Research and Data Archives - Canadian Energy Centre https://www.canadianenergycentre.ca/tag/research-and-data/ Fact-based news and research demonstrating that Canada is the world's energy solution Tue, 30 Apr 2024 15:43:45 +0000 en-CA hourly 1 https://wordpress.org/?v=6.1 https://www.canadianenergycentre.ca/wp-content/uploads/2023/11/cropped-icon-e1699989415282-32x32.jpg Research and Data Archives - Canadian Energy Centre https://www.canadianenergycentre.ca/tag/research-and-data/ 32 32 North America LNG project cost competitiveness https://www.canadianenergycentre.ca/north-america-lng-project-cost-competitiveness/ Tue, 30 Apr 2024 15:21:30 +0000 https://www.canadianenergycentre.ca/?p=14396
Construction workers look on at the FortisBC Tilbury LNG expansion project in Delta, B.C., Monday, Nov. 16, 2015. CP Images photo

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Worldwide concerns about energy security have put a renewed focus on the international liquefied natural gas (LNG) industry. The global demand for LNG is expected to increase over the next few decades.

Global demand growth will be driven primarily by Asian markets where the need for LNG is expected to increase from 277 million tonnes (MT) in 2025 to 509 MT by 2050 (see Figure 1). By 2050 the demand for LNG in Europe will be 83 MT and in Africa 20 MT. In South America too, demand will increase – from 13 MT in 2025 to 31 MT in 2050.

Source: Derived from Rystad Energy, Gas and LNG Markets Solution.

In North America (Canada, Mexico, and United States) a number of LNG projects that are either under construction or in the planning stages will benefit from the rise in global LNG demand.

North American LNG production is expected to grow from 112 MT in 2025 to over 255 MT by 2050 (see Figure 2). In Canada, the LNG projects under construction or in the planning stages include LNG Canada Phases 1 & 2, Woodfibre LNG, Cedar LNG, the Tilbury LNG expansion, and Ksi Lisims LNG. Canada’s LNG production is expected to grow from just 2 MT in 2025 to over 43 MT by 2050. In the United States production is projected to increase from 108 MT in 2025 to 210 MT in 2050.

Source: Derived from Rystad Energy, Gas and LNG Markets Solution.

This CEC Fact Sheet uses Rystad Energy’s Gas and LNG Markets Solution¹ to benchmark the cost competitiveness of LNG projects that are under construction and proposed in Canada compared to other LNG projects under construction and planned elsewhere in North America. (Note that the content of this report does not represent the views of Rystad Energy.)

The LNG cost competitiveness benchmarking analysis used the following performance metrics:

  • LNG plant free-on-board (FOB) cost break-even;
  • Total LNG plant cost (for delivery into Asia and Europe).

The objective of this LNG cost competitiveness benchmarking is to compare the competitiveness of Canadian LNG projects against those of major competitors in the United States and Mexico. The selection of other North American LNG facilities for the benchmark comparison with Canadian LNG projects (LNG Canada, the Tilbury LNG Expansion, Woodfibre LNG, Cedar LNG, and Ksi Lisims LNG) is based on the rationale that virtually all Canadian LNG plants are under construction or in the planning stage and that they compare well with other North American LNG plants that are also under construction or are being planned between 2023 and 2050. Further, to assess the cost competitiveness of the various LNG projects more accurately, we chose only North American LNG facilities with sufficient economic data to enable such a comparison. We compared the cost competitiveness of LNG coming from these other North American projects with LNG coming from Canada that is intended to be delivered to markets in Asia and Europe.

1. Rystad Energy is an independent energy research company providing data, analytics, and consultancy services to clients around the globe. Its Gas and LNG Markets Solution provides an overview of LNG markets worldwide. The Solution covers the entire value chain associated with gas and LNG production, country and sector-level demand, and LNG trade flows, infrastructure, economics, costs, and contracts through 2050. It allows for the evaluation of the entire LNG market infrastructure, including future planned projects, as well as the benchmarking of costs for LNG projects (Rystad Energy, 2024).

Comparison of LNG project FOB cost break-even (full cycle)

Figure 3 provides a comparison of the free-on-board (FOB) cost break-even for LNG facilities under construction or being planned in North America. FOB break-even costs include upstream and midstream costs for LNG excluding transportation costs (shipping) as seen from the current year. Break-even prices assume a discount rate of 10 percent and represent the point at which the net present value for an LNG project over a 20- to 30-year period becomes positive, including the payment of capital and operating costs, inclusive of taxes.

Among the selected group of North American LNG projects are Canadian LNG projects with an FOB break-even at the lower end of the range (US$7.18 per thousand cubic feet (kcf)) to those at the higher end (US$8.64 per thousand cubic feet (kcf)).

LNG projects in the United States tend to settle in the middle of the pack, with FOB break-even between US$6.44 per kcf and US$8.37 per kcf.

Mexico LNG projects have the widest variation in costs among the selected group of projects, ranging from US$6.94 per kcf to US$9.44 per kcf (see Figure 3).

Source: Derived from Rystad Energy, Gas and LNG Markets Solution.

Total costs by project for LNG delivery to Asia and Europe

The total cost by LNG plant includes FOB cost break-even, transportation costs, and the regasification tariff. Figure 4 compares total project costs for LNG destined for Asia from selected North American LNG facilities.

Canadian LNG projects are very cost competitive, and those with Asia as their intended market tend to cluster at the lower end of the scale. The costs vary by project, but range between US$8.10 per kcf and US$9.56 per kcf, making Canadian LNG projects among the lowest cost projects in North America.

The costs for Mexico’s LNG projects with Asia as the intended destination for their product tend to cluster in the middle of the pack. Costs among U.S. LNG facilities that plan to send their product to Asia tend to sit at the higher end of the scale, at between US$8.90 and US$10.80 per kcf.

Source: Derived from Rystad Energy, Gas and LNG Markets Solution.

Figure 5 compares total project costs for LNG to be delivered to Europe from select North American LNG facilities.

Costs from U.S. LNG facilities show the widest variation for this market at between US$7.48 per kcf and US$9.42 per kcf, but the majority of U.S. LNG facilities tend to cluster at the lower end of the cost scale, between US$7.48 per kcf and US$8.61 per kcf (see Figure 5).

Canadian projects that intend to deliver LNG to Europe show a variety of costs that tend to cluster at the middle to higher end of the spectrum, ranging from US$9.60 per kcf to and US$11.06 per kcf.

The costs of Mexico’s projects that are aimed at delivering LNG to Europe tend to cluster in the middle of the spectrum (US$9.11 per kcf to US$10.61 per kcf).

Source: Derived from Rystad Energy, Gas and LNG Markets Solution.

Conclusion

LNG markets are complex. Each project is unique and presents its own challenges. The future of Canadian LNG projects depends upon the overall demand and supply in the global LNG market. As the demand for LNG increases in the next decades, the world will be searching for energy security.

The lower liquefaction and shipping costs coupled with the lower cost of the natural gas itself in Western Canada translate into lower prices for Canadian LNG, particularly that destined for Asian markets. Those advantages will help make Canadian LNG very competitive and attractive to markets worldwide.

References (as of March 23, 2024)

Rystad Energy (2024), Gas & LNG Markets Solution <https://bit.ly/3Q6RorN>.

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.

]]>
Construction workers look on at the FortisBC Tilbury LNG expansion project in Delta, B.C., Monday, Nov. 16, 2015. CP 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

 

Worldwide concerns about energy security have put a renewed focus on the international liquefied natural gas (LNG) industry. The global demand for LNG is expected to increase over the next few decades.

Global demand growth will be driven primarily by Asian markets where the need for LNG is expected to increase from 277 million tonnes (MT) in 2025 to 509 MT by 2050 (see Figure 1). By 2050 the demand for LNG in Europe will be 83 MT and in Africa 20 MT. In South America too, demand will increase – from 13 MT in 2025 to 31 MT in 2050.

Source: Derived from Rystad Energy, Gas and LNG Markets Solution.

In North America (Canada, Mexico, and United States) a number of LNG projects that are either under construction or in the planning stages will benefit from the rise in global LNG demand.

North American LNG production is expected to grow from 112 MT in 2025 to over 255 MT by 2050 (see Figure 2). In Canada, the LNG projects under construction or in the planning stages include LNG Canada Phases 1 & 2, Woodfibre LNG, Cedar LNG, the Tilbury LNG expansion, and Ksi Lisims LNG. Canada’s LNG production is expected to grow from just 2 MT in 2025 to over 43 MT by 2050. In the United States production is projected to increase from 108 MT in 2025 to 210 MT in 2050.

Source: Derived from Rystad Energy, Gas and LNG Markets Solution.

This CEC Fact Sheet uses Rystad Energy’s Gas and LNG Markets Solution¹ to benchmark the cost competitiveness of LNG projects that are under construction and proposed in Canada compared to other LNG projects under construction and planned elsewhere in North America. (Note that the content of this report does not represent the views of Rystad Energy.)

The LNG cost competitiveness benchmarking analysis used the following performance metrics:

  • LNG plant free-on-board (FOB) cost break-even;
  • Total LNG plant cost (for delivery into Asia and Europe).

The objective of this LNG cost competitiveness benchmarking is to compare the competitiveness of Canadian LNG projects against those of major competitors in the United States and Mexico. The selection of other North American LNG facilities for the benchmark comparison with Canadian LNG projects (LNG Canada, the Tilbury LNG Expansion, Woodfibre LNG, Cedar LNG, and Ksi Lisims LNG) is based on the rationale that virtually all Canadian LNG plants are under construction or in the planning stage and that they compare well with other North American LNG plants that are also under construction or are being planned between 2023 and 2050. Further, to assess the cost competitiveness of the various LNG projects more accurately, we chose only North American LNG facilities with sufficient economic data to enable such a comparison. We compared the cost competitiveness of LNG coming from these other North American projects with LNG coming from Canada that is intended to be delivered to markets in Asia and Europe.

1. Rystad Energy is an independent energy research company providing data, analytics, and consultancy services to clients around the globe. Its Gas and LNG Markets Solution provides an overview of LNG markets worldwide. The Solution covers the entire value chain associated with gas and LNG production, country and sector-level demand, and LNG trade flows, infrastructure, economics, costs, and contracts through 2050. It allows for the evaluation of the entire LNG market infrastructure, including future planned projects, as well as the benchmarking of costs for LNG projects (Rystad Energy, 2024).

Comparison of LNG project FOB cost break-even (full cycle)

Figure 3 provides a comparison of the free-on-board (FOB) cost break-even for LNG facilities under construction or being planned in North America. FOB break-even costs include upstream and midstream costs for LNG excluding transportation costs (shipping) as seen from the current year. Break-even prices assume a discount rate of 10 percent and represent the point at which the net present value for an LNG project over a 20- to 30-year period becomes positive, including the payment of capital and operating costs, inclusive of taxes.

Among the selected group of North American LNG projects are Canadian LNG projects with an FOB break-even at the lower end of the range (US$7.18 per thousand cubic feet (kcf)) to those at the higher end (US$8.64 per thousand cubic feet (kcf)).

LNG projects in the United States tend to settle in the middle of the pack, with FOB break-even between US$6.44 per kcf and US$8.37 per kcf.

Mexico LNG projects have the widest variation in costs among the selected group of projects, ranging from US$6.94 per kcf to US$9.44 per kcf (see Figure 3).

Source: Derived from Rystad Energy, Gas and LNG Markets Solution.

Total costs by project for LNG delivery to Asia and Europe

The total cost by LNG plant includes FOB cost break-even, transportation costs, and the regasification tariff. Figure 4 compares total project costs for LNG destined for Asia from selected North American LNG facilities.

Canadian LNG projects are very cost competitive, and those with Asia as their intended market tend to cluster at the lower end of the scale. The costs vary by project, but range between US$8.10 per kcf and US$9.56 per kcf, making Canadian LNG projects among the lowest cost projects in North America.

The costs for Mexico’s LNG projects with Asia as the intended destination for their product tend to cluster in the middle of the pack. Costs among U.S. LNG facilities that plan to send their product to Asia tend to sit at the higher end of the scale, at between US$8.90 and US$10.80 per kcf.

Source: Derived from Rystad Energy, Gas and LNG Markets Solution.

Figure 5 compares total project costs for LNG to be delivered to Europe from select North American LNG facilities.

Costs from U.S. LNG facilities show the widest variation for this market at between US$7.48 per kcf and US$9.42 per kcf, but the majority of U.S. LNG facilities tend to cluster at the lower end of the cost scale, between US$7.48 per kcf and US$8.61 per kcf (see Figure 5).

Canadian projects that intend to deliver LNG to Europe show a variety of costs that tend to cluster at the middle to higher end of the spectrum, ranging from US$9.60 per kcf to and US$11.06 per kcf.

The costs of Mexico’s projects that are aimed at delivering LNG to Europe tend to cluster in the middle of the spectrum (US$9.11 per kcf to US$10.61 per kcf).

Source: Derived from Rystad Energy, Gas and LNG Markets Solution.

Conclusion

LNG markets are complex. Each project is unique and presents its own challenges. The future of Canadian LNG projects depends upon the overall demand and supply in the global LNG market. As the demand for LNG increases in the next decades, the world will be searching for energy security.

The lower liquefaction and shipping costs coupled with the lower cost of the natural gas itself in Western Canada translate into lower prices for Canadian LNG, particularly that destined for Asian markets. Those advantages will help make Canadian LNG very competitive and attractive to markets worldwide.

References (as of March 23, 2024)

Rystad Energy (2024), Gas & LNG Markets Solution <https://bit.ly/3Q6RorN>.

