

The Fact Sheet makes these calculations based on a conservative projection that the Henry Hub price for natural gas will average either U.S.$3.00 per thousand cubic feet (kcf) or U.S.$4.00 per kcf between 2023 and 2050. The capex and government revenue numbers (which includes provincial royalties and federal and provincial corporate taxes) are expressed in nominal U.S. dollars, assuming a 2.5 per cent inflation rate and a 10 per cent discount rate.

The written content in this report was prepared by the Canadian Energy Centre (CEC). It relies on data obtained from the Rystad Energy UCube, but it does not represent the views of Rystad Energy

Background on Rystad Energy UCube

Rystad Energy is an independent energy research company providing data, analytics and consultancy services to clients around the globe.

UCube is Rystad Energy’s global upstream database, including production and economics (costs, revenues, and valuations) for more than 80,000 assets, covering the portfolios of more than 3,500 companies.

The UCube data set is used to study all parts of the global exploration and production (E&P) activity value chain, including operational costs, investment (capex and opex), fiscal terms, and net cash flows for projects and companies, both globally and by country (Rystad Energy, 2023).

In this Fact Sheet, we use a constant price in real terms for our analysis of government revenues and capex from the natural gas sector, with Henry Hub prices set to a constant of either U.S.$3.00 per kcf or U.S.$4.00 per kcf between 2023 and 2050.

Government revenues from the Canadian natural gas sector to reach over U.S. $227 billion through 2050

Under a Henry Hub U.S.$3.00 per kcf price trajectory, government revenues from the country’s natural gas sector are expected to rise from U.S.$1.4 billion in 2023 to U.S.$3.4 billion in 2050 (see Figure 1).

Under a Henry Hub U.S.$4.00 per kcf price trajectory, government revenues from the country’s natural gas sector are expected to rise from U.S.$2.0 billion in 2023 to U.S.$10.0 billion in 2050 (see Figure 1).

Source: Derived from the Rystad Energy UCube

On a cumulative basis, between 2023 and 2050, government revenues from Canada’s natural gas sector are projected to be over U.S.$85.4 billion under a Henry Hub U.S.$3.00 per kcf price trajectory and over U.S.$227.3 billion under a Henry Hub U.S.$4.00 per kcf price trajectory (see Figure 2).

Source: Derived from the Rystad Energy UCube

Capital expenditures (capex) in Canada’s natural gas sector to reach over U.S. $297 billion through 2050

Under a Henry Hub U.S.$3.00 per kcf price trajectory, capital expenditures (capex), including exploration costs, in Canada’s natural gas sector are expected to fall from U.S. $8.9 billion in 2023 to U.S.$6.6 billion in 2050 (see Figure 3).

Under a Henry Hub U.S.$4.00 per kcf price trajectory, capital expenditures (capex) in Canada’s natural gas sector are expected to rise from U.S.$9.0 billion in 2023 to U.S.$10.7 billion in 2050 (see Figure 3).

Source: Derived from the Rystad Energy UCube

On a cumulative basis, between 2023 and 2050, capex from Canada’s natural gas sector are projected to be over U.S.$188.8 billion under a Henry Hub U.S.$3.00 per kcf price trajectory and over U.S.$297.0 billion under a Henry Hub U.S.$4.00 per kcf price trajectory (see Figure 4).

Source: Derived from the Rystad Energy UCube

Notes

The written content in this report was prepared by the Canadian Energy Centre (CEC) and does not represent the views of Rystad Energy.

References (Link live as of October 10, 2023)

Rystad Energy. (2023). Upstream Solution. <https://bit.ly/3veaMIV>.

Creative Commons Copyright

Research and data from the Canadian Energy Centre (CEC) is available for public usage under creative commons copyright terms with attribution to the CEC. Attribution and specific restrictions on usage including non-commercial use only and no changes to material should follow guidelines enunciated by Creative Commons here: Attribution-NonCommercial-NoDerivs CC BY-NC-ND.

Private and public expenditure on environmental protection in Canada, 2023 edition

Lennie Kaplan — Tue, 17 Oct 2023 21:20:19 +0000

Photo for Canadian Energy Centre

To sign up to receive the latest Canadian Energy Centre research to your inbox email: inbox@canadianenergycentre.ca

Download the PDF here

Download the charts here

Overview

This Fact Sheet details spending on environmental protection by the oil and gas sector, other industries, and provincial governments. The comparisons are made using the most recent data from Statistics Canada.

As the data makes clear, Canada’s oil and gas sector spent more than any other industry in Canada on environmental protection—$9.4 billion cumulatively from 2018 to 2020— accounting for 33 per cent of total environmental protection expenditures made by business across Canada in those years.

As the data also shows, the Alberta government spent $22.6 billion on environmental protection between 2008 and 2021.

Environmental protection spending by industry

Figure 1 shows that Canadian businesses spent $28.6 billion on environmental protection between 2018 and 2020. When capital and operating expenses on environmental protection are combined, out of the $28.6 billion spent between 2018 and 2020, the oil and gas sector spent $9.4 billion.

Source: Derived from Statistics Canada, Table 38-10-0130-01

In 2020, when capital and operating expenses on environmental protection are combined, the oil and gas sector spent $2.7 billion, which constituted 27 per cent of all Canadian business spending on the environment that year (see Figure 2).

Other major industries also spent money on environmental protection including primary metal manufacturing ($2.1 billion), mining and quarrying (about $1 billion), electric power generation, transmission, and distribution ($0.6 billion), and paper manufacturing ($0.5 billion), and chemical manufacturing (also $0.5 billion).

Source: Derived from Statistics Canada, Table 38-10-0130-01

Breakdown by capital and operating spending

Capital expenditures¹

In 2018, the oil and gas sector was responsible for 41 per cent ($1.5 billion) of all capital spending on environmental protection. All other industries combined spent 59 per cent ($2.2 billion). In 2019, the oil and gas sector spent $1.8 billion, 48 per cent of the all-industry spending on environmental protection. In 2020, the oil and gas sector spent $1.4 billion, 42 per cent of the all-industry spending on environmental protection (see Table 1).

Operating expenses²

In 2018, the oil and gas sector was responsible for 34 per cent ($2 billion) of all operating expenditures allocated to environmental protection. All other industries combined spent 66 per cent ($3.8 billion) of the operating expenditures directed to environmental protection. For 2019, there was no data available on the oil and gas industry’s operating expenses on environmental protection. In 2020, the oil and gas sector was responsible for 20 per cent ($1.3 billion) of all operating expenditures for environmental protection.

1. Capital expenditure includes outlays on machinery and equipment and for the construction of non-residential facilities, among others. 
2. Operating expenses includes expenses incurred for labour, materials and supplies, and maintenance and repair, among others.

Source: Derived from Statistics Canada, Table 38-10-0130-01

Environmental spending by the provinces, 2008-2021

Industries are not alone in spending money on environmental protection; provincial governments do as well. Table 2 shows that total provincial government spending on environmental protection between 2008 and 2021 was nearly $143.5 billion.

