Dialogue
The facts on: British columbia natural gas and Crude O il
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The Resource
Upstream
Contents The Facts............................................... 1 UNIT 1: The Resource....................... 3 UNIT 2: Energy.................................. 15 UNIT 3: Economy.............................. 24 UNIT 4: Uses.......................................37 UNIT 5: Environment 5.1 Air.................................................... 42 5.2 Water...............................................47 .5.3 Land................................................ 56
Links to additional resources.........60
The Resource
The facts Handy and credible CAPP is the voice of Canada’s upstream natural gas and crude oil industry – representing companies that produce about 90% of Canada’s natural gas and crude oil. Research indicates that Canadians want a balanced discussion about energy, the economy and the environment. This pocket book is designed to give you fast, easy access to B.C.’s natural gas and crude oil facts to help you get in on the discussion. Facts are sourced from credible third parties or are developed using CAPP data that is checked against other data sources, including government reports. Dig deeper We couldn’t cover it all in this little book! So we have provided links to various sources at the end of the book. Go ahead; dig deeper.
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More facts? Are you curious about facts that aren’t covered here? Send your questions to upstreamdialogue@capp.ca. We will respond. We will also consider your input when developing future fact books. Updates The facts provided in this book are current as of September 2013. A regularly updated online version is available at www.capp.ca. To order printed copies of The Facts on British Columbia Natural Gas and Crude Oil, email upstreamdialogue@capp.ca.
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The Resource
UNIT 1
The resource bRITISH COLUMBIA'S natural gas AND CRUDE OIL
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The Resource Canada is the world’s fifth-largest producer of natural gas and the sixth-largest producer of oil. British Columbia is the country’s secondlargest natural gas producer.
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The Resource
History The history of B.C.’s natural gas and crude oil sector can be traced back more than 100 years. In the first half of the 20th century, several wells were drilled in the province with varying degrees of success. Natural gas was first produced commercially in B.C. in 1948 in Pouce Coupe to provide natural gas service to nearby Dawson Creek. In 1956, natural gas was discovered at Clarke Lake, just to the southeast of Fort Nelson. One year later, in 1957, natural gas was first exported along the West Coast via Vancouver to U.S. markets. Exploration in the Horn River basin began in 2008 following the discovery of one of the biggest shale-gas deposits in North America. Oil was discovered near Fort St. John in 1951, which marked a new stage in the industry’s growth in the area.
Today, B.C. is Canada’s second-largest producer of natural gas.
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Natural Gas What is Natural Gas?
What is Shale Gas?
Natural gas is a naturally occurring hydrocarbon consisting primarily of methane. It may also contain small amounts of ethane, propane, butane and pentanes.
Shale gas is natural gas produced from shale and other fine-grained sedimentary rocks. The natural gas is locked in small pore spaces in the reservoir rock and requires the application of advanced technologies, like horizontal drilling and hydraulic fracturing, before it can be released.
B.C.’s Natural Gas 2011 trillion cubic feet (tcf) Reserves Production Producing Wells
34.6 tcf 1.3 tcf 7,727
Source: BCOGC; CAPP 2011
Location of Resources B.C. is home to the Horn River and Montney natural gas basins. The basins are estimated to contain up to 336Â trillion cubic feet of natural gas resources, enough to last 100 years at current demand levels.
Fort Nelson
Fort St. John Prince Rupert Kitimat Prince George
Natural gas
6
Crude oil Resource basins
Vancouver Victoria
What is Crude Oil?
What is Oil Sands?
Found throughout Canada, crude oil is black, brownish or amber liquid that is a complex mix of hydrocarbons. It is classified heavy or light. Heavy oil refers to oil that is very viscous or thick like molasses, including bitumen from the oil sands. Light oil is less viscous and flows more readily, like maple syrup.
Oil sands are found in Alberta and Saskatchewan. Oil sands are a natural mixture of sand, water, clay and bitumen. Bitumen is oil that is too heavy or thick to flow or be pumped without being heated or diluted with less viscous petroleum products. No oil sands are located in B.C. Oil reserves in B.C. are located in the northeast area of the province. B.C. production averages about 20,000 barrels/day.
Oil currently extracted in B.C. is light oil and accounts for about 1% of Canada’s production.