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.

]]> Energy Perspectives: Natural gas in the Canadian industrial sector https://www.canadianenergycentre.ca/energy-perspectives-natural-gas-in-the-canadian-industrial-sector/ Thu, 11 Apr 2024 19:19:04 +0000 https://www.canadianenergycentre.ca/?p=14351

Click here to download this edition of Energy Perspectives as a PDF.

Industries are critical to Canada’s economic development. As the Canadian economy and population grow, so will demand for materials and goods. Their production is reliant on the industrial sector, which includes all manufacturing, mining, forestry, and construction activities.

Canada has abundant natural resources. Canadian industries are also leading producers and exporters of products such as chemicals, forestry and pulp, automobiles, aluminum, gold, and steel. All these industries are energy intensive. In fact, the industrial sector accounts for 43 percent of overall energy use in Canada.

To meet their energy needs, many Canadian industries use natural gas, a vital component both as an energy source and a raw material. The sector’s final natural gas consumption rose from 43.7 billion cubic feet (Bcf) to 684.6 Bcf between 2010 and 2022, a 26 percent increase (see Figure 1).

The industrial sector can be divided into two groups. Heavy industries, such as chemical production and steel making are energy intensive. Light industries, which include a broad range of manufacturing such as food, textile, consumer goods, and machine and transport equipment, are less energy intensive.

In heavy industries such as steel manufacturing, natural gas consumption increased from 64 Bcf to 66.8 Bcf from 2010 to 2021 (the latest year for which data is available). The chemical industry’s natural gas consumption declined to 140 Bcf in 2021, whereas the non-metallic industry, which produces products such as cement, ceramic, and glass, saw its natural gas consumption nearly double between 2010 and 2021 from 19 Bcf to 30 Bcf. Non-ferrous metal industries producing metals such as aluminum, zinc, and copper saw their natural gas use increase from 26 Bcf in 2010 to 37 Bcf in 2021 (see Figure 2).

Although less energy intensive than heavy industries, light industries overall saw natural gas use increase from 2010 to 2021. The food and beverage industry increased its use of natural gas from 40 Bcf to 73 Bcf. The machinery and textile industries saw a decline in natural gas use during this period (from 12 Bcf to 10 Bcf, and from 4 Bcf to 2 Bcf, respectively), but the wood industry’s use of natural gas increased from 8 Bcf to 19 Bcf.

Natural gas is the largest single energy source for the manufacturing sector, accounting for about 28 percent of the energy the sector consumes (see Figure 3).

Natural gas is vital for Canadian industries as both an energy source and a raw material. Its abundance in Canada gives industries in this country an advantage over other manufacturers elsewhere in the world.

Canadian Energy Centre Energy Perspectives are short contextual explanations of energy-related data released periodically to provide context on energy issues for investors, policymakers, and the public. The source of profiled data depends on the specific issue.

]]>

Click here to download this edition of Energy Perspectives as a PDF.

Industries are critical to Canada’s economic development. As the Canadian economy and population grow, so will demand for materials and goods. Their production is reliant on the industrial sector, which includes all manufacturing, mining, forestry, and construction activities.

Canada has abundant natural resources. Canadian industries are also leading producers and exporters of products such as chemicals, forestry and pulp, automobiles, aluminum, gold, and steel. All these industries are energy intensive. In fact, the industrial sector accounts for 43 percent of overall energy use in Canada.

To meet their energy needs, many Canadian industries use natural gas, a vital component both as an energy source and a raw material. The sector’s final natural gas consumption rose from 43.7 billion cubic feet (Bcf) to 684.6 Bcf between 2010 and 2022, a 26 percent increase (see Figure 1).

The industrial sector can be divided into two groups. Heavy industries, such as chemical production and steel making are energy intensive. Light industries, which include a broad range of manufacturing such as food, textile, consumer goods, and machine and transport equipment, are less energy intensive.

In heavy industries such as steel manufacturing, natural gas consumption increased from 64 Bcf to 66.8 Bcf from 2010 to 2021 (the latest year for which data is available). The chemical industry’s natural gas consumption declined to 140 Bcf in 2021, whereas the non-metallic industry, which produces products such as cement, ceramic, and glass, saw its natural gas consumption nearly double between 2010 and 2021 from 19 Bcf to 30 Bcf. Non-ferrous metal industries producing metals such as aluminum, zinc, and copper saw their natural gas use increase from 26 Bcf in 2010 to 37 Bcf in 2021 (see Figure 2).

Although less energy intensive than heavy industries, light industries overall saw natural gas use increase from 2010 to 2021. The food and beverage industry increased its use of natural gas from 40 Bcf to 73 Bcf. The machinery and textile industries saw a decline in natural gas use during this period (from 12 Bcf to 10 Bcf, and from 4 Bcf to 2 Bcf, respectively), but the wood industry’s use of natural gas increased from 8 Bcf to 19 Bcf.

Natural gas is the largest single energy source for the manufacturing sector, accounting for about 28 percent of the energy the sector consumes (see Figure 3).

Natural gas is vital for Canadian industries as both an energy source and a raw material. Its abundance in Canada gives industries in this country an advantage over other manufacturers elsewhere in the world.

Canadian Energy Centre Energy Perspectives are short contextual explanations of energy-related data released periodically to provide context on energy issues for investors, policymakers, and the public. The source of profiled data depends on the specific issue.

]]> Oil and gas in the global economy through 2050 https://www.canadianenergycentre.ca/oil-and-gas-in-the-global-economy-through-2050/ Tue, 26 Mar 2024 21:38:58 +0000 https://www.canadianenergycentre.ca/?p=14179
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

Recent global conflicts, which have been partly responsible for a global spike in energy prices, have cast their shadow on energy markets around the world. Added to this uncertainty is the ongoing debate among policymakers and public institutions in various jurisdictions about the role of traditional forms of energy in the global economy.

One widely quoted study influencing the debate is the International Energy Agency’s (IEA) World Energy Outlook, the most recent edition of which, World Energy Outlook 2023 (or WEO 2023), was released recently (IEA 2023).

In this CEC Fact Sheet, we examine projections for oil and natural gas production, demand, and investment drawn from the World Energy Outlook 2023 Extended Dataset, using the IEA’s modelled scenario STEPS, or the Stated Policies Scenario. The Extended Dataset provides more detailed data at the global, regional, and country level than that found in the main report.

The IEA’s World Energy Outlook and the various scenarios

Every year the IEA releases its annual energy outlook. The report looks at recent energy supply and demand, and projects the investment outlook for oil and gas over the next three decades. The World Energy Outlook makes use of a scenario approach to examine future energy trends. WEO 2023 models three scenarios: the Net Zero Emissions by 2050 Scenario (NZE), the Announced Pledges Scenario (APS), and the Stated Policies Scenario (STEPS).

STEPS appears to be the most plausible scenario because it is based on the world’s current trajectory, rather than the other scenarios set out in the WEO 2023, including the APS and the NZE. According to the IEA:

The Stated Policies Scenario is based on current policy settings and also considers the implications of industrial policies that support clean energy supply chains as well as measures related to energy and climate. (2023, p. 79; emphasis by author)

and

STEPS looks in detail at what [governments] are actually doing to reach their targets and objectives across the energy economy. Outcomes in the STEPS reflect a detailed sector-by-sector review of the policies and measures that are actually in place or that have been announced; aspirational energy or climate targets are not automatically assumed to be met. (2023, p. 92)

Key results

The key results of STEPS, drawn from the IEA’s Extended Dataset, indicate that the oil and gas industry is not going into decline over the next decade—neither worldwide generally, nor in Canada specifically. In fact, the demand for oil and gas in emerging and developing economies under STEPS will remain robust through 2050.

Oil and natural gas production projections under STEPS

World oil production is projected to increase from 94.8 million barrels per day (mb/d) in 2022 to 97.2 mb/d in 2035, before falling slightly to 94.5 mb/d in 2050 (see Figure 1).

Source: IEA (2023b)

Canadian overall crude oil production is projected to increase from 5.8 mb/d in 2022 to 6.5 mb/d in 2035, before falling to 5.6 mb/d in 2050 (see Figure 2).

Source: IEA (2023b)

Canadian oil sands production is expected to increase from 3.6 mb/d in 2022 to 3.8 mb/d in 2035, and maintain the same production level till 2050 (see Figure 3).

Source: IEA (2023b)

World natural gas production is anticipated to increase from 4,138 billion cubic metres (bcm) in 2022 to 4,173 bcm in 2050 (see Figure 4).

Source: IEA (2023b)

Canadian natural gas production is projected to decrease from 204 bcm in 2022 to 194 bcm in 2050 (see Figure 5).

Source: IEA (2023b)

Oil demand under STEPS

World demand for oil is projected to increase from 96.5 mb/d in 2022 to 97.4 mb/d by 2050 (see Tables 1A and 1B). Demand in Africa for oil is expected to increase from 4.0 mb/d in 2022 to 7.7 mb/d in 2050. Demand for oil in the Asia-Pacific is projected to increase from 32.9 mb/d in 2022 to 35.1 mb/d in 2050. Demand for oil from emerging and developing economies is anticipated to increase from 47.9 mb/d in 2022 to 59.3 mb/d in 2050.

Source: IEA (2023b)

 

Source: IEA (2023b)

Natural gas demand under STEPS

World demand for natural gas is expected to increase from 4,159 billion cubic metres (bcm) in 2022 to 4,179 bcm in 2050 (see Figures 6 and 7). Demand in Africa for natural gas is projected to increase from 170 bcm in 2020 to 277 bcm in 2050. Demand in the Asia-Pacific for natural gas is anticipated to increase from 900 bcm in 2020 to 1,119 bcm in 2050.

Source: IEA (2023b)

 

Source: IEA (2023b)

Cumulative oil and gas investment expected to be over $21 trillion

Taking into account projected global demand, between 2023 and 2050 the cumulative global oil and gas investment (upstream, midstream, and downstream) under STEPS is expected to reach nearly U.S.$21.1 trillion (in $2022). Global oil investment alone is expected to be over U.S.$13.1 trillion and natural gas investment is predicted to be over $8.0 trillion (see Figure 8).

Between 2023 and 2050, total oil and gas investment in North America (Canada, the U.S., and Mexico) is expected to be nearly U.S.$5.6 trillion, split between oil at over $3.8 trillion and gas at nearly $1.8 trillion (see Figure 8). Oil and gas investment in the Asia Pacific, over the same period, is estimated at nearly $3.3 trillion, split between oil at over $1.4 trillion and gas at over $1.9 trillion.

Source: IEA (2023b)

Conclusion

The sector-by-sector measures that governments worldwide have put in place and the specific policy initiatives that support clean energy policy, i.e., the Stated Policies Scenario (STEPS), both show oil and gas continuing to play a major role in the global economy through 2050. Key data points on production and demand drawn from the IEA’s WEO 2023 Extended Dataset confirm this trend.

Positioning Canada as a secure and reliable oil and gas supplier can and must be part of the medium- to long-term solution to meeting the oil and gas demands of the U.S., Europe, Asia and other regions as part of a concerted move supporting energy security.

The need for stable energy, which is something that oil and natural gas provide, is critical to a global economy whose population is set to grow by another 2 billion people by 2050. Along with the increasing population comes rising incomes, and with them comes a heightened demand for oil and natural gas, particularly in many emerging and developing economies in Africa, the Asia-Pacific, and Latin America, where countries are seeing urbanization and industrialization grow rapidly.

References (as of February 11, 2024)

International Energy Agency (IEA), 2023(a), World Energy Outlook 2023 <http://tinyurl.com/4nv9xyfj>; International Energy Agency (IEA), 2023(b), World Energy Outlook 2023 Extended Dataset <http://tinyurl.com/3222553b>.

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.

]]>
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

Recent global conflicts, which have been partly responsible for a global spike in energy prices, have cast their shadow on energy markets around the world. Added to this uncertainty is the ongoing debate among policymakers and public institutions in various jurisdictions about the role of traditional forms of energy in the global economy.

One widely quoted study influencing the debate is the International Energy Agency’s (IEA) World Energy Outlook, the most recent edition of which, World Energy Outlook 2023 (or WEO 2023), was released recently (IEA 2023).

In this CEC Fact Sheet, we examine projections for oil and natural gas production, demand, and investment drawn from the World Energy Outlook 2023 Extended Dataset, using the IEA’s modelled scenario STEPS, or the Stated Policies Scenario. The Extended Dataset provides more detailed data at the global, regional, and country level than that found in the main report.

The IEA’s World Energy Outlook and the various scenarios

Every year the IEA releases its annual energy outlook. The report looks at recent energy supply and demand, and projects the investment outlook for oil and gas over the next three decades. The World Energy Outlook makes use of a scenario approach to examine future energy trends. WEO 2023 models three scenarios: the Net Zero Emissions by 2050 Scenario (NZE), the Announced Pledges Scenario (APS), and the Stated Policies Scenario (STEPS).

STEPS appears to be the most plausible scenario because it is based on the world’s current trajectory, rather than the other scenarios set out in the WEO 2023, including the APS and the NZE. According to the IEA:

The Stated Policies Scenario is based on current policy settings and also considers the implications of industrial policies that support clean energy supply chains as well as measures related to energy and climate. (2023, p. 79; emphasis by author)

and

STEPS looks in detail at what [governments] are actually doing to reach their targets and objectives across the energy economy. Outcomes in the STEPS reflect a detailed sector-by-sector review of the policies and measures that are actually in place or that have been announced; aspirational energy or climate targets are not automatically assumed to be met. (2023, p. 92)

Key results

The key results of STEPS, drawn from the IEA’s Extended Dataset, indicate that the oil and gas industry is not going into decline over the next decade—neither worldwide generally, nor in Canada specifically. In fact, the demand for oil and gas in emerging and developing economies under STEPS will remain robust through 2050.