Alberta spent $22.6 billion or 15.7 per cent of all provincial expenditures on the environment, while its proportion of the national population was 11.6 per cent in 2021. Ontario spent $55.8 billion or 38 per cent of all provincial expenditures, more or less in line with its 38.7 per cent of the population in 2021. Nova Scotia and Saskatchewan spent a higher proportion on the environment relative to their share of the national population.

Two of the largest provinces spent less on the environment than their share of the national population: Quebec and British Columbia. Quebec’s government spent $27.2 billion or 18.9 per cent of all provincial environmental expenditures between 2008 and 2021, significantly below its 22.5 per cent share of the national population in 2021.

Source: Statistics Canada, Tables 10-10-0005-01 and 17-10-0005-01; and authors’ calculations

Conclusion

Environmental spending highest by oil and gas industry, and highest by Alberta in relation to its population

Between 2018 and 2020, the oil and gas sector spent $9.3 billion, or 33 per cent of the amount spent by all businesses combined on environmental protection.

Data available from 2008 to 2021 show that Alberta’s provincial government spent significantly more than its share of Canada’s population ($22.6 billion or 15.7 per cent of all provincial spending even as its share of the national population was 11.6 per cent).

Notes

This CEC Fact Sheet was compiled by Ven Venkatachalam and Lennie Kaplan at the Canadian Energy Centre: www.canadianenergycentre.ca. The authors and the Canadian Energy Centre would like to thank and acknowledge the assistance of two anonymous reviewers in reviewing the data and research for this Fact Sheet. All percentages in this report are calculated from the original data, which can run to multiple decimal points. They are not calculated using the rounded figures that may appear in charts and in the text, which are more reader friendly. Thus, calculations made from the rounded figures (and not the more precise source data) will differ from the more statistically precise percentages we arrive at using source data.

References (All links live as of October 2, 2023)

Statistics Canada (2023), Table 38-10-0130-01: Capital and operating expenditures on environmental activities by industry <https://bit.ly/3OERIKi>; Statistics Canada (2022), Table 10-10-0005-01: Canadian Classification of Functions of Government <https://bit.ly/2ZEkp2W>.

Creative Commons Copyright

International comparisons of gas flaring among top oil producers

Lennie Kaplan — Tue, 03 Oct 2023 17:01:21 +0000

The Nahr Bin Omar oil field and facility near Iraq's southern port city of Basra on February 11, 2022. In the oilfields of southern Iraq, billions of cubic feet of gas literally go up in smoke, burnt off on flare stacks for want of the infrastructure to capture and process it. (Photo by HUSSEIN FALEH/AFP via Getty Images)

To sign up to receive the latest Canadian Energy Centre research to your inbox email: inbox@canadianenergycentre.ca

Download the PDF here

Download the charts here

Overview

This Fact Sheet analyzes the upstream oil industry’s record on flaring in Canada relative to other top oil-producing countries. Gas flaring is the burning off of the natural gas that is generated in the process of oil extraction and production. Flaring is relevant because it is a source of greenhouse gas emissions (GHGs) (see Appendix).

In 2022, 138,549 million cubic meters (m3) (or 139 billion cubic meters (bcm)) of flared gases were emitted worldwide, creating 350 million tonnes of CO2 emissions annually. Canada is a significant oil producer; it has the third-largest proven crude oil reserves and is the fourthlargest crude oil producer in the world (Natural Resources Canada, undated), and so contributes to flaring.

Flaring comparisons

This Fact Sheet uses World Bank data to provide international comparisons of flaring. It also draws on U.S. Energy Information Administration (EIA) crude oil production data to compare flaring among the top 10 crude oil producing countries.

Table 1 shows gas flaring volumes in 2012 and 2022. In absolute terms, Russia recorded more flaring than any other country at 25,495 million m3 (25.4 bcm) in 2022, which was 1,628 million m3 (7 per cent) higher than in 2012.

The four countries that are the top GHG emitters through flaring (Russia, Iraq, Iran, and Algeria) accounted for 50 per cent of global gas flaring in 2022.

At 945 million m3, Canada was the eighth lowest flarer in 2022 (23rd spot out of the top 30 countries). It decreased its flaring emissions by 320 million m3 from the 2012 level of 1,264 million m3, a 25 per cent drop.

In 2022, Canada contributed just 0.7 per cent of the global amount of gas flaring despite being the world’s fourth largest oil producer (see Table 1).

Sources: World Bank (undated)

Flaring declined worldwide between 2012 and 2022

Figure 1 shows the change in flaring volumes between 2012 and 2022. Nine countries flared more in 2022 than in 2012, while 21 countries flared less. In the last decade, the global flaring volume decreased by 3 per cent.

The three countries that most significantly increased flaring between 2012 and 2022 were the Republic of the Congo (65 per cent), Iran (56 per cent), and Iraq (41 per cent).
The three countries that most significantly decreased flaring between 2012 and 2022 were Uzbekistan (-76 per cent), Columbia (-75 per cent) and Kazakhstan (-74 per cent).
As noted earlier, flaring fell by 25 per cent in Canada between 2012 and 2022.

Sources: World Bank (undated)

Comparing flaring to increased production

The decreases in flaring in Canada between 2012 and 2022 shown in Table 1 and Figure 1 understate the magnitude of the decline in flaring in the country. That is because Canada’s crude oil production increased by 45 per cent in that period, even as absolute flaring decreased by 25 per cent (see Table 2).

Canada compares very favourably with the United States, which increased crude oil production by 82 per cent and decreased flaring by 16 per cent.

Sources: World Bank (undated) and EIA (2023)

Largest oil producers and flaring intensity

To fully grasp how much more effective Canada has been than many other oil producers in reducing flaring, Table 3 compares both flaring intensity (gas flared per unit of oil production) and crude oil production among the top 10 oil producing countries (which account for 73 per cent of the world oil production).

Canada is the fourth-largest producer of crude oil, and its gas flaring intensity declined by 48 per cenft between 2012 and 2022. Four of the top 10 oil producers witnessed their flaring intensity increase between 2012 and 2022.

Sources: World Bank (undated) and EIA (2023)

Conclusion

Gas flaring contributes to greenhouse gas emissions. However, it is possible for countries to both increase their oil production and still reduce flaring. Canada is one noteworthy example of a country that has significantly reduced flaring not only compared to its increased production of crude oil, but also in absolute terms.

Appendix

Background

Flaring and venting are two ways in which an oil or natural gas producer can dispose of waste gases. Venting is the intentional controlled release of uncombusted gases directly to the atmosphere, and flaring is combusting natural gas or gas derived from petroleum in order to dispose of it.¹ As Matthew R. Johnson and Adam R. Coderre noted in their 2012 paper on the subject, flaring in the petroleum industry generally falls within three broad categories:

Emergency flaring (large, unplanned, and very short-duration releases, typically at larger downstream facilities or off-shore platforms);
Process flaring (intermittent large or small releases that may last for a few hours or a few days as occurs in the upstream industry during well-test flaring to assess the size of a reservoir or at a downstream plant during a planned process blowdown); and
Production flaring (may occur continuously for years while oil is being produced).