Canadian Production: Barrels/day Year 1980 Crude Oil 1.5 million (incl. oil sands)
2012 3.2 million
2025 F 6.0 million
2030 F 6.7 million
Source: CAPP 2013
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The Resource
Crude Oil
Recovering the resources
Natural Gas
Natural gas resources are developed using various methods and technologies, including vertical and horizontal drilling. Geology of Natural Gas Resources
300m
Aquifers
rock
2000m
4000m
Source: EI A
Horizontal Multi-well Drilling Pad Drilling Pads Horizontal Multi-well Drilling Pad Vertical Single-wellVertical Drilling Single-well Pads
Horizontal drilling – Horizontal drilling uses the flexibility of the drilling pipe coupled with a steerable motorized bit to turn a vertical well onto a horizontal plane at a measured depth. The process of intersecting the reservoir horizontally allows the well to have much greater contact with the reservoir and better access to the natural gas it contains.
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Vertical drilling – Drilling rigs 11 drill vertical wells directly into the porous geological formations that hold natural gas.
The Resource
Crude Oil* Crude oil is extracted using reservoir pressure or pump jacks. There are 3 ways to produce conventional crude oil.
Water Injection Well
Hot Water
Primary Recovery
Primary recovery uses an oil reservoir’s own pressure and/ or simple pumps to bring the oil to the surface.
Secondary Recovery
Secondary recovery involves injecting water or natural gas to generate reservoir pressure.
Steam Injector
Natural Gas
Tertiary Recovery
Tertiary recovery uses more complicated methods, like miscible flooding, to make the oil flow. Natural gas is used to reduce surface tension and viscosity.
* Excluding oil sands
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Hydraulic
fracturing
Hydraulic fracturing is necessary for the recovery of natural gas from unconventional reservoirs such as shale and tight gas, and has been used safely in B.C. for many years. The technology was developed in the 1940s and has since helped produce natural gas throughout North America. Technological advances over the past decade and the use of horizontal multi-stage hydraulic fracturing have made it possible to develop shale and tight natural gas resources that were previously unrecoverable.
175,000 wells More than 175,000 wells have been hydraulically fractured in B.C. and Alberta over the past 60 years without a documented case of harm to drinking water. Source: BCOGC, AER
7,500 wells More than 7,500 wells have been safely hydraulically fractured in B.C. Source: BCOGC
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Hydraulic fracturing is a safe, proven and government-regulated technology that has been used in Canada for more than 60 years.
it works
Hydraulic fracturing pumps fluid (water and a small amount of additives) and sand (or another proppant) down a well at high pressure. The pressure causes the surrounding rock to fracture. When the pumping pressure is relieved, the water disperses or flows back to the surface well and leaves a thin layer of sand behind to prop open the cracks. This allows the natural gas to escape from tight (low permeability) formations and flow to the surface well where it is recovered and shipped by pipeline to market. Hydraulic fracturing has been used safely in conventional natural gas production for over 60 years.
Regulations combined with industry’s operating practices ensure safeguards are in place to protect people and the environment.
The fracturing fluid is a mixture made up of 98.5% water and sand with the remainder comprised of additives, many of which are found in household products.
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The Resource
How
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The Resource
B.C. regulator The BC Oil and Gas Commission (BCOGC) is the province’s independent regulatory agency, with responsibilities for overseeing natural gas and crude oil operations, including exploration, development, pipeline transportation and reclamation.
Review and assessment The BCOGC’s roles include reviewing and assessing applications for industry activity, consulting with First Nations, ensuring industry complies with provincial legislation, and co-operating with partner agencies.
Regulatory responsibility Regulatory responsibility of the BCOGC extends from the exploration and development phases through to facilities operation and decommissioning.
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Industry in action
ing Encana's recycl program
Horn River Basin Recycling Program In 2009, in an effort to reduce the amount of material being diverted to local landfills, Encana began a waste reduction program in northeastern B.C. Horn River Basin work camps. Recyclables were collected at the camps and stored in 50-foot trailers before being transported to the town of Fort Nelson and donated to local community groups. These groups were then able to sort the material and return containers to receive the refund deposits. By 2011, it had become difficult to find groups able to sort an entire trailer of material. In 2012, in order to address this challenge, Encana and the Northern Rockies Social Planning Council created a sorting facility where individuals with barriers to employment, fundraising groups and others in need are able to sort the containers and return them for cash. To date, Encana has diverted 20 trailers of for-deposit containers from the landfill, providing over $60,000 in revenue to the community. Read more Industry in Action stories: www.capp.ca/innovation 14
ENERGY
UNIT 2
Energy why DO WE NEED Natural gas and Crude OIL?
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Energy Natural gas and crude oil are vital sources of energy for British Columbia and the world.