Oil and natural gas production projections under STEPS

World oil production is projected to increase from 94.8 million barrels per day (mb/d) in 2022 to 97.2 mb/d in 2035, before falling slightly to 94.5 mb/d in 2050 (see Figure 1).

Source: IEA (2023b)

Canadian overall crude oil production is projected to increase from 5.8 mb/d in 2022 to 6.5 mb/d in 2035, before falling to 5.6 mb/d in 2050 (see Figure 2).

Source: IEA (2023b)

Canadian oil sands production is expected to increase from 3.6 mb/d in 2022 to 3.8 mb/d in 2035, and maintain the same production level till 2050 (see Figure 3).

Source: IEA (2023b)

World natural gas production is anticipated to increase from 4,138 billion cubic metres (bcm) in 2022 to 4,173 bcm in 2050 (see Figure 4).

Source: IEA (2023b)

Canadian natural gas production is projected to decrease from 204 bcm in 2022 to 194 bcm in 2050 (see Figure 5).

Source: IEA (2023b)

Oil demand under STEPS

World demand for oil is projected to increase from 96.5 mb/d in 2022 to 97.4 mb/d by 2050 (see Tables 1A and 1B). Demand in Africa for oil is expected to increase from 4.0 mb/d in 2022 to 7.7 mb/d in 2050. Demand for oil in the Asia-Pacific is projected to increase from 32.9 mb/d in 2022 to 35.1 mb/d in 2050. Demand for oil from emerging and developing economies is anticipated to increase from 47.9 mb/d in 2022 to 59.3 mb/d in 2050.

Source: IEA (2023b)

 

Source: IEA (2023b)

Natural gas demand under STEPS

World demand for natural gas is expected to increase from 4,159 billion cubic metres (bcm) in 2022 to 4,179 bcm in 2050 (see Figures 6 and 7). Demand in Africa for natural gas is projected to increase from 170 bcm in 2020 to 277 bcm in 2050. Demand in the Asia-Pacific for natural gas is anticipated to increase from 900 bcm in 2020 to 1,119 bcm in 2050.

Source: IEA (2023b)

 

Source: IEA (2023b)

Cumulative oil and gas investment expected to be over $21 trillion

Taking into account projected global demand, between 2023 and 2050 the cumulative global oil and gas investment (upstream, midstream, and downstream) under STEPS is expected to reach nearly U.S.$21.1 trillion (in $2022). Global oil investment alone is expected to be over U.S.$13.1 trillion and natural gas investment is predicted to be over $8.0 trillion (see Figure 8).

Between 2023 and 2050, total oil and gas investment in North America (Canada, the U.S., and Mexico) is expected to be nearly U.S.$5.6 trillion, split between oil at over $3.8 trillion and gas at nearly $1.8 trillion (see Figure 8). Oil and gas investment in the Asia Pacific, over the same period, is estimated at nearly $3.3 trillion, split between oil at over $1.4 trillion and gas at over $1.9 trillion.

Source: IEA (2023b)

Conclusion

The sector-by-sector measures that governments worldwide have put in place and the specific policy initiatives that support clean energy policy, i.e., the Stated Policies Scenario (STEPS), both show oil and gas continuing to play a major role in the global economy through 2050. Key data points on production and demand drawn from the IEA’s WEO 2023 Extended Dataset confirm this trend.

Positioning Canada as a secure and reliable oil and gas supplier can and must be part of the medium- to long-term solution to meeting the oil and gas demands of the U.S., Europe, Asia and other regions as part of a concerted move supporting energy security.

The need for stable energy, which is something that oil and natural gas provide, is critical to a global economy whose population is set to grow by another 2 billion people by 2050. Along with the increasing population comes rising incomes, and with them comes a heightened demand for oil and natural gas, particularly in many emerging and developing economies in Africa, the Asia-Pacific, and Latin America, where countries are seeing urbanization and industrialization grow rapidly.

References (as of February 11, 2024)

International Energy Agency (IEA), 2023(a), World Energy Outlook 2023 <http://tinyurl.com/4nv9xyfj>; International Energy Agency (IEA), 2023(b), World Energy Outlook 2023 Extended Dataset <http://tinyurl.com/3222553b>.

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.

]]> Energy Perspectives: Oil and gas in the agriculture sector https://www.canadianenergycentre.ca/energy-perspectives-oil-and-gas-in-the-agriculture-sector/ Wed, 13 Mar 2024 15:54:58 +0000 https://www.canadianenergycentre.ca/?p=14024

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The agriculture sector plays a significant role in the global economy, contributing more than four per cent of world GDP in 2021. Global GDP reached US$86.0 trillion in 2021, of which the GDP of the agriculture sector accounted for US$4.3 trillion, an increase from US$1.16 trillion in 1990.

Along with forestry and fishing, the agriculture sector, which includes the production of crops and livestock, has seen demand for its products increase in recent years (see Figure 1). The COVID-19 pandemic emphasized the importance of the sector to the world’s economy.

For the past 100 years, fossil fuels have been essential to the agriculture sector. Today’s food system depends heavily on oil and gas to feed billions of people across the planet.

The sector uses oil and gas both as raw materials and as energy in all stages of agriculture production from planting, irrigation, feeding, and harvesting, to processing, distribution, and packaging. Farm machinery, processing facilities, storage, and shipping all rely on fossil fuels.

DEMAND FOR OIL AND NATURAL GAS IN THE AGRICULTURE SECTOR

Worldwide, demand for oil in the agriculture sector increased from 110 million tonnes of oil equivalent (Mtoe) in 1990 to 118 Mtoe in 2022. The most significant increase was in Africa, with demand increasing by 150 per cent, followed by a 78 per cent rise in Latin America. In Asia, demand increased from 31 Mtoe to 50 Mtoe between 1990 and 2022, a 58 per cent increase. Worldwide, demand between 1990 and 2022 rose from 110 Mtoe to 118 Mtoe (see Figure 2).

Demand for natural gas by the world’s agriculture sector also increased — from 7.5 Mtoe in 1990 to 11 Mtoe in 2022. In North America, the agricultural sector’s demand for natural gas increased from 0.5 Mtoe in 1990 to 2.6 Mtoe in 2022. In Europe, the demand for natural gas in the agriculture sector was 3.3 Mtoe in 2022 (see Figure 3).

In recent years, food price increases have renewed the world’s focus on the agriculture sector. The sector consumes a significant amount of fossil fuels for its operations and is highly dependent on energy for its production. The need for stable food sources is critical to a global economy whose population is set to reach 9.7 billion people by 2050. Fossil fuel energy is critical to production in the agriculture sector.

The Canadian Energy Centre’s “Energy Perspectives” are short analyses released periodically to provide context on energy issues for investors, policymakers, and the public. The source of profiled data depends on the specific issue.

]]>

Click here to download this edition of Energy Perspectives as a PDF. 

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The agriculture sector plays a significant role in the global economy, contributing more than four per cent of world GDP in 2021. Global GDP reached US$86.0 trillion in 2021, of which the GDP of the agriculture sector accounted for US$4.3 trillion, an increase from US$1.16 trillion in 1990.

Along with forestry and fishing, the agriculture sector, which includes the production of crops and livestock, has seen demand for its products increase in recent years (see Figure 1). The COVID-19 pandemic emphasized the importance of the sector to the world’s economy.

For the past 100 years, fossil fuels have been essential to the agriculture sector. Today’s food system depends heavily on oil and gas to feed billions of people across the planet.

The sector uses oil and gas both as raw materials and as energy in all stages of agriculture production from planting, irrigation, feeding, and harvesting, to processing, distribution, and packaging. Farm machinery, processing facilities, storage, and shipping all rely on fossil fuels.

DEMAND FOR OIL AND NATURAL GAS IN THE AGRICULTURE SECTOR

Worldwide, demand for oil in the agriculture sector increased from 110 million tonnes of oil equivalent (Mtoe) in 1990 to 118 Mtoe in 2022. The most significant increase was in Africa, with demand increasing by 150 per cent, followed by a 78 per cent rise in Latin America. In Asia, demand increased from 31 Mtoe to 50 Mtoe between 1990 and 2022, a 58 per cent increase. Worldwide, demand between 1990 and 2022 rose from 110 Mtoe to 118 Mtoe (see Figure 2).

Demand for natural gas by the world’s agriculture sector also increased — from 7.5 Mtoe in 1990 to 11 Mtoe in 2022. In North America, the agricultural sector’s demand for natural gas increased from 0.5 Mtoe in 1990 to 2.6 Mtoe in 2022. In Europe, the demand for natural gas in the agriculture sector was 3.3 Mtoe in 2022 (see Figure 3).

In recent years, food price increases have renewed the world’s focus on the agriculture sector. The sector consumes a significant amount of fossil fuels for its operations and is highly dependent on energy for its production. The need for stable food sources is critical to a global economy whose population is set to reach 9.7 billion people by 2050. Fossil fuel energy is critical to production in the agriculture sector.

The Canadian Energy Centre’s “Energy Perspectives” are short analyses released periodically to provide context on energy issues for investors, policymakers, and the public. The source of profiled data depends on the specific issue.

]]> The importance of Canadian crude oil to refineries in the U.S. https://www.canadianenergycentre.ca/the-importance-of-canadian-crude-oil-to-refineries-in-the-u-s/ Tue, 27 Feb 2024 16:49:51 +0000 https://www.canadianenergycentre.ca/?p=13950
Aerial view of an oil refinery in Los Angeles, California. Getty Images photo

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Introduction

The refining industry¹ in the United States is one of the world’s largest, with capacity to process 18 million barrels of oil per day. Canada plays a crucial role by supplying more than one-fifth of the crude oil refined in the U.S.

The U.S.–Canada cross-border crude oil trade is essential to North American energy security. Canadian crude oil exports and the U.S. refinery industry are highly integrated. In recent years, Canada’s crude oil sector has been making a growing contribution to the operations of U.S. oil refineries.

U.S. refineries are converting Canadian crude oil, including heavy oil,² into products that North Americans use daily, such as transportation fuels (gasoline and diesel), chemicals, and plastics. Although the U.S. has increased its production of oil in recent years, U.S. refineries still rely on Canadian heavy crude oil to meet their feedstock (i.e., the raw materials and intermediate materials processed at refineries to produce finished petroleum products, otherwise known as refinery inputs) specifications.

In this CEC Fact Sheet, we examine several economic indicators that illustrate the importance of Canadian crude oil, particularly heavy crude, to U.S. refineries. This fact sheet also analyzes the refining industry’s direct and indirect economic impacts on the U.S. economy.

1. NAICS Code 324110 (Petroleum Refineries): This industry comprises establishments primarily engaged in refining crude petroleum into refined petroleum.
2. A majority of the crude oil imported by the U.S. from Canada is heavy crude (between 15-25 API gravity). API gravity is a commonly used index for measuring the density of crude oil or refined products. Crude oil typically has an API between 15 and 45 degrees. The higher the API, the lighter the crude; the lower the API, the heavier the crude.

Imports of Canadian crude oil to refineries in the United States

The physical characteristics of crude oil determine how it is processed in refineries. Generally, heavy crude oil offers higher yields of low-value products (coke and asphalt) and lower yields of high-value products (gasoline). Heavy crude oil requires more complicated processing than lighter crude if it is to produce high-value products.

Overall, Canadian crude oil imports to U.S. refineries for processing have risen from over 1.3 million barrels per day in 2000 to just under 3.8 million barrels per day in 2022, an increase of 181 per cent (see Figure 1). The per cent of Canadian crude in U.S. refinery feedstock has steadily risen from nearly 9 per cent in 2000 to over 23 per cent by the end of 2022.

Source: U.S. Energy Information Administration (2024a, 2024b, 2024c)

The U.S. refining industry

Since the first U.S. refinery began operating in 1861, the refining industry has been one of the largest manufacturing sectors in the United States. There are currently 129 petroleum refineries across the five U.S. PADDS³ (125 operating refineries and five refineries that are idle but not permanently shut down) (see Table 1).

3. The United States is divided into five Petroleum Administration for Defense Districts (PADDs) for the allocation of fuels derived from petroleum products, including gasoline and diesel fuel. The geographic breakdown of PADDs enables U.S. policymakers to better analyze petroleum supplies in the country
Source: U.S. Energy Information Administration (2023)

Total refining capacity in the United States has risen from 16.2 million barrels of crude processed in 2000 to nearly 17.8 million barrels per day in 2022, an increase of over 8 per cent (see Figure 2). The refining utilization⁴ has also recovered, growing from 79 per cent during COVID-19 to a high of 91 per cent in 2022.