To track GHGs from flaring and venting, Environment Canada (2016) defines such emissions as:

Fugitive emissions: Unintentional releases from venting, flaring, or leakage of gases from fossil fuel production and processing, iron and steel coke oven batteries, or CO2 capture, transport, injection, and storage infrastructure.
Flaring emissions: Controlled releases of gases from industrial activities from the combustion of a gas or liquid stream produced at a facility, the purpose of which is not to produce useful heat or work. This includes releases from waste petroleum incineration, hazardous emission prevention systems, well testing, natural gas gathering systems, natural gas processing plant operations, crude oil production, pipeline operations, petroleum refining, chemical fertilizer production, and steel production.
Venting emissions: Controlled releases of a process or waste gas, including releases of CO2 associated with carbon capture, transport, injection, and storage; from hydrogen production associated with fossil fuel production and processing; of casing gas; of gases associated with a liquid or a solution gas; of treater, stabilizer, or dehydrator off-gas; of blanket gases; from pneumatic devices that use natural gas as a driver; from compressor start-ups, pipelines, and other blowdowns; and from metering and regulation station control loops.

1. Many provinces regulate flaring and venting including Alberta (Directive 060) British Columbia (Flaring and Venting Reduction Guideline), and Saskatchewan (S-10 and S-20). Newfoundland & Labrador also has regulations that govern offshore flaring.

Notes

This CEC Fact Sheet was compiled by Ven Venkatachalam and Lennie Kaplan at the Canadian Energy Centre: www.canadianenergycentre.ca. All percentages in this report are calculated from the original data, which can run to multiple decimal points. They are not calculated using the rounded figures that may appear in charts and in the text, which are more reader friendly. Thus, calculations made from the rounded figures (and not the more precise source data) will differ from the more statistically precise percentages we arrive at using source data. The authors and the Canadian Energy Centre would like to thank and acknowledge the assistance of an anonymous reviewer in reviewing the data and research for this Fact Sheet.

References (All links live as of September 23, 2023)

Alberta Energy Regulator (2022), Directive 060: Upstream Petroleum Industry Faring, Incinerating, and Venting <https://bit.ly/3AMYett>; BC Oil and Gas Commission (2021), Flaring and Venting Reduction Guideline, version 5.2 <https://bit.ly/3CWRa0i>; Canada-Newfoundland and Labrador Offshore Petroleum Board (2007), Offshore Newfoundland and Labrador Gas Flaring Reduction <https://bit.ly/3RhKpKu>; D&I Services (2010), Saskatchewan Energy and Resources: S-10 and S-20 <https://bit.ly/3TBrVGJ>; Johnson, Matthew R., and Adam R. Coderre (2012), Compositions and Greenhouse Gas Emission Factors of Flared and Vented Gas in the Western Canadian Sedimentary Basin, Journal of the Air & Waste Management Association 62, 9: 992-1002 <https://bit.ly/3cJRqPd>; Environment Canada (2016), Technical Guidance on Reporting Greenhouse Gas Emissions/Facility Greenhouse Gas Emissions Reporting Program <https://bit.ly/3CVQR5C>; Natural Resources Canada (Undated), Oil Resources <https://bit.ly/3oWWhW0>; U.S. Energy Information Administration (undated), Petroleum and Other Liquids <https://bit.ly/2Ad6S9i>; World Bank (Undated), Global Gas Flaring Data <https://bit.ly/3zXuxGX>.

Creative Commons Copyright

Over $420 billion in government revenues from the Canadian oil sands sector expected through 2050

Lennie Kaplan — Tue, 26 Sep 2023 19:25:41 +0000

Canada's parliament building in Ottawa. Getty Images photo

To sign up to receive the latest Canadian Energy Centre research to your inbox email: inbox@canadianenergycentre.ca

Download the PDF here

Download the charts here

Overview

With ongoing public discussions focusing on net zero emissions from Canada’s oil sands sector, it is a good time to examine projected government revenues and capital expenditures (capex) expected from the sector through 2050. This analysis illustrates how investment in low-emitting technologies, such as carbon capture and storage (CCUS), will help preserve government revenues and capex in Canada’s oil sands sector.

This Fact Sheet makes these calculations based on a conservative projection that the Brent price for oil will average US$60 per barrel between 2023 and 2050. The capex and government revenue numbers are expressed in nominal US dollars, assuming a 2.5 per cent inflation rate and a 10 per cent discount rate.

The written content in this report was prepared by the Canadian Energy Centre (CEC). It relies on data obtained from the Rystad Energy UCube, but it does not represent the views of Rystad Energy.

Background on Rystad Energy UCube

Rystad Energy is an independent energy research company providing data, analytics and consultancy services to clients around the globe.

In this Fact Sheet, we use a constant price in real terms for our analysis of government revenues and capex from the oil sands sector, with Brent crude oil prices set to a constant US$60 per barrel between 2023 and 2050.

Canadian oil sands sector government revenues to reach over U.S. $420 billion through 2050

Under a US$60 per barrel price trajectory, Canadian government revenues (which includes provincial royalties and federal and provincial corporate taxes) from the country’s oil sands sector are expected to rise from an annual US$12.1 billion in 2023 to US$19.4 billion in 2050 (see Figure 1).

On a cumulative basis, between 2023 and 2050 Canadian government revenues from the oil sands sector are projected to be over US$420.7 billion.

Source: Derived from the Rystad Energy UCube, based on $60 USD per barrel price scenario

Capital expenditures (capex) in Canada’s oil sands sector to reach nearly U.S. $328 billion through 2050

Under the US$60 per barrel price projection, capital expenditures (capex) in Canada’s oil sands sector are expected to rise from US$10.6 billion in 2023 to US$12.6 billion in 2050 (see Figure 2).

Cumulatively between 2023 and 2050, Canadian oil sands sector capex is projected at nearly US$327.8 billion.

Source: Derived from the Rystad Energy UCube, based on $60 USD per barrel price scenario

Notes

This CEC Fact Sheet was compiled by Lennie Kaplan at the Canadian Energy Centre (www.canadianenergycentre.ca). The author and the Canadian Energy Centre would like to thank and acknowledge the assistance of two anonymous reviewers in reviewing the data and research for this Fact Sheet. The written content in this report was prepared by the Canadian Energy Centre (CEC) and does not represent the views of Rystad Energy.

References (All links live as of September 19, 2023)

Rystad Energy. (2023). Upstream Solution. <https://bit.ly/3veaMIV>.

Creative Commons Copyright

Examining key demographic characteristics of Canada’s oil and gas sector workers

Lennie Kaplan — Tue, 19 Sep 2023 16:44:13 +0000

Photo courtesy Woodfibre LNG

To sign up to receive the latest Canadian Energy Centre research to your inbox email: inbox@canadianenergycentre.ca

Download the PDF here

Download the charts here

Introduction

While it is well known that the oil and gas sector is an important generator of high paying jobs within the Canadian economy, some of the key demographic characteristics of workers directly employed in the sector are less well known.

In this CEC Fact Sheet, we examine some of the key demographic characteristics of workers directly employed in the oil and gas sector between 2009 and 2021, using the Statistics Canada Natural Resources Satellite Account (NRSA)-Human Resource Model (HRM).