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Energy
demand
is expected to increase 55% by 2035.*
*Growth from 2009 to 2035, IEA New Policies scenario
Global Primary Energy Demand (New Policies scenario) Other renewables Bioenergy Hydro Nuclear Natural gas Oil Coal
20 Billion tonnes oil equivalent
18 16 14 12 10 8 6 4
Oil sands help supply global energy needs.
2 1990
2010
2020
2030
2035
Source: IEA World Energy Outlook 2012 New Policies scenario
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ENERGY
Global demand for energy is expected to increase 35% by 2035 as economies in both developed and emerging countries continue to grow and standards of living improve. Global demand for natural gas specifically is expected to increase 55% by 2035. All sources of energy, developed Global demand responsibly, will be needed to meet for natural gas growth in global demand.
B.C.’s resources Our energy future The world relies on an energy mix that includes oil, coal, natural gas, hydro, nuclear and renewables. All forms of energy production must increase to meet growing demand. Canada, including B.C., is uniquely positioned to provide an abundance of safe, secure energy.
Natural gas and crude oil are an important part of the province’s energy production mix.
Growth Growth in natural gas consumption will occur primarily in 3 sectors: fuel for oil sands production, development of LNG and electricity generation. Together, they will account for 79% of the total growth in Canadian natural gas demand between 2012 and 2035. Source: Conference Board of Canada 2012
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115 million barrels B.C. has 115 million barrels of oil reserves. Source: Government of British Columbia 2012
20,000 barrels/day ENERGY
B.C.’s oil production is currently 20,000 barrels/day, almost 1% of Canada’s total daily oil production. B.C.’s oil is refined into gasoline, diesel, jet fuel, heating oil and other products in Prince George and Burnaby and consumed in B.C. and the Yukon. Source: CAPP 2012
67,000 barrels/day There are 67,000 barrels/day of oil-refining capacity in B.C. Crude oil is sourced from both B.C. and Alberta. Source: CAPP 2013
3.3 billion cubic feet 3.3 billion cubic feet per day of natural gas was produced in B.C. in 2012. This is enough to heat 3.5 million Canadian homes per year. Source: CAPP 2012
8,300 wells
B.C. is Canada’s secondlargest producer of natural gas, behind Alberta.
There are 8,300 producing natural gas and crude oil wells in B.C. Source: CAPP 2013
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Liquefied Natural Gas (LNG) Over the next 20 years, global demand for natural gas is expected to rise dramatically, fuelled by rapid economic growth in Asia. B.C., because of its abundant resource and proximity to Asia, is well positioned to supply these markets by establishing an LNG industry on the West Coast.
If LNG spills into water, it will warm, rise to the surface and dissipate.
Developing LNG export facilities in B.C. could generate thousands of jobs and billions of dollars in new investment. It could also mean more revenues for the B.C. government to fund programs such as health care, education and social services.
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ENERGY
-160oC o
LNG is natural gas cooled to -160 C to keep it in a liquid form. In this state, its volume shrinks by a factor of 600, making it easier to transport. Source: BC Ministry of Energy, Mines and Natural Gas
Non-toxic LNG is non-toxic, odourless, non-corrosive and less dense than water. Source: BC Ministry of Energy, Mines and Natural Gas
50 years LNG has been safely shipped around the globe in specially designed vessels for more than 50 years. Canada does not currently export LNG. Source: CLNG 2013
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LNG
supply
B.C.’s natural gas resource is approximately 600 trillion cubic feet. As technology evolves, additional deposits of natural gas are expected to be developed and will be resourced for development of an LNG industry.
LNG
facilities
At least 9 LNG export facilities have been proposed for the West Coast. These projects could contribute more than $1 trillion to the provincial economy over the next 30 years. B.C. is expected to have 3 operational LNG plants by 2020. Three projects – Kitimat LNG, BC LNG Export Co-operative and LNG Canada – have received export licences from the National Energy Board. Which facilities are finally built depends on economic viability, long-term market contracts and investment from the private sector. Source: B.C. Government
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ENERGY
Compressed
natural gas (CNG)
CNG is natural gas compressed under high pressure (between 2,000 and 3,600 pounds per square inch). CNG is used as a transportation fuel and stored in a special reinforced tank. CNG expands CNG and LNG cannot be used when released interchangeably. CNG remains in for use as a fuel. a gaseous state, under significant pressure, whereas LNG is converted to a liquid state through extreme cooling. More fuel can be carried in an LNG tank because the density of the liquid fuel is higher than compressed gas. LNG is more practical for long-distance transportation. CNG is typically used for shorter distances, like return to base vehicles.