Source: U.S. Energy Information Administration (2024b)

The impact of the U.S. refining industry on the American economy

The estimated direct and indirect economic impacts of the U.S. refining industry in 2024 include 1.6 million direct and indirect jobs, $206 billion in labour income, $577 billion in direct and indirect value-added, and $1.6 trillion in what is known as “outputs,” i.e., the value of goods and services produced by the industry (see Table 2).⁵

4. Capacity measures how much crude oil refineries are able to process. Utilization measures how much is actually being processed (as a percentage of maximum capacity). 
5. These projected amounts are in nominal U.S. dollars
Source: Author’s calculations using the IMPLAN modelling system. Details may not add up to totals due to rounding

Projected spending by the U.S. refining industry, 2024-2030

Figure 3 illustrates the industry’s projected annual spending between 2024 and 2030. Industry spending is expected to be US$58 billion in 2024, rising to US$62 billion by 2030. This includes operating expenditures (OPEX) and capital expenditures (CAPEX). Cumulatively, between 2024 and 2030, the industry is projected to spend over US$428 billion.⁶

6. These projected amounts are in nominal U.S. dollars and are calculated using the Rystad Energy UCube.
Source: Derived from Rystad Energy (2024), Service Market Solution

Conclusion

American refineries are critical to the country’s strategic interest. U.S. refineries are projected to spend more than $428 billion in the next seven years on operating and capital expenditures. The industries support millions of jobs. Canadian crude is an important part of the equation. It supplies more than 23 per cent of U.S. refinery feedstock.

Not only are Canadian crude oil supplies critical for the U.S. refining industry, but they are key to North American energy security. Limiting access to Canadian crude oil for U.S. refineries would require increased U.S. imports from less-free countries, which in turn would risk North American energy security.

References

Rystad Energy (2024), Service Market Solution <http://tinyurl.com/28fmv6a6>; U.S. Energy Information Administration (Undated), Oil and Petroleum Products Explained: Refining Crude Oil <http://tinyurl.com/3b2uwrxh>; U.S. Energy Information Administration (2023), Refinery Capacity Report <http://tinyurl.com/2s4ybz9z>; U.S. Energy Information Administration (2024a), Petroleum and Other Liquids: PADD District Imports by Country of Origin <http://tinyurl.com/58mzvtts>; U.S. Energy Information Administration (2024b), Petroleum and Other Liquids: Refinery Utilization and Capacity <http://tinyurl.com/3wx957k4>; U.S. Energy Information Administration (2024c), Petroleum and Other Liquids: U.S. Imports by Country of Origin <http://tinyurl.com/bdcsbwhn>; U.S. Environmental Protection Agency (Undated), Appendix A — Overview of Petroleum Refining, Proposed Clean Fuels Refinery DEIS <http://tinyurl.com/dveyzc8k>.

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.

]]>
Aerial view of an oil refinery in Los Angeles, California. Getty Images photo

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Download the PDF here

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Introduction

The refining industry¹ in the United States is one of the world’s largest, with capacity to process 18 million barrels of oil per day. Canada plays a crucial role by supplying more than one-fifth of the crude oil refined in the U.S.

The U.S.–Canada cross-border crude oil trade is essential to North American energy security. Canadian crude oil exports and the U.S. refinery industry are highly integrated. In recent years, Canada’s crude oil sector has been making a growing contribution to the operations of U.S. oil refineries.

U.S. refineries are converting Canadian crude oil, including heavy oil,² into products that North Americans use daily, such as transportation fuels (gasoline and diesel), chemicals, and plastics. Although the U.S. has increased its production of oil in recent years, U.S. refineries still rely on Canadian heavy crude oil to meet their feedstock (i.e., the raw materials and intermediate materials processed at refineries to produce finished petroleum products, otherwise known as refinery inputs) specifications.

In this CEC Fact Sheet, we examine several economic indicators that illustrate the importance of Canadian crude oil, particularly heavy crude, to U.S. refineries. This fact sheet also analyzes the refining industry’s direct and indirect economic impacts on the U.S. economy.

1. NAICS Code 324110 (Petroleum Refineries): This industry comprises establishments primarily engaged in refining crude petroleum into refined petroleum.
2. A majority of the crude oil imported by the U.S. from Canada is heavy crude (between 15-25 API gravity). API gravity is a commonly used index for measuring the density of crude oil or refined products. Crude oil typically has an API between 15 and 45 degrees. The higher the API, the lighter the crude; the lower the API, the heavier the crude.

Imports of Canadian crude oil to refineries in the United States

The physical characteristics of crude oil determine how it is processed in refineries. Generally, heavy crude oil offers higher yields of low-value products (coke and asphalt) and lower yields of high-value products (gasoline). Heavy crude oil requires more complicated processing than lighter crude if it is to produce high-value products.

Overall, Canadian crude oil imports to U.S. refineries for processing have risen from over 1.3 million barrels per day in 2000 to just under 3.8 million barrels per day in 2022, an increase of 181 per cent (see Figure 1). The per cent of Canadian crude in U.S. refinery feedstock has steadily risen from nearly 9 per cent in 2000 to over 23 per cent by the end of 2022.

Source: U.S. Energy Information Administration (2024a, 2024b, 2024c)

The U.S. refining industry

Since the first U.S. refinery began operating in 1861, the refining industry has been one of the largest manufacturing sectors in the United States. There are currently 129 petroleum refineries across the five U.S. PADDS³ (125 operating refineries and five refineries that are idle but not permanently shut down) (see Table 1).

3. The United States is divided into five Petroleum Administration for Defense Districts (PADDs) for the allocation of fuels derived from petroleum products, including gasoline and diesel fuel. The geographic breakdown of PADDs enables U.S. policymakers to better analyze petroleum supplies in the country
Source: U.S. Energy Information Administration (2023)

Total refining capacity in the United States has risen from 16.2 million barrels of crude processed in 2000 to nearly 17.8 million barrels per day in 2022, an increase of over 8 per cent (see Figure 2). The refining utilization⁴ has also recovered, growing from 79 per cent during COVID-19 to a high of 91 per cent in 2022.

Source: U.S. Energy Information Administration (2024b)

The impact of the U.S. refining industry on the American economy

The estimated direct and indirect economic impacts of the U.S. refining industry in 2024 include 1.6 million direct and indirect jobs, $206 billion in labour income, $577 billion in direct and indirect value-added, and $1.6 trillion in what is known as “outputs,” i.e., the value of goods and services produced by the industry (see Table 2).⁵

4. Capacity measures how much crude oil refineries are able to process. Utilization measures how much is actually being processed (as a percentage of maximum capacity). 
5. These projected amounts are in nominal U.S. dollars
Source: Author’s calculations using the IMPLAN modelling system. Details may not add up to totals due to rounding

Projected spending by the U.S. refining industry, 2024-2030

Figure 3 illustrates the industry’s projected annual spending between 2024 and 2030. Industry spending is expected to be US$58 billion in 2024, rising to US$62 billion by 2030. This includes operating expenditures (OPEX) and capital expenditures (CAPEX). Cumulatively, between 2024 and 2030, the industry is projected to spend over US$428 billion.⁶

6. These projected amounts are in nominal U.S. dollars and are calculated using the Rystad Energy UCube.
Source: Derived from Rystad Energy (2024), Service Market Solution

Conclusion

American refineries are critical to the country’s strategic interest. U.S. refineries are projected to spend more than $428 billion in the next seven years on operating and capital expenditures. The industries support millions of jobs. Canadian crude is an important part of the equation. It supplies more than 23 per cent of U.S. refinery feedstock.

Not only are Canadian crude oil supplies critical for the U.S. refining industry, but they are key to North American energy security. Limiting access to Canadian crude oil for U.S. refineries would require increased U.S. imports from less-free countries, which in turn would risk North American energy security.

References

Rystad Energy (2024), Service Market Solution <http://tinyurl.com/28fmv6a6>; U.S. Energy Information Administration (Undated), Oil and Petroleum Products Explained: Refining Crude Oil <http://tinyurl.com/3b2uwrxh>; U.S. Energy Information Administration (2023), Refinery Capacity Report <http://tinyurl.com/2s4ybz9z>; U.S. Energy Information Administration (2024a), Petroleum and Other Liquids: PADD District Imports by Country of Origin <http://tinyurl.com/58mzvtts>; U.S. Energy Information Administration (2024b), Petroleum and Other Liquids: Refinery Utilization and Capacity <http://tinyurl.com/3wx957k4>; U.S. Energy Information Administration (2024c), Petroleum and Other Liquids: U.S. Imports by Country of Origin <http://tinyurl.com/bdcsbwhn>; U.S. Environmental Protection Agency (Undated), Appendix A — Overview of Petroleum Refining, Proposed Clean Fuels Refinery DEIS <http://tinyurl.com/dveyzc8k>.

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.

]]> The economic impact in the United States from Canadian natural gas exports https://www.canadianenergycentre.ca/the-economic-impact-in-the-united-states-from-canadian-natural-gas-exports/ Wed, 24 Jan 2024 17:38:40 +0000 https://www.canadianenergycentre.ca/?p=13811
TC Energy employees at the Blue Lake Compressor Station and Gas Storage Facility in Michigan. Photo courtesy TC Energy

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Summary

The bilateral trade in energy products between Canada and the United States is critical for economic prosperity and North American energy security. This CEC Research Brief analyzes the economic impacts in the United States that are attributable to natural gas imported from Canada.

In 2022, about 99 per cent of the U.S.’s total annual natural gas imports were from Canada, and nearly all were by pipeline. Its imports of natural gas from Canada help support fluctuating supply in the U.S. during the winter months.

In 2022, the economic impacts across the U.S. states from Canada’s natural gas exports included 7,300 jobs, US$1 billion in employee compensation, and US$2.40 billion in value-added.

Introduction

Imports and exports are essential for the smooth and efficient operation of natural gas markets in Canada and the United States. Canada and the U.S. rank among the world’s top natural gas producers, but both countries rely on one another to maintain reliable supply in domestic markets.

The demand for natural gas is increasing in the U.S. According to the U.S. Energy Information Administration (EIA), the projected demand for dry (or consumer-grade) natural gas in the U.S. will reach 88.38 billion cubic feet per day (bcfd) in 2024. Canada is a significant exporter of natural gas to the United States.

In 2022, about 99 per cent of the U.S.’s total annual natural gas imports were from Canada, and nearly all were by pipeline. Its imports of natural gas from Canada help support fluctuating supply in the U.S. during the winter months.

The bilateral trade in energy products between the U.S. and Canada reached $236.9 billion in 2022. Canada’s energy exports comprise more than one-third of all its merchandise exports. Canada exports half of the natural gas it produces to the United States.

Canada’s natural gas market is highly integrated with the U.S. through a vast transmission network (see Figure 1). Seven Canadian provinces are directly connected to the U.S. pipeline network, which enables natural gas to flow between the two countries. In 2022, Canada exported natural gas worth CAN$24.6 billion to the U.S.¹

Canadian natural gas exports have an impact on the U.S. economy by adding value and creating jobs in states that import Canadian natural gas.

In this research brief, we explore the economic impact of Canadian gas exports on the downstream sector of the U.S. economy. The paper measures value-added Gross State Product (GSP) and employment to determine Canada’s contribution to the downstream natural gas distribution sector in the U.S

1. Data value for Harmonized System (HS) code 271121 – Natural gas, in gaseous state, from Canada (2023), Trade Data Online.

U.S.-Canada Natural Gas Trade

Most of the natural gas consumed in the U.S. is met by domestic production, but the U.S. still imports natural gas from Canada and Mexico to help supply domestic demand. Imports and exports are essential components of the natural gas market in the U.S. They provide additional sources of supply for U.S. natural gas customers.

Canada is the U.S.’s largest energy trading partner based on the combined value of energy exports and imports. Energy accounts for one-fourth of the value of all U.S. imports.

Most of Canada’s natural gas exports go to the U.S., though such exports have decreased in recent years. The emergence of shale gas in Western Canada and in the United States, particularly the Marcellus region, has changed international natural gas market dynamics, increasing supply in both the U.S. and Canada.

In 2022, about 99 per cent of all the natural gas that the United States imported came from Canada, nearly all transported to the U.S. through pipelines. In 2022, Canada exported 2.99 trillion cubic feet (tcf) of natural gas to the U.S., down from a peak of 3.78 tcf in 2002. On average, between January 2000 to August 2023, Canada’s monthly gas exports to the U.S. were 264,131 million cubic feet (MMcf).

Source: U.S. EIA (Undated c)

Between 2013 and 2020, the volume of natural gas exported from Canada to the U.S. declined. However, the export trade value rebounded in 2023 due to high energy prices. Between 2013 and 2022, Canada exported CAN$10 billion annually of natural gas to the U.S. In 2022, high energy prices coupled with high trade volume resulted in Canada exporting CAN$24.6 billion worth of gas to the U.S.

Source: Canada (2023), Trade Data Online

Many U.S. states rely on Canadian natural gas. In 2022, East Port Idaho was the largest Canadian natural gas importing pipeline by point of entry in the U.S., importing 897,492 million cubic feet (MMcf). Other pipelines include those in Sherwood, North Dakota (486,065 MMcf), Noyes, Minnesota (451,818 MMcf), Sumas, Washington State (415,186 MMcf), and Port of Morgan, Montana (261,471 MMcf).

Source: U.S. EIA (Undated a)

Economic Impacts in the U.S. from Canadian Natural Gas Exports

The study uses a two-step approach to determine the impact of Canadian natural gas exports on U.S. state economies. First, the study analyzes Canada’s share of the U.S. downstream natural gas flow based on Canada’s historical natural gas exports to the U.S. Second, it applies these shares to U.S. downstream natural gas distribution activity measured in terms of value-added and employment to determine the Canadian contribution to the U.S. downstream natural gas sector.

Canadian natural gas has provided a steady source of supply to many U.S. states and is exported to regions in the U.S. West,
U.S. Midwest, and the U.S. East.²

U.S. states receiving Canadian gas can be identified from gas volume data supplied by the U.S. Energy Information Administration (EIA). The EIA data shows natural gas imports at U.S. entry points. Using a simple analytical approach, the author determined the Canadian share of total natural gas flows to various states across the U.S. as a percentage of natural gas imported to the states in the U.S. West, U.S. Midwest, and the U.S. East regions.