For the purposes of our research, we define the oil and gas sector in Canada as the sum of conventional oil and gas extraction, non-conventional oil and gas extraction, support activities for oil and gas extraction, pipeline transportation of natural gas, crude oil and other pipeline transportation, and petroleum refineries. This is different definition of the oil and gas extraction sector than was used previously by the CEC, because it also includes the pipeline transportation and petroleum refineries sub-sectors. Revisions to the data between 2009 and 2021 also occurred due to the incorporation of the results from the 2020 census. There were also some adjustments to the methodology used to link census years together.

Previously, the data was linked at the level of employment, but it has now moved to linking the demographic ratios instead. The former method led to occasional breaks in the data series.

The conventional and non-conventional oil and gas extraction sector includes establishments engaged primarily in operating oil and gas field properties. This includes the production and extraction of oil from oil shale and oil sands. Support activities for oil and gas extraction include establishments primarily engaged in providing support services, on a contract or fee basis, for the extraction of oil and gas. Pipeline transportation of natural gas comprises establishments primarily engaged in the pipeline transportation of natural gas, from gas fields or processing plants to local distribution systems. Crude oil and other pipeline transportation comprises establishments primarily engaged in the pipeline transportation of crude oil. Petroleum refining involves the transformation of crude oil by such processes as cracking and distillation (Statistics Canada, 2023a).

Natural Resources Satellite Account (NRSA)-Human Resource Model (HRM)

The Natural Resources Satellite Account (NRSA) is an analytical framework used to present Statistics Canada’s existing time series data for the natural resource sector at an increased level of detail. The extraction of energy from natural resources, such as crude oil and natural gas, is included under the NRSA framework (Statistics Canada, 2017).

While the NRSA provides information on the number of jobs generated by the energy sector at the national level, the aim of the Human Resource Module (HRM) is to provide timely and reliable statistics on the human resource dimension of natural resources sub-sectors, such as the oil and gas sector in Canada (Statistics Canada, 2021).

Analysis

The Canadian oil and gas sector directly employs over 147,300 Canadians

In 2021, the oil and gas sector directly employed 147,371 Canadians. The number of direct jobs in the oil and gas sector rose from 158,483 in 2009 to 185,393 in 2014, then fell to 134,939 in 2016, the result of the sharp decline in energy prices, before rising to 160,379 in 2019 as energy prices gradually recovered. The onslaught of COVID-19 in 2020 saw oil and gas sector jobs fall back to 135,475, before recovering to 147,371 in 2021 (see Figure 1).

Source: Derived from Statistics Canada (2023c)

At $133,293 in average annual wage and salary in 2021, Canadian oil and gas sector jobs continue to pay very well

The average wage and salary of a worker in the Canadian oil and gas sector in 2021 was $133,293. The average wage and salary for an oil and gas worker rose from $103,448 in
2009 to $133,776 in 2015, before leveling off to $129,716 as of 2019 due to the energy price slump. However, between 2009 and 2021, the average annual wage and salary of a worker in the Canadian oil and gas sector increased by nearly 29 per cent (see Figure 2).

Source: Derived from Statistics Canada (2023c)

The average annual wage and salary for female employees in Canada’s oil and gas sector has increased by over 53% since 2009

The number of females employed in the oil and gas sector reached a high of 42,440 in 2013, dipping to 30,285 in 2020 due to COVID-19, and then recovering to 33,068 in 2021 (see Figure 3).

Source: Derived from Statistics Canada (2023c)

In 2021, the average wage and salary for a female directly working in the Canadian oil and gas sector was $106,865. The average wage and salary for a female working in the oil and gas sector reached a high of $110,111 in 2020 before declining to $106,865 in 2021. Between 2009 and 2021, the average wage and salary for a female worker in the Canadian oil and gas industry increased by over 53 per cent (see Figure 4).

Source: Derived from Statistics Canada (2023c)

Average annual wages and salaries for immigrants working in Canada’s oil and gas sector are on the rise, reaches $138,439 in 2021

In 2021, 24,931 immigrants were directly employed in the Canadian oil and gas sector. The number of immigrants employed in the oil and gas industry reached 28,469 by 2014, declining to 21,622 in 2016 before recovering to 26,569 in 2019. Between 2009 and 2021, immigrant employment in the Canadian oil and gas sector increased by over 9 per cent (see Figure 5).

Source: Derived from Statistics Canada (2023c)

The average wage and salary of an immigrant directly employed in the Canadian oil and gas sector was $138,439 in 2021. The average wage and salary of an immigrant employed in the oil and gas sector increased to $143,339 by 2015, declining to $132,266 in 2018 before recovering to $138,439 in 2021. Between 2009 and 2021, the average wage and salary of an immigrant employed in the Canadian oil and gas sector increased by nearly 25 per cent (see Figure 6).

Source: Derived from Statistics Canada (2023c)

Indigenous employment in Canada’s oil and gas sector has increased by nearly 17% since 2009, and average annual wages and salaries reached $111,037 in 2021, an increase of over 39% since 2009

Indigenous direct employment in the oil and gas sector reached 10,934 in 2014, declining to 8,016 in 2016 before recovering to 9,683 in 2021. Between 2009 and 2021, workers in the Canadian oil and gas sector identified as Indigenous increased by nearly 17 per cent (see Figure 7).

Source: Derived from Statistics Canada (2023c)

The average wage and salary of an Indigenous person directly employed in the Canadian oil and gas sector reached $113,976 by 2020 before declining to $111,037 in 2021. However, between 2009 and 2021, the average wage and salary of an Indigenous person employed in the Canadian oil and gas sector increased by over 39 per cent (see Figure 8).

Source: Derived from Statistics Canada (2023c)

Over 21% of workers in the Canadian oil and gas industry identified as visible minorities, earning an average wage and salary of $121,174 in 2021

The number of direct workers in the Canadian oil and gas sector identified as members of a visible minority reached 34,091 in 2014, declining to 25,992 in 2016 before recovering to 33,066 in 2019. Then, visible minority workers in the Canadian oil and gas sector fell to 28,570 in 2020, before recovering to 31,195 in 2021. Between 2009 and 2021, the number of workers in the Canadian oil and gas sector identified as members of visible minorities increased by nearly 17 per cent (see Figure 9).

Source: Derived from Statistics Canada (2023c)

In 2021, direct workers identified as members of visible minorities comprised over 21 per cent of total employment in Canada’s oil and gas sector, compared to nearly 17 per cent in 2009. The average wage and salary of workers identified as members of visible minorities in the Canadian oil and gas sector was $121,174 in 2021. This represents an increase of over 30 per cent since 2009 (see Figure 10).

Source: Derived from Statistics Canada (2023c)

Notes

This CEC Fact Sheet was compiled by Lennie Kaplan at the Canadian Energy Centre (www.canadianenergycentre.ca). The author and the Canadian Energy Centre would like to thank and acknowledge the assistance of Philip Cross and two anonymous reviewers in reviewing the original data and research for this Fact Sheet.