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UNIT 3
Economy How do Natural Gas and Crude Oil development, production, transportation and use contribute to British Columbia's economy?
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Economy
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Economy
Natural gas and crude oil are an important part of British Columbia’s economy, providing thousands of jobs and significant revenue for the provincial government.
Economic
contribution $1.3 billion per year The B.C. government collects an average $1.3Â billion per year from natural gas and crude oil development in B.C. through land sales and royalties. Source: B.C. Government
$180 billion $180 billion will be directly invested in B.C. as a result of natural gas development between 2012 and 2035. Source: Conference Board of Canada, 2012
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$591 million Between 2012 and 2035, $591 million will be invested in natural gas vehicles and infrastructure in B.C. Economy
Source: Conference Board of Canada, 2012
$116 billion B.C.’s GDP is expected to grow to $116 billion as a result of natural gas investment. Source: Conference Board of Canada, 2012
$47 billion An investment of $180 billion could generate $47 billion in tax revenues for B.C. Source: Conference Board of Canada, 2012
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Jobs The natural gas and crude oil industry in B.C. is a key employer in the province and will continue to contribute to the job market as the industry grows.
54,000 An investment of $180 billion in B.C.’s natural gas sector between 2012 and 2035 could generate 54,000 B.C. jobs annually. Source: Conference Board of Canada, 2012
905,000 jobs* Employment in Canada as a result of new oil sands investments is expected to grow from 75,000 jobs in 2010 to 905,000 jobs in 2035, with 126,000 jobs in provinces outside of Alberta. Source: CERI 2011
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*Jobs are direct, indirect and induced.
Aboriginal
opportunities Consultation
The proposed Kitimat LNG export facility will be constructed on First Nations land under a partnership with the Haisla First Nation.
Industry understands the value of ensuring aboriginal communities are consulted at the earliest stages of project development to identify concerns and mitigate potential impacts.
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Economy
Solid relationships with aboriginal communities create mutually beneficial employment and business opportunities in B.C.’s energy industry.
Existing markets Canada has infrastructure to transport natural gas and crude oil from Western Canada to Eastern Canada, the U.S. and, in limited quantities, to some offshore markets. Natural gas and crude oil can be transported in several ways. Pipelines are more cost-effective, efficient and have a lower carbon footprint than alternative transportation options. Rail transport has grown significantly in the last year and currently accounts for 175,000 barrels/day of crude oil or about 4% of Western Canada’s oil production. About 2.9 million barrels/day are transported via pipeline. Source: Peters & Co.
8,600 kilometres B.C. is home to over 8,600 km of pipeline. Approximately 6,000 km are pipelines used to transport crude oil or natural gas liquids from producing If laid end fields to refineries. Source: CEPA 2012
to end, Canada’s underground natural gas and liquids pipelines would circle the Earth 20 times. Source: CEPA
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Getting to markets As a result of strong growth in U.S. and Canadian oil production, crude oil pipeline capacity is expected to become constrained in the next few years, requiring new pipelines and pipeline expansions to provide access to new markets. In addition to the extensive oil pipeline network already in place in Alberta and Saskatchewan, a number of pipeline projects are being proposed to connect the growing supply with growing markets in India and China. Economy
Fort Nelson
Fort St. John Prince Rupert Kitimat Prince George
Existing natural gas Proposed natural gas pipeline Existing crude oil Proposed crude oil pipeline
Vancouver Victoria
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New markets Canadian natural gas and crude oil producers continue to source new markets for their expanding production. Canada’s exports of natural gas and crude oil are almost exclusively to the U.S. A small amount of crude oil is shipped overseas. As U.S. demand for Canadian natural gas is declining, Canada must look for alternative markets. Asia’s growing energy demand, and the potential for higher prices, makes it an attractive option. Potential route Existing route
4 KOREA JAPAN CHINA PERSIAN GULF TAIWAN
5400 Nautical Miles 32
86
Asian markets are an 8- to 11-day sail from proposed LNG terminals on Canada’s West Coast, 2 days closer than most of our international competitors.
Prince Rupert/ Kitimat
iles 0NM
600 N
1400 N Miles Los Angeles
Miles
1790 N Miles Santa Cruz
Jose/ LaCruz
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Economy
450
Asia’s fast-growing economies require new sources of energy. B.C.’s natural gas can create high-paying jobs and generate government revenues while providing people in both B.C. and Asia with cleaner-burning energy.