2. The U.S. West region includes Washington and Idaho, the U.S. Midwest region includes Montana, North Dakota, Minnesota, and Michigan, and the U.S. East region includes New York, Vermont, and Maine.
Source: Author’s calculation from U.S. EIA (undated a)

Natural gas can be used either as a final product (for heating or cooling) or as an intermediate product (for electricity generation or petrochemical production). The natural gas distribution sector (NAICS Code 221210)³ is used as the final consumer of imported gas to simplify the analysis of the uses for the natural gas imported from Canada.⁴ The study used the 023 IMPLAN model⁵ (software that combines data and analytics) to examine the impacts on the study area.

Table 2 summarizes the direct and indirect economic impacts of Canadian natural gas exports across various U.S. states in 2023. Direct impacts are measured as the jobs, labor income, employee compensation, and value-added attributable to Canadian gas exports. The indirect impact is measured as the jobs, labor income, and value-added occurring throughout the supply chain of the natural gas distribution industry that are attributable to its expenditures.

Across 10 states, the economic impact attributable to Canadian gas exports is US$2.40 billion in value-added, US$1 billion in employee compensation, and 10,780 jobs.

The value-added Gross State Product (GSP) impact is most significant in New York (US$649 million), followed by Washington state (US$373 million), North Dakota (US$339 million), and Minnesota (US$332 million).

The most significant impact on employment attributable to Canadian gas exports is in New York (2,286 jobs), followed by Minnesota (1,810 jobs), Montana (1,652 jobs), North Dakota (1,605 jobs), Idaho (1,211 jobs), and Washington (1,055 jobs).

3. NAICS Code 221210: Natural gas distribution. This sector comprises: (a) establishments primarily engaged in operating gas distribution systems (e.g., mains, meters); (b) establishments known as gas marketers that buy gas from the well and sell it to a distribution system; (c) establishments known as gas brokers or agents that arrange the sale of gas over gas distribution systems operated by others; and (d) establishments primarily engaged in transmitting and distributing gas to final consumers.
4. A few caveats should be considered. The analysis doesn’t employ the traditional input/output methodology of employing “expenditure shocks” in evaluating the U.S. economic impact attributable to Canadian natural gas exports to the U.S. states. The paper uses a simplified methodology of determining the Canadian share of the total U.S. downstream natural gas distribution flow based on trade patterns of natural gas across various states. Another caveat is that the downstream gas distribution sector can replace Canadian exported natural gas with interstate imports or imports from other countries, creating a “substitution effect.” Replacing imports from other sources can create the same impact and preserve the jobs in the sector.
5. For more information on the IMPLAN modeling process, visit https://IMPLAN.com.
Source: Author’s calculations using the IMPLAN modelling system. Details may not add up to totals due to rounding

Conclusion

Canadian natural gas exports to the United States have a critical impact on many states. The United States and Canada have strong and valuable energy links. The impact of these links should be emphasized in any discussions about the role of energy in both countries’ economies. Canadian natural gas exports to the U.S. generate spin-off effects in many states across the U.S. West, Midwest, and East.

The direct and indirect economic impacts of Canadian natural gas exports to U.S. states in 2023 included 7,300 jobs, US$1 billion in employee compensation, and US$2.40 billion in value-added.

A robust energy industry is critical to economic prosperity. Natural gas plays a key role in the bilateral trade in energy between Canada and the United States—and in North America’s overall energy security

CEC Research Briefs

Canadian Energy Centre (CEC) Research Briefs are contextual explanations of data as they relate to Canadian energy. They are statistical analyses released periodically to provide context on energy issues for investors, policymakers, and the public. The source of profiled data depends on the specific issue.

About the author

This CEC Research Brief was compiled by Ven Venkatachalam, Director of Research, Canadian Energy Centre.

Acknowledgements

The author and the Canadian Energy Centre would like to thank and acknowledge the assistance of two reviewers in reviewing the data and research for this Research Brief

References

Canada (2023). Trade Data Online. Government of Canada <https://ised-isde.canada.ca/site/trade-data-online/en>;  Canada (undated). “Canada-United States Relations,” Government of Canada. <https://www.international.gc.ca/country-pays/us-eu/relations.aspx?lang=eng>; United States, Office of International Trade Commission [OITC] (2023). “Market Overview” (November 3). Canada – Country Commercial Guide. OITC. Government of the United States, Department of Commerce. <https://www.trade.gov/knowledge-product/canada-market-overview>; IMPLAN (2021). Gas Industry: Regions and Results, Custom Tabulation. IMPLAN <https://implan.com/>; U.S. Energy Information Administration [EIA] (2022). “Natural Gas Imports from Canada Continue Providing Winter Reliability to U.S. Markets.” Today in Energy (November 22). EIA. <https://www.eia.gov/todayinenergy/detail.php?id=54759>; U.S. Energy Information Administration [EIA] (Undated a). “International & Interstate Movements of Natural Gas by State.” Natural Gas. EIA <https://www.eia.gov/dnav/ng/ng_move_ist_a2dcu_SID_a.htm>; U.S. Energy Information Administration [EIA] (Undated b). “Natural Gas Explained: Where Our Natural Gas Comes From.” Basics. EIA. <https://www.eia.gov/energyexplained/natural-gas/where-our-natural-gas-comes-from.php>; U.S. Energy Information Administration [EIA] (Undated c). “U.S. Natural Gas Pipeline Imports from Canada.” Natural Gas. EIA. <https://www.eia.gov/dnav/ng/hist/n9102cn2m.htm>.

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.

]]>
TC Energy employees at the Blue Lake Compressor Station and Gas Storage Facility in Michigan. Photo courtesy TC Energy

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Summary

The bilateral trade in energy products between Canada and the United States is critical for economic prosperity and North American energy security. This CEC Research Brief analyzes the economic impacts in the United States that are attributable to natural gas imported from Canada.

In 2022, about 99 per cent of the U.S.’s total annual natural gas imports were from Canada, and nearly all were by pipeline. Its imports of natural gas from Canada help support fluctuating supply in the U.S. during the winter months.

In 2022, the economic impacts across the U.S. states from Canada’s natural gas exports included 7,300 jobs, US$1 billion in employee compensation, and US$2.40 billion in value-added.

Introduction

Imports and exports are essential for the smooth and efficient operation of natural gas markets in Canada and the United States. Canada and the U.S. rank among the world’s top natural gas producers, but both countries rely on one another to maintain reliable supply in domestic markets.

The demand for natural gas is increasing in the U.S. According to the U.S. Energy Information Administration (EIA), the projected demand for dry (or consumer-grade) natural gas in the U.S. will reach 88.38 billion cubic feet per day (bcfd) in 2024. Canada is a significant exporter of natural gas to the United States.

In 2022, about 99 per cent of the U.S.’s total annual natural gas imports were from Canada, and nearly all were by pipeline. Its imports of natural gas from Canada help support fluctuating supply in the U.S. during the winter months.

The bilateral trade in energy products between the U.S. and Canada reached $236.9 billion in 2022. Canada’s energy exports comprise more than one-third of all its merchandise exports. Canada exports half of the natural gas it produces to the United States.

Canada’s natural gas market is highly integrated with the U.S. through a vast transmission network (see Figure 1). Seven Canadian provinces are directly connected to the U.S. pipeline network, which enables natural gas to flow between the two countries. In 2022, Canada exported natural gas worth CAN$24.6 billion to the U.S.¹

Canadian natural gas exports have an impact on the U.S. economy by adding value and creating jobs in states that import Canadian natural gas.

In this research brief, we explore the economic impact of Canadian gas exports on the downstream sector of the U.S. economy. The paper measures value-added Gross State Product (GSP) and employment to determine Canada’s contribution to the downstream natural gas distribution sector in the U.S

1. Data value for Harmonized System (HS) code 271121 – Natural gas, in gaseous state, from Canada (2023), Trade Data Online.

U.S.-Canada Natural Gas Trade

Most of the natural gas consumed in the U.S. is met by domestic production, but the U.S. still imports natural gas from Canada and Mexico to help supply domestic demand. Imports and exports are essential components of the natural gas market in the U.S. They provide additional sources of supply for U.S. natural gas customers.

Canada is the U.S.’s largest energy trading partner based on the combined value of energy exports and imports. Energy accounts for one-fourth of the value of all U.S. imports.

Most of Canada’s natural gas exports go to the U.S., though such exports have decreased in recent years. The emergence of shale gas in Western Canada and in the United States, particularly the Marcellus region, has changed international natural gas market dynamics, increasing supply in both the U.S. and Canada.

In 2022, about 99 per cent of all the natural gas that the United States imported came from Canada, nearly all transported to the U.S. through pipelines. In 2022, Canada exported 2.99 trillion cubic feet (tcf) of natural gas to the U.S., down from a peak of 3.78 tcf in 2002. On average, between January 2000 to August 2023, Canada’s monthly gas exports to the U.S. were 264,131 million cubic feet (MMcf).

Source: U.S. EIA (Undated c)

Between 2013 and 2020, the volume of natural gas exported from Canada to the U.S. declined. However, the export trade value rebounded in 2023 due to high energy prices. Between 2013 and 2022, Canada exported CAN$10 billion annually of natural gas to the U.S. In 2022, high energy prices coupled with high trade volume resulted in Canada exporting CAN$24.6 billion worth of gas to the U.S.

Source: Canada (2023), Trade Data Online

Many U.S. states rely on Canadian natural gas. In 2022, East Port Idaho was the largest Canadian natural gas importing pipeline by point of entry in the U.S., importing 897,492 million cubic feet (MMcf). Other pipelines include those in Sherwood, North Dakota (486,065 MMcf), Noyes, Minnesota (451,818 MMcf), Sumas, Washington State (415,186 MMcf), and Port of Morgan, Montana (261,471 MMcf).

Source: U.S. EIA (Undated a)

Economic Impacts in the U.S. from Canadian Natural Gas Exports

The study uses a two-step approach to determine the impact of Canadian natural gas exports on U.S. state economies. First, the study analyzes Canada’s share of the U.S. downstream natural gas flow based on Canada’s historical natural gas exports to the U.S. Second, it applies these shares to U.S. downstream natural gas distribution activity measured in terms of value-added and employment to determine the Canadian contribution to the U.S. downstream natural gas sector.

Canadian natural gas has provided a steady source of supply to many U.S. states and is exported to regions in the U.S. West,
U.S. Midwest, and the U.S. East.²

U.S. states receiving Canadian gas can be identified from gas volume data supplied by the U.S. Energy Information Administration (EIA). The EIA data shows natural gas imports at U.S. entry points. Using a simple analytical approach, the author determined the Canadian share of total natural gas flows to various states across the U.S. as a percentage of natural gas imported to the states in the U.S. West, U.S. Midwest, and the U.S. East regions.

2. The U.S. West region includes Washington and Idaho, the U.S. Midwest region includes Montana, North Dakota, Minnesota, and Michigan, and the U.S. East region includes New York, Vermont, and Maine.
Source: Author’s calculation from U.S. EIA (undated a)

Natural gas can be used either as a final product (for heating or cooling) or as an intermediate product (for electricity generation or petrochemical production). The natural gas distribution sector (NAICS Code 221210)³ is used as the final consumer of imported gas to simplify the analysis of the uses for the natural gas imported from Canada.⁴ The study used the 023 IMPLAN model⁵ (software that combines data and analytics) to examine the impacts on the study area.

Table 2 summarizes the direct and indirect economic impacts of Canadian natural gas exports across various U.S. states in 2023. Direct impacts are measured as the jobs, labor income, employee compensation, and value-added attributable to Canadian gas exports. The indirect impact is measured as the jobs, labor income, and value-added occurring throughout the supply chain of the natural gas distribution industry that are attributable to its expenditures.

Across 10 states, the economic impact attributable to Canadian gas exports is US$2.40 billion in value-added, US$1 billion in employee compensation, and 10,780 jobs.

The value-added Gross State Product (GSP) impact is most significant in New York (US$649 million), followed by Washington state (US$373 million), North Dakota (US$339 million), and Minnesota (US$332 million).

The most significant impact on employment attributable to Canadian gas exports is in New York (2,286 jobs), followed by Minnesota (1,810 jobs), Montana (1,652 jobs), North Dakota (1,605 jobs), Idaho (1,211 jobs), and Washington (1,055 jobs).

3. NAICS Code 221210: Natural gas distribution. This sector comprises: (a) establishments primarily engaged in operating gas distribution systems (e.g., mains, meters); (b) establishments known as gas marketers that buy gas from the well and sell it to a distribution system; (c) establishments known as gas brokers or agents that arrange the sale of gas over gas distribution systems operated by others; and (d) establishments primarily engaged in transmitting and distributing gas to final consumers.
4. A few caveats should be considered. The analysis doesn’t employ the traditional input/output methodology of employing “expenditure shocks” in evaluating the U.S. economic impact attributable to Canadian natural gas exports to the U.S. states. The paper uses a simplified methodology of determining the Canadian share of the total U.S. downstream natural gas distribution flow based on trade patterns of natural gas across various states. Another caveat is that the downstream gas distribution sector can replace Canadian exported natural gas with interstate imports or imports from other countries, creating a “substitution effect.” Replacing imports from other sources can create the same impact and preserve the jobs in the sector.
5. For more information on the IMPLAN modeling process, visit https://IMPLAN.com.
Source: Author’s calculations using the IMPLAN modelling system. Details may not add up to totals due to rounding

Conclusion

Canadian natural gas exports to the United States have a critical impact on many states. The United States and Canada have strong and valuable energy links. The impact of these links should be emphasized in any discussions about the role of energy in both countries’ economies. Canadian natural gas exports to the U.S. generate spin-off effects in many states across the U.S. West, Midwest, and East.