References (All links live as of September 11, 2023)

Statistics Canada, 2017. The Natural Resources Satellite Account: Sources and Methods, <https://bit.ly/2VZ1th4>; Statistics Canada, 2021. Natural Resources Satellite Account: Human Resource Module, 2009 to 2019. <https://bit.ly/3zAwcPu>; Statistics Canada, 2023a. North American Industry Classification System (NAICS) Canada. <https://bit.ly/3rPAnp3>; Statistics Canada, 2023b. Natural Resources Satellite Account: Human Resource Module, 2009 to 2021. <https://bit.ly/47YOjkj>; Statistics Canada, 2023c. Natural Resources Satellite Account: Human Resource Module, 2009 to 2021. Special Tabulation.

Creative Commons Copyright

An assessment of economic activity generated by Canada’s oil and natural gas sector, 2019

Lennie Kaplan — Wed, 13 Sep 2023 03:37:59 +0000

Employees work with new equipment that cuts threads into the pipe ends on the new premium line at at Tenaris in Sault Ste. Marie, Ontario on October 31, 2022. (Photo by Peter Power for Canadian Energy Centre)

To sign up to receive the latest Canadian Energy Centre research to your inbox email: research@canadianenergycentre.ca

Download the PDF here

Download the charts here

Overview

The impact of the broad oil and gas sector on the GDP and jobs of other key sectors of the Canadian economy is not well known, yet extremely relevant to current discussions about the sector’s importance to Canada’s economic future.

In this Fact Sheet, we examine the indirect impact that the broad oil and gas sector had on the Canadian economy in 2019. We chose the year 2019 due to the availability of Statistics Canada Supply and Use Table (SUT) data. The 2019 SUTs (the latest year available) provide a detailed accounting of the Canadian economy and give information by industry, products, provinces, sectors, and components of final use.

The indirect impact is measured as the GDP and jobs occurring throughout the supply chain of the oil and natural gas industry, attributable to its extraction and investment expenditures. These economic impacts represent the backward linkages of the oil and natural gas industry to its various suppliers. Indirect impacts occur through the oil and gas industry’s purchases of intermediate and capital goods from a variety of other key Canadian industries.

Canada’s oil and gas sector indirect impacts on key industries within the Canadian economy

GDP

In 2019, the activities of the Canadian oil and gas sector were indirectly responsible for significant portions of GDP in key industries across Canada. They range from $100.9 million in GDP in in the industry categorized as food, beverage, and tobacco merchant wholesalers to nearly $4.1 billion in GDP for architectural, engineering, and related services (see Figure 1).

Source: Derived from Statistics Canada Custom Tabulation of the Supply and Use Tables, 2019

For GDP, the top five industries associated with the activities of Canada’s oil and gas sector, in 2019, included:

Architectural, engineering, and related services: $4.1 billion
Machinery, equipment and supplies merchant wholesalers: $3.4 billion
Banking and other depository credit intermediation: $2.1 billion
Computer systems design and related services: $1.7 billion
Electrical power generation, transmission, and distribution: $1.5 billion (see Figure 2).

Source: Derived from Statistics Canada Custom Tabulation of the Supply and Use Tables, 2019

Jobs

In 2019, the Canadian oil and gas sector was indirectly responsible for jobs created in other key industries, ranging from 1,033 jobs in the taxi and limousine service industry to 95,122 jobs in oil and gas engineering construction (see Figure 3).

Source: Derived from Statistics Canada, Custom Tabulation of the Supply and Use Tables, 2017

For jobs, the top five industries associated with the activities of Canada’s oil and gas sector, in 2019, included:

Oil and gas engineering construction: 95,122
Architectural, engineering, and related services: 33,845
Machinery, equipment and supplies merchant wholesalers: 23,906
Employment services: 15,534
Computer systems design and related services: 13,695 (see Figure 4).

Source: Derived from Statistics Canada, Custom Tabulation of the Supply and Use Tables, 2017

Notes

This CEC Fact Sheet was compiled by Lennie Kaplan at the Canadian Energy Centre (www.canadianenergycentre.ca). The authors and the Canadian Energy Centre would like to thank and acknowledge the assistance of Philip Cross and two anonymous reviewers in reviewing the original data and research for this Fact Sheet.

Methodology

The estimates presented in this paper are the result of a Statistics Canada custom tabulation of the Canadian oil and gas sector taken from the Supply and Use Tables (SUTs). The SUTs capture and present the production of products by domestic industries, imports of products as well as their use, either as inputs, final consumption, investment, or exports. The latest SUTs are for the 2019 calendar year. The total (direct and indirect) impact of the oil and gas industry on the Canadian economy can be quantified using input-output multipliers derived from the SUTs. According to Statistics Canada (2018), these multipliers “provide a measure of the interdependence between an industry and the rest of the economy” (Statistics Canada, 2018, National and Provincial Multipliers, Surveys and statistical programs, Documentation: 15F0046X). As Statistics Canada notes, although there is a lag from the 2017 data, the structure of the Canadian economy evolves slowly, so the lag should have a minimal impact on the estimates of GDP, jobs, and output (Statistics Canada, Economic Insights, 11-626-X, No. 109, The Decline in Production and Investment in Canada’s Oil and Gas Sector and its Impact on the Economy, July 2020. This fact sheet applies the same concepts and definitions of oil and gas extraction activities as used by the North American Industry Classification System (NAICS), Canada 2012. The Canadian SUTs use the Supply and Use Product Classification (SUPC) system, a variant based on the North American Product Classification System (NAPCS), to classify products within the economy.

Definitions

Using Statistics Canada terminology, we define the broad Canadian oil and gas sector as the sum of oil and gas extraction (NAICS 211) and oil and gas investment. For the purposes of NAICS and NAPCS, oil and gas extraction comprise establishments primarily engaged in operating oil and gas field properties. Such activities may include exploration for crude petroleum and natural gas; drilling, completing, and equipping wells; operating separators, emulsion breakers, desilting equipment, and field gathering lines for crude petroleum; and all other activities in the preparation of oil and gas up to the point of shipment from the producing property. This subsector includes the production of oil, the mining and extraction of oil from oil shale and oil sands, and the production of gas and hydrocarbon liquids, through gasification, liquefaction, and pyrolysis of coal at the mine site. Oil and gas investment includes capital expenditures on construction, machinery and equipment, and exploration by the oil and gas extraction industry. GDP is defined as the unduplicated value of the goods and services produced in the economy. Output consists primarily of the value of goods and services produced by an industry. Jobs include employee jobs (full-time, part-time, and seasonal) and self employed jobs. The direct impact of oil and gas extraction is the effects directly attributed to this industry’s production. The direct impact of oil and gas investment is the deliveries by domestic industries to satisfy capital expenditures by the oil and gas extraction industry. The indirect impact covers upstream economic activities associated with supplying intermediate inputs (the current expenditures on goods and services used up in the production process) to the directly affected industries. (Excerpts taken from Statistics Canada, Contribution of the Oil and Gas Sector to the Canadian Economy in 2016, 2020, custom tabulation.)

References (All links live as of August 22, 2023)

Statistics Canada (2020), The Decline in Production and Investment in Canada’s Oil and Gas Sector and its Impact on the Economy, July 2020, Economic Insights, 11-626-X, No. 109 <https://bit.ly/32LbTlb>; Statistics Canada (2023a), Custom tabulation of the oil and gas sector derived from the 2019 Supply and Use Tables; Statistics Canada (2023b), Table 36-10-0478-01: Supply and use tables, 2019, detail level, provincial and territorial (x 1,000), <https://bit.ly/3mCm9nt>; Statistics Canada (2023c), Supply, Use and Input-Output Tables, 2021 <https://bit.ly/2G0S3tk>.