80 years Oil tankers have been moving safely and regularly along Canada’s West Coast since the 1930s. Source: Transport Canada
580 million barrels Currently, approximately 580 million barrels of oil are safely shipped off Canada’s East and West coasts via tanker.
500 tanker visits At present, fewer than 500 oil tankers pass through Canada’s West Coast each year. While most of these West Coast tankers are U.S.-bound, about 200 call on Port Metro Vancouver. There hasn’t been a tanker issue in the Port of Vancouver for 50 years. Source: IHS CERA 2013
Tanker Sizes Source: marinewiki.org
A tanker exclusion zone has been established off the Pacific coast of Canada. This area keeps tankers west of the boundary and protects the shoreline and coastal waters from a potential risk of pollution. Source: Government of Canada, Canadian Coast Guard
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Suez Very Large C
Ultra Large Crude O * Tons Deadweight (TDW): The maximum mass that a ship
A federal moratorium on natural gas and crude oil exploration and development off the coast of B.C. does not apply to tanker storage or movement. Tankers that are not double-hulled are being phased out. Large single-hulled crude oil tankers were prohibited in 2010 and can no longer operate in Canadian waters.
High Standards Economy
All oil tankers using Port Metro Vancouver are subject to the same international agreements and rules as other shipping nations, as well as strict national and port authority standards. Source: IHS CERA, 2013
Handymax Tankers (35,000 - 45,000 TDW) Panamax Tankers (55,000 - 79,999 TDW) ~ 200m long x 32m wide Aframax Tankers (80,000 - 119,999 TDW) ~ 245m long x 42m wide
zmax Tankers (120,000 - 199,999 TDW) ~ 275m long x 50m wide Crude Oil Carriers (VLCC) Tankers (180,000 - 319,999 TDW) ~ 330m long x 58m wide
Oil Carriers (ULCC)Tankers (greater than 320,000 TDW) ~ 380m long x 68m wide can carry, representing the cargo, fuel, water and everything required for proper operation of the ship
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Industry in action
Modular Homes Thousands of workers in the oil sands are using BRITCO Britco manufactured accommodation as their home away from home. Britco is a modular construction company that is providing jobs and opportunities for people across British Columbia. From a handful of people in Langley in 1977, Britco has grown to approximately 1,000 employees, with 10 modular construction facilities located in Australia, Canada and the United States. Today, Britco is not only one of the largest modular construction companies in the industry but is also uniquely positioned to meet the needs of its customers anywhere in the world. With a workforce that is highly skilled and multi-faceted, Britco’s work in the oil sands has allowed growth and expansion outside of Canada. CHRIS GARDNER ESIDENT EXECUTIVE VICE PR
Read more Industry in Action stories: www.capp.ca/innovation 36
UNIT 4
USES How are natural gas and crude oil used in British Columbia?
USES
Uses Natural gas and crude oil are an important part of daily life in British Columbia, providing energy for electricity, transportation, and residential and industrial uses.
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Natural gas use Residential – Natural gas is the single-largest form of energy used in Canadian homes. Over 6 million homeowners use natural gas to heat their houses and their water. Canadians are also enjoying the benefits of increasingly efficient natural gas furnaces and appliances. Industrial – Natural gas accounts for about half of the energy used in the industrial sector. Industrial customers choose natural gas because it is readily available as a heat source for industrial processes, such as manufacturing steel. It is also a key feedstock for the chemical and fertilizer industries. Generating electricity – Natural gas currently provides almost 9% of Canada’s power generation. Because it can be brought online quickly, it is an excellent partner for renewable power sources such as wind and solar.
Source: NRCan
Natural Gas Use by Sector in Canada (% share) Commercial 17.0%
Industrial 33.0%
Residential 22.0%
Electricity Generation 28.0% Transportation 0.1%
Source: Natural Resources Canada, CGA
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USES
Transportation – Natural gas powered vehicles produce 20 to 30% fewer greenhouse gas emissions than vehicles powered by traditional fuels.
B.C.’s energy
consumption About three quarters of all the energy consumed in B.C. is fossil fuels. About half of the energy consumed is fuel for transportation. Source: B.C. Ministry of Energy and Mines
B.C. Energy Consumption by Fuel Other 15%
Natural Gas 25%
Petroleum Products 39%
Electricity 21%
Source: B.C. Ministry of Energy, Mines and Natural Gas
Transportation Natural gas can be used in transportation as compressed natural gas (CNG) or liquefied natural gas (LNG).