The direct and indirect economic impacts of Canadian natural gas exports to U.S. states in 2023 included 7,300 jobs, US$1 billion in employee compensation, and US$2.40 billion in value-added.

A robust energy industry is critical to economic prosperity. Natural gas plays a key role in the bilateral trade in energy between Canada and the United States—and in North America’s overall energy security

CEC Research Briefs

Canadian Energy Centre (CEC) Research Briefs are contextual explanations of data as they relate to Canadian energy. They are statistical analyses released periodically to provide context on energy issues for investors, policymakers, and the public. The source of profiled data depends on the specific issue.

About the author

This CEC Research Brief was compiled by Ven Venkatachalam, Director of Research, Canadian Energy Centre.

Acknowledgements

The author and the Canadian Energy Centre would like to thank and acknowledge the assistance of two reviewers in reviewing the data and research for this Research Brief

References

Canada (2023). Trade Data Online. Government of Canada <https://ised-isde.canada.ca/site/trade-data-online/en>;  Canada (undated). “Canada-United States Relations,” Government of Canada. <https://www.international.gc.ca/country-pays/us-eu/relations.aspx?lang=eng>; United States, Office of International Trade Commission [OITC] (2023). “Market Overview” (November 3). Canada – Country Commercial Guide. OITC. Government of the United States, Department of Commerce. <https://www.trade.gov/knowledge-product/canada-market-overview>; IMPLAN (2021). Gas Industry: Regions and Results, Custom Tabulation. IMPLAN <https://implan.com/>; U.S. Energy Information Administration [EIA] (2022). “Natural Gas Imports from Canada Continue Providing Winter Reliability to U.S. Markets.” Today in Energy (November 22). EIA. <https://www.eia.gov/todayinenergy/detail.php?id=54759>; U.S. Energy Information Administration [EIA] (Undated a). “International & Interstate Movements of Natural Gas by State.” Natural Gas. EIA <https://www.eia.gov/dnav/ng/ng_move_ist_a2dcu_SID_a.htm>; U.S. Energy Information Administration [EIA] (Undated b). “Natural Gas Explained: Where Our Natural Gas Comes From.” Basics. EIA. <https://www.eia.gov/energyexplained/natural-gas/where-our-natural-gas-comes-from.php>; U.S. Energy Information Administration [EIA] (Undated c). “U.S. Natural Gas Pipeline Imports from Canada.” Natural Gas. EIA. <https://www.eia.gov/dnav/ng/hist/n9102cn2m.htm>.

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.

]]> 25 facts about oil and gas: A summary Research Brief https://www.canadianenergycentre.ca/25-facts-about-oil-and-gas-a-summary-research-brief/ Tue, 19 Dec 2023 17:25:03 +0000 https://www.canadianenergycentre.ca/?p=13561

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The following summary facts and data were drawn from 30 Fact Sheets and Research Briefs and various Research Snapshots that the Canadian Energy Centre released in 2023. For sources and methodology and for additional data and information, the original reports are available at the research portal on the Canadian Energy Centre website: canadianenergycentre.ca.

 

Environment

1.

Canada’s share of Global CO2 emissions is dropping

Since the Kyoto Summit in 1997, Canada’s share of the world’s CO2 emissions has fallen from 2.2 per cent to 1.6 per cent. Canada’s share of world CO2 emissions decreased by 25 per cent from the Kyoto climate summit to the recent Dubai climate summit.

 

Source: CEC Research, Calculation from Various Database (2023)

2.

Canadian natural gas is getting cleaner

Emissions intensity is the emission rate of a given pollutant relative to the intensity of a specific activity or industrial production process. Emissions intensity is determined by dividing the number of absolute emissions by some unit of output, such as GDP, energy used, population, or barrel of oil produced. Between 2010 and 2021, the CO2 emissions intensity of Canadian natural gas production fell from 63.5 kilograms CO2e per barrel of oil equivalent to 44.5 kilograms CO2e per barrel of oil equivalent, a decline of nearly 30 per cent.

Source: Derived from Rystad Energy

3.

Canadian oil sands production is getting cleaner

Between 2000 and 2021, the emissions intensity of the oil sands subsector fell from 111.8 kilograms CO2e per barrel to just under 79.3 kilograms CO2e per barrel, a decline of over 29 per cent. As GHG emissions intensity in the upstream oil sector continues to decline and because Canada’s ESG performance remains highly rated, Canadian oil has the potential to become the barrel of choice on the world stage.

Source: Derived from Rystad Energy

4.

Canada’s oil and gas sector is doing its part to reduce methane emissions

Gas flaring is the burning off of the natural gas that is generated in the process of oil extraction and production. It is a significant source of greenhouse gas emissions (GHGs). 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. At 945 million m3 in 2022, Canada was the eighth lowest flarer among the world’s top 30 oil and gas producers (23rd spot). Canada decreased its flaring emissions by 320 million m3 from its 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.

Source: World Bank (undated)

5.

Environmental spending by Canada’s oil and gas sector remains high

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 that $28.6 billion the oil and gas sector spent $9.4 billion, or nearly 33 per cent. In 2020 alone, when capital and operating expenses on environmental protection are combined, the oil and gas sector spent $2.7 billion, or 27 per cent of all Canadian business spending on the environment that year.

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

6.

Alberta among top provincial spenders on environmental protection

Industries are not alone in spending money on environmental protection; provincial governments do as well. Total provincial government spending on environmental protection between 2008 and 2021 was nearly $143.5 billion. In 2021, 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.

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

Economics of the Oil and Gas Sector

7.

Revenue contribution from the oil and gas sector: $578.7 billion between 2000 and 2021

The gross revenue contribution to federal, provincial, and municipal governments received exclusively from the oil and gas sector was $578.7 billion between 2000 and 2021, an average of $26.3 billion per year. The $578.7 billion figure includes $461.6 billion in direct provincial revenues, $99.6 billion in direct federal revenues, and $17.3 billion in indirect federal, provincial, and municipal taxes.

Sources: Statistics Canada, 2022 (a, b, c, d), Statistics Canada 2023 (a,b), and CAPP, 2022

8.

Projected government revenues from Canada’s oil sands sector: US$231 billion from 2023 to 2032

Government revenues from Canada’s oil sands sector (which includes provincial royalties and federal and provincial corporate taxes) are expected to rise from US$17.1 billion in 2023 to US$28.7 billion in 2032—nearly US$231 billion cumulatively—assuming the price of oil is a flat US$80 per barrel. Both projections would be about 20 per cent more in Canadian dollars at the current exchange rate.

Source: Derived from Rystad Energy

9.

Projected capex from Canadian oil sands sector: nearly US$113 billion over the next decade

Capex from the Canadian oil sands sector is projected to reach US$112.7 billion over the next decade. Assuming a flat US$80 per barrel for the price of oil, oil sands sector capex is expected to rise from US$10.1 billion in 2023 to US$14.2 billion in 2032. Those projections would be about 20 per cent more in Canadian dollars at the current exchange rate.

Source: Derived from Rystad Energy

10.

Canadian overall upstream oil sector supply costs have declined over 35% since 2015

The cost of supply for the Canadian upstream oil sector is the minimum constant dollar price needed to recover all capital expenditures, operating costs, royalties, taxes, and earn a specified return on investment. Supply costs indicate whether the upstream oil sector is economically viable.

Supply costs within Canada’s upstream oil sector declined significantly between 2015 and 2022. At the end of 2015, the Canadian upstream oil sector’s weighted average breakeven price was nearly US$76.00 per barrel of Brent. By the end of 2022, that weighted average breakeven price was US$49.09 per barrel of Brent, a decline of US$26.91 per barrel, or over 35 per cent since 2015. This number incorporates different phases of oil production including producing, under development, and discovery.

Source: Derived from Rystad Energy

11.

Breakeven costs in Canadian natural gas sector fifth lowest in the world

The Canadian natural gas sector had a weighted average breakeven gas price of US$2.31 per thousand cubic feet (mcf) in 2022, fifth lowest among major natural gas producing countries. Only in Saudi Arabia (US$1.09 per mcf), Iran (US$1.39 per mcf), Qatar (US$1.93 per mcf), and the United States (US$2.22 per mcf) was the breakeven gas price lower. The weighted average breakeven costs for Canada‘s natural gas sector in 2022 were lower than in Russia, Norway, Algeria, China, and Australia.

Source: Derived from Rystad Energy

12.

Natural gas prices have skyrocketed

Natural gas prices have skyrocketed around the world in the last two years. In 2021, the price of natural gas in Asia was US$18.60 per million British thermal units (mmbtu) compared to US$4.40 per mmbtu in 2020—an increase of 323 per cent in just one year. By comparison, in 2021 natural gas sold for US$2.80 per mmbtu on Alberta’s AECO-C trading hub; in Asia it was US$15.88 per mmbtu more (or 564 per cent higher). Between 2019 and 2021, the price gap between Henry Hub in the US and AECO-C natural gas fluctuated from a high of 98 per cent in 2019 to a low of 26 per cent in 2020. In 2021, U.S. natural gas sold for US$3.84 per mmbtu, 40 per cent higher than the US$2.75 per mmbtu average price for AECO-C natural gas that year.

Sources: BP Statistical Review of World Energy and International Monetary Fund

13.

Projected government revenues from the Canadian natural gas sector: over US$227 billion through 2050

Government revenues from the Canadian natural gas sector are projected to reach over US$227 billion through 2050. Under a Henry Hub price for natural gas of US$3.00 per thousand cubic feet (kcf), government revenues from the country’s natural gas sector are expected to rise from US$1.4 billion in 2023 to US$3.4 billion in 2050. Should the Henry Hub price reach US$4.00 per kcf, government revenues from the country’s natural gas sector would be projected to rise from US$2.0 billion in 2023 to US$10.0 billion in 2050.

Source: Derived from Rystad Energy

14.

Small business plays a key role in the oil and gas sector

Small business plays a key job creation role in Canada’s economy. 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. In 2022, of the oil and gas firms in Canada, 96.0 per cent were small, 3.5 per cent were medium-sized, and 0.6 per cent were large companies.

With the exception of construction, the oil and gas sector in Canada has a higher proportion of small businesses than other major industries. 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 99.0 per cent in the construction sector. The all-industry average is 98.0 per cent.

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

15.

Canada’s oil and gas sector has an impact on key industries across the Canadian economy

In 2019, the activities of the Canadian oil and gas sector were indirectly responsible for significant portions of the GDP created by other key industries across Canada. The sector’s activities generated $100.9 million in GDP in the food and beverage merchant wholesalers industry that year and nearly $4.1 billion in GDP in architectural, engineering, and related services. In 2019, the top five industries whose GDP was most affected by their association with Canada’s oil and gas sector 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
Source: Statistics Canada

16.

Employment and wages in the oil and gas sector remain high

In 2021, the oil and gas sector directly employed 147,371 Canadians. The number of direct jobs in the 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. The average salary of a worker in the Canadian oil and gas sector in 2021 was $133,293. The average salary for a worker in the sector had risen from $103,448 in 2009 to $133,776 in 2015, before leveling off to $129,716 in 2019 due to the energy price slump. However, between 2009 and 2021, the average annual wage of a worker in the Canadian oil and gas sector increased by nearly 29 per cent.

Source: Statistics Canada

Social and Governance

17.

Women’s employment in Canada’s oil and gas sector is recovering

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 somewhat to 33,068 in 2021. Between 2009 and 2021, the average wage for a female worker in the Canadian oil and gas industry increased by over 53 per cent.

Source: Statistics Canada

18.

Diversity increasing in the oil and gas sector

Between 2009 and 2021, workers in the Canada’s oil and gas sector who identified as Indigenous increased by nearly 17 per cent. Between 2009 and 2021, the average salary of an Indigenous person employed in Canada’s oil and gas sector increased by over 39 per cent.

Source: Statistics Canada

19.

More new Canadians working in the oil and gas sector over the long term

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. 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.

Source: Statistics Canada

Carbon Capture, Utilization and Storage (CCUS)

20.

Carbon Capture, Utilization and Storage (CCUS) growing across the world

At the end of 2022, there were 65 commercial carbon capture, utilization and storage (CCUS) projects in operation globally capable of capturing nearly 41 million tonnes per annum (mtpa) of CO2 across various industries, including the oil and gas sector. There are another 478 projects in various stages of development around the world that will be capable of capturing roughly another 559 mtpa of CO2. These projects are in various stages of development: some are at the feasibility stage while others are in the concept and construction phases. If all projects move ahead as scheduled, by 2030 it is estimated that nearly 500 CCUS projects could be operating worldwide, having the ability to capture 623.0 mtpa of CO2. In fact,  between 2023 and 2030, global carbon capture capacity could grow from 43.5 mtpa to 623.0 mtpa, an increase of over 1,332 per cent.

Source: Derived from Rystad Energy

21.

Projected Carbon Capture, Utilization and Storage (CCUS) in Canada has a bright future

Global carbon capture capacity and worldwide spending trends to date underline the fact that the future is bright for Canadian investments in CCUS. Assuming that appropriate government policies and regulations are put in place, Canada can expect to see further project announcements and increased investment in the technology. Canada will likely emerge as a CCUS heavyweight given the prevailing policy environment and the existential need for oil sands players to decarbonize. Rystad Energy estimates that Canada alone could account for around 20 per cent of cumulative carbon capture demand between 2023 and 2030.