Creative Commons Copyright

Making progress on Canadian oil sands CO2 emissions intensity

Lennie Kaplan — Tue, 05 Sep 2023 19:10:25 +0000

Cenovus' Foster Creek oil sands project. Photograph courtesy Cenovus Energy

To sign up to receive the latest Canadian Energy Centre research to your inbox email: research@canadianenergycentre.ca

Download the PDF here

Download the charts here

Overview

As news reports and interest about the Canadian oil sands continues, it is a good time to evaluate the sector’s progress in reducing carbon dioxide (CO2) emissions intensity.

In this CEC Fact Sheet, we use data on projected direct upstream CO2 emissions intensity drawn from Rystad Energy’s UCube and EmissionsCube to assess trends in the CO2 emissions intensity of Canada’s oil sands sector between 2000 and 2022.

Background on Rystad Energy’s UCube and EmissionsCube

Rystad Energy is an independent energy research company providing data, analytics, and consultancy services to clients around the globe.¹

UCube is Rystad Energy’s global upstream database. It includes production and economics (costs, revenues, and valuations) for more than 85,000 assets covering the portfolios of more than 3,500 companies. Policymakers use the UCube dataset to study all parts of the global exploration and production (E&P) activity value chain, including operational costs, investment (capex and opex), fiscal terms, and net cash flows for projects and companies, both globally and by country (Rystad, 2023b).

Rystad’s EmissionsCube enables the study of CO2e emissions from upstream activity down to the asset level.

Through the EmissionsCube, countries, companies, assets, basins, and fields can be compared with each other on their upstream emissions and emissions intensity. Specifically, EmissionsCube can help policymakers:

Compare companies in order to understand their emission performance and assess risks.
Understand the relative ranking of countries, operators, and companies (taking ownership into account) globally, and the changes or initiatives that will improve emission performance.
Identify the high-emitting parts of an operation and, from that, develop ESG strategies to both meet increasing demands for disclosure and emission reduction goals.
Assess the impact of emissions on various companies’ competitiveness (Rystad, 2023a).

1. The written content in this report was prepared by the authors at the Canadian Energy Centre (CEC) and does not represent the views of Rystad Energy

Examining oil sands CO2 emissions intensity

This Fact Sheet defines upstream CO2 emissions as those originating from on-site emissions, both extraction and flaring. Extraction includes production drilling; all emissions related to on-site processing; and gathering and boosting.

This Fact Sheet defines CO2 emissions intensity as the amount of CO2 emitted, expressed in kilograms (kg), per barrel of oil equivalent (boe) produced (i.e., kg CO2 per boe produced). A declining CO2 emission intensity figure means that less CO2 is being created per boe produced.

Focusing on emissions per boe produced is a realistic means of establishing a meaningful target for the oil sands industry in Canada.

Average CO2 emissions per oil sands barrel produced in Canada has declined by over 32% since 2000

Canada’s oil sands sector has made considerable progress in reducing its CO2 emissions intensity since 2000.

The overall rate fell from 101.7 kg CO2 per boe produced in 2000 to 68.7 kg CO2 per boe produced in 2022, a decline of 32.4 per cent (see Figure 1).

Source: Derived from the Rystad Energy UCube and EmissionsCube

Average oil sands (mining) CO2 emissions per barrel produced in Canada declines by over 40% since 2000

An examination of upstream oil sands CO2 emissions intensity by type reveals some interesting trends.

The average emissions intensity of oil sands (in-situ) fell from 89.2 kg CO2 per boe produced in 2000 to 72.9 kg CO2 per boe produced in 2022, a decline of 18.3 per cent.

Meanwhile, the average emissions intensity of oil sands (mining) fell from 107.0 kg CO2 per boe produced in 2000 to 63.8 kg CO2 per boe produced in 2022, a decline of 40.4 per cent (see Figure 2).

Source: Derived from the Rystad Energy UCube and EmissionsCube

Notes

References (All links live as of August 28, 2023)

Rystad Energy (2023a). EmissionsCube. Emissions Solution. <https://bit.ly/3eAyIAs>; Rystad Energy (2023b). UCube. Upstream Solution. <https://bit.ly/3JTk2JK>; S&P Global Commodity Insights (2023). Canadian Oil Sands Continue Their Trend of GHG Intensity Reductions in 2022 — Down 23% Since 2009. <https://bit.ly/3sobIeV>.

Creative Commons Copyright

Assessing the impact of the carbon tax on business costs in B.C.

Lennie Kaplan — Wed, 23 Aug 2023 20:21:20 +0000

A tugboat motors past a log sort on the shores of Howe Sound in British Columbia. Getty Images photo

To sign up to receive the latest Canadian Energy Centre research to your inbox email: research@canadianenergycentre.ca

Download the PDF here

Download the charts here

Introduction

Since introducing a carbon tax in 2008, the Province of British Columbia (BC) has attracted significant attention from policymakers due to its large natural resource sector. Energy products account for 38 percent of all provincial exports, with coal and natural gas accounting for 31.5 percent of those exports.

The carbon tax is a policy instrument governments have implemented with the aim of curbing greenhouse gas emissions (GHGs). However, businesses and others have raised concern about the impact of the carbon tax on industry costs and competitiveness. The carbon tax makes producers pay for their emissions. The problem arises when there is no uniform carbon policy across international markets.

The carbon tax affects nearly all taxpayers in BC regardless of who bears the initial cost. As such, businesses in the province need to know about the carbon tax and its impact. This CEC Fact Sheet looks at the potential impact of a federally mandated $170 per tonne carbon tax in 2030 on various industries in the province.¹

Our analysis provides a general overview of the potential impact of the carbon tax on production costs for particular sectors because each business organization is unique. Businesses need to complete their own analyses specific to their own business models and based on their suppliers, competitors, customers, and markets. Studies conducted with different methodologies and assumptions will calculate different estimates of the impact of the carbon tax on business.

Carbon tax legislation and business costs

As part of the 2016 Pan-Canadian Framework on Clean Growth and Climate Change, the Government of Canada passed the Greenhouse Gas Pollution Pricing Act (GGPPA) in December 2018. The GGPPA imposes a carbon pricing system on provinces and territories that either have not implemented their own carbon pricing system or have implemented a system that does not meet the minimum requirements set by the federal government.

Federal and provincial governments both have the constitutional authority to regulate climate change policy, which affects how policy has been developed in BC.² Under the GGPPA, the federal carbon tax began at $20/tonne in 2019 and escalated by $10/tonne per year to $50/tonne in 2022. In December 2020, the federal government released an updated plan with a $15/tonne per year increase in the carbon price to reach $95/tonne in 2025 and $170/tonne in 2030.