402 vehicles 236 CNG vehicles, 165 LNG vehicles and 1 marine vessel have been approved for construction in B.C. Source: B.C. Ministry of Energy, Mines and Natural Gas
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A CNG vehicle will travel 350 km on 1Â tank while a typical LNG vehicle will travel 800 km per tank.
14 fuelling stations There are currently 14Â CNG fuelling stations in B.C. Source: B.C. Ministry of Energy, Mines and Natural Gas
$42.5million B.C. will invest up to $42.5 million in fuelling infrastructure by 2017, $12 million on CNG infrastructure and $30.5 million on LNG infrastructure. Source: B.C. Ministry of Energy, Mines and Natural Gas
Crude oil use
Over 4,000 different petrochemical products are used in the production of everyday items: plastics, synthetic fibres, synthetic rubbers, detergents and chemical fertilizers.
Day-to-day products derived from refined crude oil include lubricants, asphalt, perfumes and insecticides.
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USES
To extract the maximum value from crude oil, it needs to be refined into petroleum products. The best-known of these is gasoline, but there are many other products that can come from a barrel of refined crude oil, including liquefied petroleum gas (LPG), naphtha, kerosene, gasoil and ethane, which are used in the production of petrochemicals.
UNIT 5.1
Environment: AIR How does the Natural gas and Crude oil industry impact air and GHG emissions?
Air The natural gas and crude oil industry is committed to reducing its emissions intensity.
Environment AIR
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GHG emissions Canada, with 0.5% of the world’s population, produces 2% of global greenhouse gas (GHG) emissions. In B.C., the oil and gas industry accounts for 21% of provincial GHG emissions. Transportation accounts for the largest share of provincial GHG emissions. Source B.C. Ministry of Environment
B.C.’s electricity industry is a small contributor to the province’s GHG emissions and is much lower than the national average of 17%.
B.C. Greenhouse Gas Emissions - 2010
Other Industry 13%
Residential & Commercial 10%
Fossil Fuel Production 21%
Transportation 38%
Net Deforestation 5% Waste 7% Electricity 2%
Source: B.C. Ministry of Environment
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Agriculture 4%
Responsible
development Carbon dioxide (CO2) is a GHG. CO2 is emitted into the air when burning fossil fuels for electricity generation, industrial uses, transportation and the heating of homes and buildings. Flaring is the controlled burning of natural gas as part of production and processing. The B.C. government plans to eliminate all routine flaring at natural gas and crude oil producing wells and production facilities by 2016.
55 megatonnes is equivalent to 4.3% of 2011 emissions from the U.S. coal-fired power generation sector. Source: EC U.S. EIA
Heavy-duty trucks and buses running on natural gas reduce GHG emissions by an estimated 15-30% compared to diesel trucks and buses.
Oil sands’ total GHG emissions in 2011 were 55 megatonnes. GHG emissions associated with every barrel of oil sands crude produced were reduced by 26% between 1990 and 2011.
Environment
55 megatonnes Source: Environment Canada 2013.
AIR
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Industry in action
WASTE . MANAGEMENT INC
Waste Management Inc. In Vancouver, North America’s leading waste management company – Waste Management Inc. – uses 60 compressed natural gas (CNG) vehicles to collect garbage and recyclables. Each CNG truck lowers Waste Management’s use of diesel fuel by an average of 30,280 litres per year. That’s equivalent to reducing greenhouse gas emissions by 22 metric tonnes annually. The benefits of using natural gas rather than diesel fuel have prompted the company to replace another 100 diesel trucks with CNG vehicles. Natural gas is more affordable than diesel used by most heavy-duty trucks. It burns cleaner, making vehicles easier and less costly to maintain than diesel trucks. And CNG-fuelled trucks are quieter than their diesel-run counterparts.
air
Read more Industry in Action stories: www.capp.ca/innovation 46
UNIT 5.2
Environment: WATER How does the natural gas and crude oil industry impact British Columbia's water resources?
Environment Water
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Water The natural gas and crude oil industry is committed to using water responsibly. The industry recycles water and continually looks for ways to reduce fresh water use.
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Water use Natural gas and crude oil operations require water for well drilling and completions. Enhanced oil recovery and natural gas processing plants also require water.
Regulated The BC Oil and Gas Commission regulates short-term water use in natural gas and crude oil activities from both surface and subsurface sources. The B.C. Ministry of Forests, Lands and Natural Resource Operations is responsible for long-term water licenses. To manage water use by the natural gas and crude oil industry, short-term water use permits are issued across all sectors for terms under 1 year. Operators must report water withdrawals, injections and disposals monthly. Source: BCOGC 2012
Environment
Northeast Water Tool The BCOGC developed the Northeast Water Tool, which provides guidance on water availability and water inflows in northeast B.C., and supports decision-making for water use approvals and licences.