Source: Derived from Rystad Energy

Nuclear and Renewables

22.

Nuclear energy a stable source of electricity production in Canada

Nuclear power plants have been producing electricity in Canada since the 1960s. As of 2022, four nuclear power plants operate in Canada: three in Ontario and one in New Brunswick. Canada’s share of nuclear electricity production has remained relatively stable over the past few decades. In 1990, nuclear energy accounted for about 14.8 per cent of Canada’s electricity production; by 2021, this share had decreased only slightly to about 14.3 per cent.

Source: International Atomic Energy Agency

23.

Canada’s trade in renewable products is modest

Trade is an essential component of Canada’s economic activity, accounting for about two-thirds of the economy and employing 3.3 million people. In 2021, Canada imported solar panel products with a value of CAN$653 million and wind turbine products with a value of CAN$91 million. The value of the solar panels and wind turbines Canada imported was much higher than the CAN$260 million export value for both products.

Source: Government of Canada, Trade Data Online

Liquefied Natural Gas (LNG)

24.

Global LNG production projected to rise

Global liquefied natural gas (LNG) production is expected to reach nearly 720 million tonnes by 2035. That year the United States is projected to be the world’s leading LNG producer at 259 million tonnes, followed by Qatar at 121 million tonnes, and Australia at 78 million tonnes. Russian LNG supply was expected to grow to 54 million tonnes by 2035, but this is now in question, leaving opportunities for countries such as Canada to fill the void. In fact, by 2035, Canada could be the fifth largest LNG producer at nearly 33 million tonnes of LNG.

Source: Derived from Rystad Energy

25.

Canadian LNG exports could help reduce global emissions

Asia is a significant source of CO2 emissions. Canadian LNG exports can help in reducing emissions from the Asian energy mix. If Canada increases its LNG export capacity to Asia, by 2050 net global emissions could decline by 188 million tonnes of CO2 equivalent per year. That would have the annual impact of taking 41 million cars off the road.

CEC Research Briefs

Canadian Energy Centre (CEC) Research Briefs are contextual explanations of data as they relate to Canadian energy. They are statistical analyses released periodically to provide context on energy issues for investors, policymakers, and the public. The source of profiled data depends on the specific issue. This research brief is a compilation of previous Fact Sheets and Research Briefs released by the centre in 2023. Sources can be accessed in the previously released reports. 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 the original data sources.

About the author

This CEC Research Brief was compiled by Ven Venkatachalam, Director of Research at the Canadian Energy Centre.

Acknowledgements

The author and the Canadian Energy Centre would like to thank and acknowledge the assistance of an anonymous reviewer for the review of this paper.

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.

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The following summary facts and data were drawn from 30 Fact Sheets and Research Briefs and various Research Snapshots that the Canadian Energy Centre released in 2023. For sources and methodology and for additional data and information, the original reports are available at the research portal on the Canadian Energy Centre website: canadianenergycentre.ca.

 

Environment

1.

Canada’s share of Global CO2 emissions is dropping

Since the Kyoto Summit in 1997, Canada’s share of the world’s CO2 emissions has fallen from 2.2 per cent to 1.6 per cent. Canada’s share of world CO2 emissions decreased by 25 per cent from the Kyoto climate summit to the recent Dubai climate summit.

 

Source: CEC Research, Calculation from Various Database (2023)

2.

Canadian natural gas is getting cleaner

Emissions intensity is the emission rate of a given pollutant relative to the intensity of a specific activity or industrial production process. Emissions intensity is determined by dividing the number of absolute emissions by some unit of output, such as GDP, energy used, population, or barrel of oil produced. Between 2010 and 2021, the CO2 emissions intensity of Canadian natural gas production fell from 63.5 kilograms CO2e per barrel of oil equivalent to 44.5 kilograms CO2e per barrel of oil equivalent, a decline of nearly 30 per cent.

Source: Derived from Rystad Energy

3.

Canadian oil sands production is getting cleaner

Between 2000 and 2021, the emissions intensity of the oil sands subsector fell from 111.8 kilograms CO2e per barrel to just under 79.3 kilograms CO2e per barrel, a decline of over 29 per cent. As GHG emissions intensity in the upstream oil sector continues to decline and because Canada’s ESG performance remains highly rated, Canadian oil has the potential to become the barrel of choice on the world stage.

Source: Derived from Rystad Energy

4.

Canada’s oil and gas sector is doing its part to reduce methane emissions

Gas flaring is the burning off of the natural gas that is generated in the process of oil extraction and production. It is a significant source of greenhouse gas emissions (GHGs). 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. At 945 million m3 in 2022, Canada was the eighth lowest flarer among the world’s top 30 oil and gas producers (23rd spot). Canada decreased its flaring emissions by 320 million m3 from its 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.

Source: World Bank (undated)

5.

Environmental spending by Canada’s oil and gas sector remains high

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 that $28.6 billion the oil and gas sector spent $9.4 billion, or nearly 33 per cent. In 2020 alone, when capital and operating expenses on environmental protection are combined, the oil and gas sector spent $2.7 billion, or 27 per cent of all Canadian business spending on the environment that year.

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

6.

Alberta among top provincial spenders on environmental protection

Industries are not alone in spending money on environmental protection; provincial governments do as well. Total provincial government spending on environmental protection between 2008 and 2021 was nearly $143.5 billion. In 2021, 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.

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

Economics of the Oil and Gas Sector

7.

Revenue contribution from the oil and gas sector: $578.7 billion between 2000 and 2021

The gross revenue contribution to federal, provincial, and municipal governments received exclusively from the oil and gas sector was $578.7 billion between 2000 and 2021, an average of $26.3 billion per year. The $578.7 billion figure includes $461.6 billion in direct provincial revenues, $99.6 billion in direct federal revenues, and $17.3 billion in indirect federal, provincial, and municipal taxes.

Sources: Statistics Canada, 2022 (a, b, c, d), Statistics Canada 2023 (a,b), and CAPP, 2022

8.

Projected government revenues from Canada’s oil sands sector: US$231 billion from 2023 to 2032

Government revenues from Canada’s oil sands sector (which includes provincial royalties and federal and provincial corporate taxes) are expected to rise from US$17.1 billion in 2023 to US$28.7 billion in 2032—nearly US$231 billion cumulatively—assuming the price of oil is a flat US$80 per barrel. Both projections would be about 20 per cent more in Canadian dollars at the current exchange rate.

Source: Derived from Rystad Energy

9.

Projected capex from Canadian oil sands sector: nearly US$113 billion over the next decade

Capex from the Canadian oil sands sector is projected to reach US$112.7 billion over the next decade. Assuming a flat US$80 per barrel for the price of oil, oil sands sector capex is expected to rise from US$10.1 billion in 2023 to US$14.2 billion in 2032. Those projections would be about 20 per cent more in Canadian dollars at the current exchange rate.

Source: Derived from Rystad Energy

10.

Canadian overall upstream oil sector supply costs have declined over 35% since 2015

The cost of supply for the Canadian upstream oil sector is the minimum constant dollar price needed to recover all capital expenditures, operating costs, royalties, taxes, and earn a specified return on investment. Supply costs indicate whether the upstream oil sector is economically viable.

Supply costs within Canada’s upstream oil sector declined significantly between 2015 and 2022. At the end of 2015, the Canadian upstream oil sector’s weighted average breakeven price was nearly US$76.00 per barrel of Brent. By the end of 2022, that weighted average breakeven price was US$49.09 per barrel of Brent, a decline of US$26.91 per barrel, or over 35 per cent since 2015. This number incorporates different phases of oil production including producing, under development, and discovery.

Source: Derived from Rystad Energy

11.

Breakeven costs in Canadian natural gas sector fifth lowest in the world

The Canadian natural gas sector had a weighted average breakeven gas price of US$2.31 per thousand cubic feet (mcf) in 2022, fifth lowest among major natural gas producing countries. Only in Saudi Arabia (US$1.09 per mcf), Iran (US$1.39 per mcf), Qatar (US$1.93 per mcf), and the United States (US$2.22 per mcf) was the breakeven gas price lower. The weighted average breakeven costs for Canada‘s natural gas sector in 2022 were lower than in Russia, Norway, Algeria, China, and Australia.

Source: Derived from Rystad Energy

12.

Natural gas prices have skyrocketed

Natural gas prices have skyrocketed around the world in the last two years. In 2021, the price of natural gas in Asia was US$18.60 per million British thermal units (mmbtu) compared to US$4.40 per mmbtu in 2020—an increase of 323 per cent in just one year. By comparison, in 2021 natural gas sold for US$2.80 per mmbtu on Alberta’s AECO-C trading hub; in Asia it was US$15.88 per mmbtu more (or 564 per cent higher). Between 2019 and 2021, the price gap between Henry Hub in the US and AECO-C natural gas fluctuated from a high of 98 per cent in 2019 to a low of 26 per cent in 2020. In 2021, U.S. natural gas sold for US$3.84 per mmbtu, 40 per cent higher than the US$2.75 per mmbtu average price for AECO-C natural gas that year.

Sources: BP Statistical Review of World Energy and International Monetary Fund

13.

Projected government revenues from the Canadian natural gas sector: over US$227 billion through 2050

Government revenues from the Canadian natural gas sector are projected to reach over US$227 billion through 2050. Under a Henry Hub price for natural gas of US$3.00 per thousand cubic feet (kcf), government revenues from the country’s natural gas sector are expected to rise from US$1.4 billion in 2023 to US$3.4 billion in 2050. Should the Henry Hub price reach US$4.00 per kcf, government revenues from the country’s natural gas sector would be projected to rise from US$2.0 billion in 2023 to US$10.0 billion in 2050.

Source: Derived from Rystad Energy

14.

Small business plays a key role in the oil and gas sector

Small business plays a key job creation role in Canada’s economy. 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. In 2022, of the oil and gas firms in Canada, 96.0 per cent were small, 3.5 per cent were medium-sized, and 0.6 per cent were large companies.

With the exception of construction, the oil and gas sector in Canada has a higher proportion of small businesses than other major industries. 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 99.0 per cent in the construction sector. The all-industry average is 98.0 per cent.

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

15.

Canada’s oil and gas sector has an impact on key industries across the Canadian economy

In 2019, the activities of the Canadian oil and gas sector were indirectly responsible for significant portions of the GDP created by other key industries across Canada. The sector’s activities generated $100.9 million in GDP in the food and beverage merchant wholesalers industry that year and nearly $4.1 billion in GDP in architectural, engineering, and related services. In 2019, the top five industries whose GDP was most affected by their association with Canada’s oil and gas sector 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
Source: Statistics Canada

16.

Employment and wages in the oil and gas sector remain high

In 2021, the oil and gas sector directly employed 147,371 Canadians. The number of direct jobs in the 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. The average salary of a worker in the Canadian oil and gas sector in 2021 was $133,293. The average salary for a worker in the sector had risen from $103,448 in 2009 to $133,776 in 2015, before leveling off to $129,716 in 2019 due to the energy price slump. However, between 2009 and 2021, the average annual wage of a worker in the Canadian oil and gas sector increased by nearly 29 per cent.

Source: Statistics Canada

Social and Governance

17.

Women’s employment in Canada’s oil and gas sector is recovering

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 somewhat to 33,068 in 2021. Between 2009 and 2021, the average wage for a female worker in the Canadian oil and gas industry increased by over 53 per cent.

Source: Statistics Canada

18.

Diversity increasing in the oil and gas sector

Between 2009 and 2021, workers in the Canada’s oil and gas sector who identified as Indigenous increased by nearly 17 per cent. Between 2009 and 2021, the average salary of an Indigenous person employed in Canada’s oil and gas sector increased by over 39 per cent.

Source: Statistics Canada

19.

More new Canadians working in the oil and gas sector over the long term

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. 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.

Source: Statistics Canada

Carbon Capture, Utilization and Storage (CCUS)

20.

Carbon Capture, Utilization and Storage (CCUS) growing across the world

At the end of 2022, there were 65 commercial carbon capture, utilization and storage (CCUS) projects in operation globally capable of capturing nearly 41 million tonnes per annum (mtpa) of CO2 across various industries, including the oil and gas sector. There are another 478 projects in various stages of development around the world that will be capable of capturing roughly another 559 mtpa of CO2. These projects are in various stages of development: some are at the feasibility stage while others are in the concept and construction phases. If all projects move ahead as scheduled, by 2030 it is estimated that nearly 500 CCUS projects could be operating worldwide, having the ability to capture 623.0 mtpa of CO2. In fact,  between 2023 and 2030, global carbon capture capacity could grow from 43.5 mtpa to 623.0 mtpa, an increase of over 1,332 per cent.

Source: Derived from Rystad Energy

21.

Projected Carbon Capture, Utilization and Storage (CCUS) in Canada has a bright future

Global carbon capture capacity and worldwide spending trends to date underline the fact that the future is bright for Canadian investments in CCUS. Assuming that appropriate government policies and regulations are put in place, Canada can expect to see further project announcements and increased investment in the technology. Canada will likely emerge as a CCUS heavyweight given the prevailing policy environment and the existential need for oil sands players to decarbonize. Rystad Energy estimates that Canada alone could account for around 20 per cent of cumulative carbon capture demand between 2023 and 2030.

Source: Derived from Rystad Energy

Nuclear and Renewables

22.