According to Environment and Climate Change Canada (undated), the GGPPA consists of two parts: a regulatory charge on fuels such as gasoline and natural gas (known as the fuel charge) and a performance-based baseline and credit system for large industrial emitters that meet prescribed criteria set out in the GGPPA and its regulations, known as the Output-Based Pricing System (OBPS).

BC’s provincial carbon tax was initially set at $10 per tonne in 2008, but by 2023 the rate had increased to $65 per tonne. BC uses the provincial carbon tax (for fuel emissions) and, starting in April 2024, will switch to the BC output-based pricing system (B.C. OBPS) for industrial emissions.

In line with the federal government’s nationwide carbon tax, BC must meet the federally mandated carbon tax and move towards $170 per tonne by 2030.

The carbon tax gives rise to both direct and indirect business costs. Energy-intensive industries will incur more of the former, and other industries more of the latter. Direct
impacts are the cost that the carbon tax will impose on carbon-emitting sectors and the cost of fuel or energy used directly in production. Indirect costs are the carbon tax-induced costs the business will incur through input or production processes subject to the carbon tax in the prior production stage.

Industries such as food services and restaurants or retail stores that are not subject to the tax directly may still experience significant cost increases if the sector relies on inputs that use energy-intensive production processes.

Estimated impact of the carbon tax on industry production costs in BC

The production of goods and services in any sector necessitates business input costs, including capital, goods, services, energy, and wages and salaries. Industries that have a high usage of petroleum products will generally experience a slightly higher cost increase due to their higher usage.

The forestry and logging industry in the province will see its cost increase by 6.1 percent on average. The most significant increase in production costs will be incurred by support activities for oil and gas extraction, which witnesses a cost increase of 9.5 percent. The fishing, hunting and trapping industry will see its costs increase by 5.2 percent.

Non-metallic mineral mining and quarrying, which relies on fuels such as gasoline, diesel, and fuel oils to produce goods, will experience a 5.5 percent increase in its production inputs from the $170 per tonne carbon tax (see Figure 1).

For the utilities sector, on average, production costs will increase by about 4.6 percent. BC’s electric power generation, transmission, and distribution sector will see a cost increase of almost 4.8 percent due to the carbon tax. Construction sector costs will increase by 4.2 percent (see Figure 2).

In the manufacturing sector, the cement and concrete products sub-sector will see the highest cost increase of all industries from the carbon tax at 15.6 percent. This increase is predominantly due to the industry’s high use of energy inputs, including coke and coal, which account for 6.9 percent of total inputs.

Other energy-intensive industries, such as aluminum manufacturing, and chemicals, pesticides, and fertilizers, will see their costs increase by between 5 percent and 7 percent. The paper products industry will witness a cost increase of 4.7 percent. Food manufacturing costs will increase by 3.4 percent under the $170/tonne carbon tax (see Table 1).

In BC’s service sector, the transportation and warehousing sub-sector, which relies heavily on refined petroleum products, will see the highest cost increases from the $170 per tonne carbon tax, at 7.4 percent. The accommodation and food services industry will see costs rise by 3.9 percent and the wholesale and retail trade industry will see its cost increase by 4.7 percent (see Figure 3).

Conclusion

This Fact Sheet has analyzed the impact of the carbon tax across various industries in British Columbia. It shows that introducing the $170 per tonne carbon tax will increase business costs for the province’s key industries.

The design of BC’s output-based pricing system is intended to mitigate this impact by targeting energy-intensive and trade-exposed (EITE) industries and setting individual facility or industry emission limits for them.

Each business must determine how the carbon tax will apply to its specific business environment and its impact on stakeholders, employees, customers, and owners. Nevertheless, there is no doubt that key industries in British Columbia will face additional costs associated with the $170 per tonne carbon tax and those charges will affect industry cost competitiveness.

In this Fact Sheet, we use customized data from Stokes Economics to examine the impact of the carbon tax on industry production costs. The CEC retained Stokes Economics to estimate the additional costs industries will incur from the carbon tax. The estimated impact on industry costs from carbon taxes presented in this analysis focuses solely on pricing fuel emissions subject to the provincial carbon tax.
Federal and provincial governments in Canada share jurisdiction on environmental regulations in accordance with Canada’s Constitution Act, 1867, which did not assign jurisdiction over the environment to either the provincial or federal governments.

Appendix

About the estimates: Impact of the carbon tax on production costs

Stokes Economics provided macroeconomic cost projections of the impact of the carbon tax on various industries. Stokes Economics uses a provincial macroeconomic modelling system known as “PROVMODS” to estimate the impacts of the carbon tax on industry costs. The estimated impact on industry costs from carbon taxes presented in this analysis focuses solely on pricing fuel emissions subject to provincial and federal carbon taxes either directly through a fuel charge or indirectly through a cap-and-trade system.

To quantify the impact of carbon pricing, the model uses a “base case” forecast that includes the carbon price beginning at $50 per tonne in 2022 and escalating to $170 per tonne by 2030. Next, the model creates an alternate scenario where the carbon tax is immediately repealed in 2023 and remains cancelled in all future years. The two scenarios are compared for industry costs and other economic impacts. As various aspects of the carbon pricing system must be accounted for, the selected model is multi-faceted in its features and capabilities.

Limitations

This analysis focuses solely on the cost implications associated with the fuel charge component of the carbon tax. With the implementation of BC OBPS in 2024, large industrial emitters subject to the output-based pricing system (OBPS) may incur additional costs if their facility doesn’t meet emission standards set under that program. These potential costs are not included in the results presented in this analysis. Also, the analysis doesn’t include the impact of clean fuel standards.

The model relies on relative aggregate industry data that masks heterogeneity across firms in the industry. The model assumes that the carbon tax is an input cost and not a fixed cost in production, and that the average cost is equal to the marginal cost, reflecting the long-run absence of economies or diseconomies of scale. The estimates do not consider input substitution among factors of production (energy, land, labour, and capital). Moreover, the study does not consider how the revenue from the carbon tax will be recycled to various industries through cuts in other taxes or taxes on input production. This analysis does not assume changes in production technology or fuel switching in industrial production processes due to the carbon fuel charge. The model ignores different manufacturing processes used in various industries. Different manufacturing processes can lead to a different industry fuel mix and energy use.

Notes

References (All links live as of August 11, 2023)

British Columbia (2023), Exports, Issue 23-05 (May) <https://tinyurl.com/5dv32yjh>; British Columbia (Undated), British Columbia’s Carbon Tax <https://tinyurl.com/5xbsdz9u>; Environment and Climate Change Canada (Undated), Carbon Pollution Pricing Systems across Canada <https://tinyurl.com/25xmew2n>.

Creative Commons Copyright

Assessing the impact of the carbon tax on business costs in various industries in British Columbia

Lennie Kaplan — Tue, 22 Aug 2023 21:47:53 +0000

To sign up to receive the latest Canadian Energy Centre research to your inbox email: research@canadianenergycentre.ca

Download the PDF here

Download the charts here

Introduction

Carbon tax legislation and business costs

Federal and provincial governments both have the constitutional authority to regulate climate change policy, which affects how policy has been developed in BC.2

Under the GGPPA, the federal carbon tax began at $20/tonne in 2019 and escalated by $10/tonne per year to $50/tonne in 2022. In December 2020, the federal government released an updated plan with a $15/tonne per year increase in the carbon price to reach $95/tonne in 2025 and $170/tonne in 2030.