Water
49
Less than 1% Natural gas and crude oil account for approximately 0.6% of the surface water authorized for use (excluding waterpower) in B.C. Source: BCOGC 2010
Amount of Surface Water Use Authorized
Waterpower 98%
Surface Water Allocated by Sector (excluding water power)
Conservation and Land Improvement 59%
Remaining Water Uses 2%
Aquaculture (ďŹ sh hatchery) 3% Agriculture 11% Waterworks 12% Mining 0.8%
Source: BCOGC 2010
50 50
Domestic 0.2% Industrial and Commercial 14% Oil and Gas 0.6%
Water quality Groundwater Groundwater is defined as all water occurring below the surface. Groundwater quality is often described by its salinity or total dissolved solids (TDS) concentration. Total Dissolved Solids (TDS) Concentrations Parts Per Million (ppm) Drinking Water
<500 mg/L
Agricultural Standards
<4,000 mg/L
Sea Water
30,000 to 40,000 mg/L
Formation Water in
20,000 to 200,000 mg/L
northeast B.C.
Drinking water contains less than 500
ppm TDS.
Source: BCOGC 2010
Agricultural grade water contains TDS up to
4,000 ppm.
Source: BCOGC 2010
Environment
Montney formation water naturally contains TDS
200,000 ppm
and is not suitable averaging for human or animal consumption.
Water
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Hydraulic
fracturing
Water is used for hydraulic fracturing, and is mixed with sand and a small percentage of additives to fracture the shale rock to release the natural gas into the wellbore. Shale gas and tight gas resources currently developed in B.C. using horizontal wells with multi-stage fracturing require 5,000 to 100,000 cubic metres of water per well, depending on geology. A well is typically only fractured once and will produce natural gas for 20 to 30 years. Most operators use water drawn from rivers, their own freshwater storage pits or saline groundwater source wells. They also use recycled water. Wastewater or produced water is either recycled and used for further hydraulic fracturing, or is disposed of by injection into deep subsurface formations through a water disposal well. Surface discharge of produced water is not allowed in B.C. Produced water and fracture-return water are not introduced into surface waters such as lakes and streams, and are not introduced into near-surface aquifers that are used for potable water supply.
7.1 million m3 In 2012, 7.1 million m3 of water was used for hydraulic fracturing in B.C. This includes water acquired from short-term water use approvals, long-term water licences, water source wells and other sources such as recycled wastewater.
Water
Source: BCOGC
52
Fracturing fluids Fracturing fluid is 98.5% water and sand. The remainder is comprised of chemical additives serving a number of purposes, such as suspending the sand evenly in the mixture and preventing bacterial growth. Most fracturing fluid is recovered at the wellhead during flowback testing and production operations. In some cases this fluid may be stored, treated and reused. When the fluid is to be disposed, it is generally trucked to an approved disposal well or facility. At this point it must be pumped into a deep underground formation using a wellbore reviewed and approved by the BC Oil and Gas Commission. Mandatory Disclosure Disclosure of the composition of fracturing fluid is mandatory in B.C. and is listed online at fracfocus.ca.
Commonly 50 to 90% of fracturing fluid is recovered.
Water Used for Hydraulic Fracturing in 2012 # of Wells 50 193 138 1 15 9 406
Mean (m3/well) 76,923 6,760 9,792 139 36,704 211 17,376
Total Water Use (m3) 3,846,142 1,304,619 1,351,341 139 550,563 1,899 7,054,704 53
Water
Source: BCOGC
Environment
Play Horn River Basin Montney â&#x20AC;&#x201C; Heritage Montney â&#x20AC;&#x201C; North Liard Basin Cordova Embayment Other Total
Groundwater Protection The BC Oil and Gas Commissionâ&#x20AC;&#x2122;s regulation of hydraulic fracturing ensures that potable groundwater is protected. This is achieved through well construction practices including a steel casing system that is cemented externally to prevent fluid migration from the wellbore to groundwater.