Nuclear energy a stable source of electricity production in Canada

Nuclear power plants have been producing electricity in Canada since the 1960s. As of 2022, four nuclear power plants operate in Canada: three in Ontario and one in New Brunswick. Canada’s share of nuclear electricity production has remained relatively stable over the past few decades. In 1990, nuclear energy accounted for about 14.8 per cent of Canada’s electricity production; by 2021, this share had decreased only slightly to about 14.3 per cent.

Source: International Atomic Energy Agency

23.

Canada’s trade in renewable products is modest

Trade is an essential component of Canada’s economic activity, accounting for about two-thirds of the economy and employing 3.3 million people. In 2021, Canada imported solar panel products with a value of CAN$653 million and wind turbine products with a value of CAN$91 million. The value of the solar panels and wind turbines Canada imported was much higher than the CAN$260 million export value for both products.

Source: Government of Canada, Trade Data Online

Liquefied Natural Gas (LNG)

24.

Global LNG production projected to rise

Global liquefied natural gas (LNG) production is expected to reach nearly 720 million tonnes by 2035. That year the United States is projected to be the world’s leading LNG producer at 259 million tonnes, followed by Qatar at 121 million tonnes, and Australia at 78 million tonnes. Russian LNG supply was expected to grow to 54 million tonnes by 2035, but this is now in question, leaving opportunities for countries such as Canada to fill the void. In fact, by 2035, Canada could be the fifth largest LNG producer at nearly 33 million tonnes of LNG.

Source: Derived from Rystad Energy

25.

Canadian LNG exports could help reduce global emissions

Asia is a significant source of CO2 emissions. Canadian LNG exports can help in reducing emissions from the Asian energy mix. If Canada increases its LNG export capacity to Asia, by 2050 net global emissions could decline by 188 million tonnes of CO2 equivalent per year. That would have the annual impact of taking 41 million cars off the road.

CEC Research Briefs

Canadian Energy Centre (CEC) Research Briefs are contextual explanations of data as they relate to Canadian energy. They are statistical analyses released periodically to provide context on energy issues for investors, policymakers, and the public. The source of profiled data depends on the specific issue. This research brief is a compilation of previous Fact Sheets and Research Briefs released by the centre in 2023. Sources can be accessed in the previously released reports. 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 the original data sources.

About the author

This CEC Research Brief was compiled by Ven Venkatachalam, Director of Research at the Canadian Energy Centre.

Acknowledgements

The author and the Canadian Energy Centre would like to thank and acknowledge the assistance of an anonymous reviewer for the review of this paper.

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.

]]> Global emissions from coal plants https://www.canadianenergycentre.ca/global-emissions-from-coal-plants/ Tue, 28 Nov 2023 22:25:58 +0000 https://www.canadianenergycentre.ca/?p=13360
A man walks towards a ferry as the Wujing coal-electricity power station is seen across the Huangpu River in the Minhang district of Shanghai. 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

 

Introduction

High energy prices, inflation, war, and the ongoing economic recovery from the pandemic has highlighted the general worldwide demand for electricity, particularly in Asia and Europe. The growing demand for electricity on these two continents has led some electricity producing plants to rely increasingly heavily on coal as a power source.

The electricity sector accounts for 34 per cent of the world’s energy-related carbon dioxide (CO2) emissions. In this Fact Sheet, we detail recent trends in electricity production and demand across the globe as well as CO2 emissions from the electricity sector worldwide.

Carbon dioxide emissions from the world’s top ten emitters between 2000 and 2022

A total of 38.2 gigatonnes (Gt) of energy-related CO2 was emitted globally in 2022, an increase of 53 per cent from 2000. However, the increase is not consistent for all countries; between 2000 and 2023, CO2 emissions trends diverged. Emissions from China, India, and Indonesia more than doubled in the last two decades, whereas emissions for other countries remained relatively consistent or even declined.

In 2022, Canada’s total energy-related CO2 emissions were 0.62 Gt, or 1.6 per cent of the global total. That compares to emissions of 0.64 Gt in South Korea, 1.09 Gt in Japan, 2.8 Gt in India, 5.0 Gt in the United States, and 13.0 Gt in China (see Figure 1).

Sources: IEA World Energy Statistics database and Enerdata

Demand for electricity and sources of emissions

Global domestic electricity consumption increased from 13,188 terawatt-hours (TWh) in 2000 to 25,681 TWh in 2022 and estimates are that global demand for electricity will rise to 35,000 TWh by 2040.¹

That is a jump of 94 per cent, or 12,492 TWh, between 2000 and 2022. During the same period, electricity consumption in Asia rose a whopping 280 per cent. In Africa the demand for electricity increased by 90 per cent (see Figure 2). Coal remains the world’s largest source of fuel for electricity generation, with approximately 10,317 terawatt-hours of electricity generated by coal-fired plants in 2022 (see Figure 3).

1. The IEA’s Electricity Market Report 2022 states that nearly all of the increase is attributable to growing electricity consumption in developing countries across southeast Asia and Africa.
Sources: IEA World Energy Statistics database and Enerdata

 

Sources: IEA World Energy Statistics database and Enerdata

In recent years, electricity generated from the combustion of coal declined in Canada, the United States, Europe, and Africa. However, electricity generated from coal combustion has continued to grow in China, India, and other parts of Asia.

Between 2000 and 2022, the share of coal-powered electricity generation in Asia increased from 49.8 to 56. 3 per cent, while in Canada it decreased from 19.4 per cent to less than 5 per cent.

Sources: IEA World Energy Statistics database and Enerdata

Source of emissions in the electricity sector

The electricity sector accounts for 34 per cent of the carbon dioxide emitted across the world. The sector emitted 13.05 gigatonnes of CO2 in 2022, an increase of 5.01 Gt from 2000. In Asia, between 2000 and 2022, CO2 emissions from the electricity sector increased from 2.5 Gt to 8.3 Gt and the sector’s share of carbon dioxide (CO2) emissions increased from just over 32 per cent to well over 40 per cent (see Figure 5).

Sources: IEA World Energy Statistics database and Enerdata

Coal burned to generate electricity accounts for the majority of the CO2 emitted in power generation. In 2022, coal-fired electricity\ generation accounted for 9.89 Gt, or nearly 76 per cent of the worldwide CO2 emissions from the electricity sector. The share was even higher in Asia where 92 per cent of emissions from the electricity sector come from coal combustion. Asian coal-fired plants accounted for 7.62 Gt of the total 8.26 Gt of emissions from the sector on that continent (see Figure 6).

Sources: IEA World Energy Statistics database and Enerdata

Conclusion

The global electricity sector, and particularly the sector in Asia, is a major source of CO2 emissions. Relative to Canada’s existing carbon emissions, emissions from the coal-fired power plants worldwide will make any reductions in Canada’s carbon emissions and resulting job losses, higher taxes, and higher costs for consumers and businesses—meaningless.

As 56 per cent of the electricity in Asia is generated by coal-fired plants, a transition from coal- to gas-fired electricity generation in the region could lead to significant reductions in CO2 emissions, reducing emissions by 50 per cent on average. The corollary is that there is a potential market in Asia for natural gas extracted in and exported from Canada. Canada has an opportunity to play a useful and meaningful role in reducing CO2 emissions from the electricity sector by encouraging and contributing to the global natural gas market.

Notes

This CEC Fact Sheet was compiled by Ven Venkatachalam at the Canadian Energy Centre (www.canadianenergycentre.ca). The author 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 (live as of November 2, 2023)

Canadian Energy Centre (November 7, 2022), Canadian LNG has massive opportunity in Asia: report <https://tinyurl.com/2p9525j6>; Enerdata (2022), Power Plant Tracker database <https://bit.ly/3xfgOdF>; IEA (2022), Electricity Market Report – January 2022 <https://bit.ly/3M0723j> IEA (Undated), World Energy Statistics Database <https://tinyurl.com/ytz789m4>

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.

]]>
A man walks towards a ferry as the Wujing coal-electricity power station is seen across the Huangpu River in the Minhang district of Shanghai. 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

 

Introduction

High energy prices, inflation, war, and the ongoing economic recovery from the pandemic has highlighted the general worldwide demand for electricity, particularly in Asia and Europe. The growing demand for electricity on these two continents has led some electricity producing plants to rely increasingly heavily on coal as a power source.

The electricity sector accounts for 34 per cent of the world’s energy-related carbon dioxide (CO2) emissions. In this Fact Sheet, we detail recent trends in electricity production and demand across the globe as well as CO2 emissions from the electricity sector worldwide.

Carbon dioxide emissions from the world’s top ten emitters between 2000 and 2022

A total of 38.2 gigatonnes (Gt) of energy-related CO2 was emitted globally in 2022, an increase of 53 per cent from 2000. However, the increase is not consistent for all countries; between 2000 and 2023, CO2 emissions trends diverged. Emissions from China, India, and Indonesia more than doubled in the last two decades, whereas emissions for other countries remained relatively consistent or even declined.

In 2022, Canada’s total energy-related CO2 emissions were 0.62 Gt, or 1.6 per cent of the global total. That compares to emissions of 0.64 Gt in South Korea, 1.09 Gt in Japan, 2.8 Gt in India, 5.0 Gt in the United States, and 13.0 Gt in China (see Figure 1).

Sources: IEA World Energy Statistics database and Enerdata

Demand for electricity and sources of emissions

Global domestic electricity consumption increased from 13,188 terawatt-hours (TWh) in 2000 to 25,681 TWh in 2022 and estimates are that global demand for electricity will rise to 35,000 TWh by 2040.¹

That is a jump of 94 per cent, or 12,492 TWh, between 2000 and 2022. During the same period, electricity consumption in Asia rose a whopping 280 per cent. In Africa the demand for electricity increased by 90 per cent (see Figure 2). Coal remains the world’s largest source of fuel for electricity generation, with approximately 10,317 terawatt-hours of electricity generated by coal-fired plants in 2022 (see Figure 3).

1. The IEA’s Electricity Market Report 2022 states that nearly all of the increase is attributable to growing electricity consumption in developing countries across southeast Asia and Africa.
Sources: IEA World Energy Statistics database and Enerdata

 

Sources: IEA World Energy Statistics database and Enerdata

In recent years, electricity generated from the combustion of coal declined in Canada, the United States, Europe, and Africa. However, electricity generated from coal combustion has continued to grow in China, India, and other parts of Asia.

Between 2000 and 2022, the share of coal-powered electricity generation in Asia increased from 49.8 to 56. 3 per cent, while in Canada it decreased from 19.4 per cent to less than 5 per cent.

Sources: IEA World Energy Statistics database and Enerdata

Source of emissions in the electricity sector

The electricity sector accounts for 34 per cent of the carbon dioxide emitted across the world. The sector emitted 13.05 gigatonnes of CO2 in 2022, an increase of 5.01 Gt from 2000. In Asia, between 2000 and 2022, CO2 emissions from the electricity sector increased from 2.5 Gt to 8.3 Gt and the sector’s share of carbon dioxide (CO2) emissions increased from just over 32 per cent to well over 40 per cent (see Figure 5).

Sources: IEA World Energy Statistics database and Enerdata

Coal burned to generate electricity accounts for the majority of the CO2 emitted in power generation. In 2022, coal-fired electricity\ generation accounted for 9.89 Gt, or nearly 76 per cent of the worldwide CO2 emissions from the electricity sector. The share was even higher in Asia where 92 per cent of emissions from the electricity sector come from coal combustion. Asian coal-fired plants accounted for 7.62 Gt of the total 8.26 Gt of emissions from the sector on that continent (see Figure 6).

Sources: IEA World Energy Statistics database and Enerdata

Conclusion

The global electricity sector, and particularly the sector in Asia, is a major source of CO2 emissions. Relative to Canada’s existing carbon emissions, emissions from the coal-fired power plants worldwide will make any reductions in Canada’s carbon emissions and resulting job losses, higher taxes, and higher costs for consumers and businesses—meaningless.

As 56 per cent of the electricity in Asia is generated by coal-fired plants, a transition from coal- to gas-fired electricity generation in the region could lead to significant reductions in CO2 emissions, reducing emissions by 50 per cent on average. The corollary is that there is a potential market in Asia for natural gas extracted in and exported from Canada. Canada has an opportunity to play a useful and meaningful role in reducing CO2 emissions from the electricity sector by encouraging and contributing to the global natural gas market.

Notes

This CEC Fact Sheet was compiled by Ven Venkatachalam at the Canadian Energy Centre (www.canadianenergycentre.ca). The author 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 (live as of November 2, 2023)

Canadian Energy Centre (November 7, 2022), Canadian LNG has massive opportunity in Asia: report <https://tinyurl.com/2p9525j6>; Enerdata (2022), Power Plant Tracker database <https://bit.ly/3xfgOdF>; IEA (2022), Electricity Market Report – January 2022 <https://bit.ly/3M0723j> IEA (Undated), World Energy Statistics Database <https://tinyurl.com/ytz789m4>

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.

]]> Over US$227 billion in government revenues from Canada’s natural gas sector expected through 2050 https://www.canadianenergycentre.ca/over-u-s-227-billion-in-government-revenues-from-canadas-natural-gas-sector-expected-through-2050/ Tue, 31 Oct 2023 21:52:17 +0000 https://www.canadianenergycentre.ca/?p=13161

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Download the PDF here

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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

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 (Link live as of October 10, 2023)

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

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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.

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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

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 (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 https://www.canadianenergycentre.ca/private-and-public-expenditure-on-environmental-protection-in-canada-2023-edition/ Tue, 17 Oct 2023 21:20:19 +0000 https://www.canadianenergycentre.ca/?p=13106
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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

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.

]]>
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

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.

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