1. In this Fact Sheet, we use customized data from Stokes Economics to examine the impact of the carbon tax on industry production costs. The CEC retained Stokes Economics to 
estimate the additional costs industries will incur from the carbon tax. The estimated impact on industry costs from carbon taxes presented in this analysis focuses solely on pricing fuel 
emissions subject to the provincial carbon tax.

Small business continues to account for the vast majority of oil and gas firms in Canada

Lennie Kaplan — Tue, 08 Aug 2023 20:55:00 +0000

Robin Davis of All-Weld Company Ltd., is photographed in Toronto, Ontario on Friday, July 31, 2020. (Photo by Peter Power/Canadian Energy Centre)

To sign up to receive the latest Canadian Energy Centre research to your inbox email: research@canadianenergycentre.ca

Download the PDF here

Download the charts here

Overview

Small business plays a key job creation role in Canada‘s economy. There is a general notion that only big companies benefit from the development of Canada’s oil and gas sector.

As this Fact Sheet demonstrates, the vast majority of Canada’s oil and gas firms are small businesses. When Canada’s oil and gas sector is healthy, the small businesses therein are able to flourish.

This Fact Sheet compares oil and gas companies by size (small, medium, and large) as measured by employee counts; it then compares the share in the industry that are small businesses; and then compares these businesses by country (Canada with the U.S., Norway, and then with the European Union.

Comparisons of Canadian oil and gas firms by size

For the purposes of our analysis, Statistics Canada defines small businesses as those with between one and 99 paid employees. Medium-size enterprises are those with 100 to 499 employees, while large enterprises have 500 or more employees.

As of 2022, for oil and gas firms in Canada:

96.0 per cent are small;
3.5 per cent are medium-size companies; and
0.6 per cent are large companies (see Figure 1).

Source: Authors’ calculation based on Statistics Canada Table 33-10-0661-01

Industry comparisons in Canada

In Canada, the oil and gas sector has a higher proportion of small businesses than other major industries, with the exception of construction. As of 2022, 96.0 per cent of all oil and gas energy firms had between 1 and 99 employees compared with 93.2 per cent in manufacturing, 89.6 per cent in utilities, and 99 per cent in the construction sector. The all-industry average is 98 per cent¹ (see Figure 2).

1. The 98 per cent average for all industries is high largely because of the sheer size of the construction sector. In 2022, there were 154,252 firms in that sector compared with 51,726 in manufacturing, 6,486 in oil and gas, and 1,410 in utilities.

Source: Authors’ calculation based on Statistics Canada Table 33-10-0661-01

Canada-U.S. comparisons of oil and gas sector company size by employee count

Canada and the United States define small businesses differently. In Canada, small businesses have 1 to 99 employees whereas in the United States they have from 1 to 499 employees.

For a more standardized comparison between the two countries, Figure 3, which includes oil and gas extraction firms only, shows both the number of companies with 1 to 99 employees and the number with 1 to 499 employees in each country.

Using Canadian definitions of firm size:

Small business comparisons: 94.0 per cent of all oil and gas extraction firms in the United States have between 1 and 99 employees compared with 96.0 per cent in Canada.
Small and medium-size business comparisons: Adding in medium-size employee counts (defined in Canada as 100 to 499 employees), reveals that 96.7 per cent of all oil and gas firms in the United States have between 1 and 499 employees (i.e., are small and medium-size using Canadian definitions) compared with 99.4 per cent in Canada.
Large oil and gas companies: Corporations with over 500 employees comprise 3.3 per cent of all oil and gas firms in the United States while in Canada “big oil and gas” accounts for just 0.6 per cent of all oil and gas firms (see Figure 3).

Sources: Derived from Statistics Canada Table 33-10-0661-01 and U.S. Small Business Administration (2023)

Comparing Canada with Europe: Number of firms involved in oil and gas

The final set of comparisons contrasts Canada with Norway (another major oil producer) and with the European Union (of which Norway is not a member). The first comparison (Figure 4a) illustrates the number of oil and gas firms in each jurisdiction, which makes it plainly obvious how important the oil and gas sector is to Canada.²

Of the three jurisdictions, Canada has the greatest number of oil and gas extraction firms by far—small, medium, and large—at 1,162 in total.
In contrast, Norway has just 38 oil and gas extraction firms³ and the European Union just 198 firms in total involved in oil and natural gas activity.

2. Canada-European Union comparisons are drawn from a smaller subset of oil and gas activity—oil and gas extraction only—which allows for international comparisons. 
3. Large firms dominate Norway’s oil and gas sector given that all of its oil and gas comes from offshore drilling, which is a complicated and expensive undertaking.

Source: Eurostat (undated) and Statistics Canada Table 33-10-0661-01

Unlike Canada-U.S. comparisons, data limitations do not allow for exact firm size comparisons based on 1-99 or 1-499 employee counts between Canada, Norway, and the European Union. The best we can do is compare firms in Canada with 1-199 employees (i.e., below 200) with those in Norway and Europe that have 1-249 employees (i.e., below 250). Figure 4b breaks down the proportion of oil and gas extraction firms by size for each jurisdiction.

Norway has just 28 oil and gas extraction firms with fewer than 250 employees;
The European Union has 185 firms that employ fewer than 250 employees; and
Canada has 1,115 oil and gas extraction firms with fewer than 200 employees. In other words, even with Canada’s more limited employee count, the absolute number of oil and gas companies in Canada with smaller workforces is about five times that of Norway and the European Union combined (1,115 firms versus 213 oil and gas enterprises in Norway and the EU together).

Source: Eurostat (undated) and Statistics Canada Table 33-10-0661-01

“Big oil” is a more accurate description in Europe than Canada

This slightly modified comparison shows that smaller businesses constitute 73.7 per cent of all oil and gas extraction firms in Norway, 94.3 per cent of all firms in the European Union, and 96.0 per cent of all and gas extraction firms in Canada (see Figure 4c). Canada’s oil and gas extraction sector is thus overwhelmingly composed of small and medium-size businesses relative to Norway and the European Union.

Source: Eurostat (undated) and Statistics Canada Table 33-10-0661-01

Conclusion

Most oil and gas firms in Canada are small or medium-size businesses whether measured domestically and compared with other sectors, or in international comparisons with the United States, Norway, and the European Union.

Notes

References (All links live as of July 31, 2023)

Canada (2022), Key Small Business Statistics 2022, Innovation, Science and Economic Development Canada <https://tinyurl.com/2hme3n9s>; Eurostat (undated), Enterprise Statistics by Size Class and NACE Rev.2 Activity (from 2021 Onwards) <https://tinyurl.com/34auxean>; Statistics Canada (2023), Table 33-10-0661-01, Canadian Business Counts, with employees, December 2022 <https://tinyurl.com/5n82zpa2>; U.S. Small Business Administration (2023), 2022 Small Business Profile <https://tinyurl.com/3c6as4en>; United States Census (2023), 2020 SUSB Annual Data Tables by Establishment Industry <https://tinyurl.com/59u4t446>.