54
Water
Source: Apache Corporation
Industry in action
SIBLE ENCANA'S, RESPON RAM OG PR TS UC OD PR
Responsible Products Program
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Water
Read more Industry in Action stories: www.capp.ca/innovation
Environment
Encana has implemented a company-wide program to manage chemical additives used in hydraulic fracturing. The Responsible Products Program allows Encana to assess its hydraulic fracturing fluid systems for potential impacts on human health or the environment using widely accepted toxicological criteria. Encana identifies any required operational controls to allow for the responsible use of the additives or eliminate them from use entirely. The program has been shared with CAPP in support of the Fracturing Fluid Additive Risk Assessment and Management Operating Practice. Encana has determined that none of the hydraulic fracturing products it uses contains arsenic, cadmium, chromium, lead or mercury and is committed to verifying that none of these heavy metals is used in its hydraulic fracturing operations in the future. Encana also prohibits the use of hydraulic fracturing fluid products containing diesel, 2-Butoxyethanol and benzene.
UNIT 5.3
Enviro nment: LAND How do natural gas and crude oil impact the land?
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Land The natural gas and crude oil industry is committed to minimizing its footprint, reclaiming all lands affected by operations and maintaining biodiversity.
Environment LAND
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Land use Advances in horizontal drilling and the use of multi-well drilling pads have greatly reduced the area of land disturbed in drilling operations as well as the number of access roads and pipelines needed to service the wells. A 20-well horizontal drilling pad disturbs about 5% of the land compared to an equal number of vertical drilling pads. A Horizontal Multi-well Drilling Pad
Vertical Single-well Drilling
Northeast B.C. has the total land area of 175,345 km2.
Source: Encana
Land Surface Area used for Natural Gas and Oil Activities in Northeast B.C.
Wells Roads Facilities Pipelines Other natural gas and oil infastructure Geophysical exploration Total area used for natural gas and oil activities Source BCOGC 2012
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Land Area (in km2) 302 835 15 440 126
Percent 0.17 0.48 0.01 0.25 0.07
2278 3996
1.30 2.28
Land
reclamation Reclamation planning starts at the beginning of the project. Once drilling is completed and the well is tied into the pipeline, a portion of the lease is reclaimed to minimize surface disturbance. At the end of operations, the entire area is reclaimed. To minimize impact, companies avoid sensitive habitat, use narrow seismic lines, employ low-impact pipeline methods and use mulch to reduce surface disturbance.
5 Years
LAND
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Environment
It generally takes at least 5 years for a well site to be reclaimed â&#x20AC;&#x201C; from capping the well and removing equipment to cleaning up any contaminants, replacing soil and replanting native vegetation.
Dig Deeper
Find out more about the natural gas and crude oil industry Alberta Energy www.energy.alberta.ca Alberta Environment and Sustainable Resource Development (AESRD) www.environment.alberta.ca BC Oil and Gas Commission (BCOGC) www.bcogc.com Cambridge Energy Research Associates (CERA) www.cera.com Canadian Association of Petroleum Producers (CAPP) www.capp.ca Canadian Energy Research Institute (CERI) www.ceri.ca Centre for Energy www.centreforenergy.com Energy Resources Conservation Board (ERCB) www.ercb.ca FracFocus www.fracfocus.ca International Energy Agency (IEA) www.iea.org Oil Sands Developers Group (OSDG) www.oilsandsdevelopers.ca National Energy Board (NEB) www.neb-one.gc.ca
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The Resource
The Royal Society of Canada www.rsc.ca Transport Canada www.tc.gc.ca U.S. Energy Information Administration (EIA) www.eia.doe.gov Wood Buffalo Environmental Association (WBEA) www.wbea.org
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Get more facts
on Canada’s natural gas and crude oil industry To order free copies of the following fact books, email upstreamdialogue@capp.ca.
Dialogue
LES FAITS SUR :
THE FACTS ON:
Les sables
British columbia
bitumineux
natural gas and Crude O il
ACPP
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Upstream
ASSOCIATION CANADIENNE DES PRODUCTEURS PÉTROLIERS
1
1
The Resource
Dialogue
The Resource
NOTES
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NOTES
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The Resource
NOTES
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The Canadian Association of Petroleum Producers (CAPP) represents companies, large and small, that explore for, develop and produce natural gas and crude oil throughout Canada. CAPP’s member companies produce about 90% of Canada’s natural gas and crude oil. CAPP’s associate members provide a wide range of services that support the upstream natural gas and crude oil industry. Together CAPP’s members and associate members are an important part of a $100-billion-a-year national industry that provides essential energy products. CAPP’s mission is to enhance the economic sustainability of the Canadian upstream petroleum industry in a safe and environmentally and socially responsible manner, through constructive engagement and communication with governments, the public and stakeholders in the communities in which we operate.
www.capp.ca www.canadiannaturalgas.ca www.oilsandstoday.ca
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October 2013 2013-0015