{{Canadianpetroleumhistory}}
Natural gas has been used almost as long as crude oil in
CanadaCanada is a country occupying most of northern North America, extending from the Atlantic Ocean in the east to the Pacific Ocean in the west and northward into the Arctic Ocean...
, but its commercial development was not as rapid. This is because of special properties of this
energyIn physics, energy is a scalar physical quantity that describes the amount of work that can be performed by a force, an attribute of objects and systems that is subject to a conservation law...
commodityA commodity is some good for which there is demand, but which is supplied without qualitative differentiation across a market. It is a product that is the same no matter who produces it, such as petroleum, notebook paper, or milk. In other words, copper is copper. The price of copper is universal,...
: it is a
gasThis page is about the physical properties of gas as a state of matter. For the uses of gases, and other meanings, see Gas .A gas is one of four states of matter. Near absolute zero, a substance exists as a solid...
, and it frequently contains impurities. The technical challenges involved to first process and then pipe it to
marketA market is any one of a variety of different systems, institutions, procedures, social relations and infrastructures whereby persons trade, and goods and services are exchanged, forming part of the economy. It is an arrangement that allows buyers and sellers to exchange things...
are therefore considerable. Furthermore, the
costIn business, retail, and accounting, a cost is the value of money that has been used up to produce something, and hence is not available for use anymore. In economics, a cost is an alternative that is given up as a result of a decision. In business, the cost may be one of acquisition, in which case...
s of
pipelinePipeline transport is the transportation of goods through a pipe. Most commonly, liquid and gases are sent, but pneumatic tubes that transport solid capsules using compressed air have also been used....
building make the whole enterprise capital intensive, requiring both
moneyMoney is anything that is generally accepted as payment for goods and services and repayment of debts. The main functions of money are distinguished as: a medium of exchange, a unit of account, a store of value, and occasionally, a standard of deferred payment...
and
engineeringEngineering is the discipline, art and profession of acquiring and applying technical, scientific and mathematical knowledge to design and implement materials, structures, machines, devices, systems, and processes that safely realize a desired objective or inventions.The American Engineers' Council...
expertise, and large enough markets to make the
businessA business is a legally recognized organization designed to provide goods and/or services to consumers. Businesses are predominant in capitalist economies, most being privately owned and formed to earn profit that will increase the wealth of its owners and grow the business itself...
profitIn economics, economic profit is the difference between a company's total revenue and its opportunity costs. It is the increase in wealth that an investor has from making an investment, taking into consideration all costs associated with that investment including the opportunity cost of...
able.
Until it became commercially viable,
natural gasNatural gas is a gas consisting primarily of methane. It is found associated with fossil fuels, in coal beds, as methane clathrates, and is created by methanogenic organisms in marshes, bogs, and landfills...
was often a nuisance. Dangerous to handle and hard to get to market, early oilmen despised it as a poor relation to its rich cousin crude oil. Although early processing procedures were able to remove water, in the nineteenth century discoveries were only developed if
consumerConsumer is a broad label for any individuals or households that use goods and services generated within the economy. The concept of a consumer is used in different contexts, so that the usage and significance of the term may vary....
s could use the gas just as it came out of the ground. If the gas required further processing or needed to be piped a long distance to market, the producer shut in the well.
FlaresA gas flare or flare stack is an elevated vertical stack or chimney found on oil wells or oil rigs, and in refineries, chemical plants and landfills used for burning off unwanted gas or flammable gas and liquids released by pressure relief valves during unplanned over-pressuring of plant equipment...
got rid of gas coming from
oil wellAn oil well is a general term for any boring through the earth's surface that is designed to find and produce petroleum oil hydrocarbons. Usually some natural gas is produced along with the oil. A well designed to produce mainly or only gas may be termed a gas well.-History:The earliest known oil...
s.
Natural gas processingNatural gas processing plants, or fractionators, are used to purify the raw natural gas extracted from underground gas fields and brought up to the surface by gas wells...
changes the commodity in two critical ways. First, it extracts valuable by-products; second, it renders natural gas fit to be transported to a point for commercial sale and consumption. Through the use of evolving technology, the gas processing industry of each era extracts higher percentages of a wider range of hydrocarbons and other commercial by-products than its predecessors. It also removes ever-higher percentages of dangerous and other unwanted impurities. Steady growth has made natural gas a major industry, with
180 cubic kilometresThe Canadian Association of Petroleum Producers is the voice of the upstream Canadian oil and natural gas industry. The members of CAPP produce 98% of the petroleum production in Canada.-Background:...
of gas flowing from Canadian fields to market, every year.
Part of a series on Canada's
petroleumPetroleum or crude oil is a naturally occurring, flammable liquid found in rock formations in the Earth consisting of a complex mixture of hydrocarbons of various molecular weights, plus other organic compounds.The term "petroleum" was first used in the treatise De Natura Fossilium, published in...
industryAn industry is the manufacturing of a good or service within a category. Although industry is a broad term for any kind of economic production, in economics and urban planning industry is a synonym for the secondary sector, which is a type of economic activity involved in the manufacturing of raw...
, this entry focuses on the second of these two functions of gas processing - removing impurities from the gas stream - rather than recovering natural gas liquids, described
elsewhereCanada's natural gas liquids industry dates back to the discovery of wet natural gas at Turner Valley, Alberta in 1914. The gas was less important than the natural gasoline - "skunk gas" it was called, because of its distinctive odour - that early producers extracted from it...
. Of course, most large plants perform both functions, and plants have no other ultimate purpose than to quickly,
safelySafety is the state of being "safe" , the condition of being protected against physical, social, spiritual, financial, political, emotional, occupational, psychological, educational or other types or consequences of failure, damage, error, accidents, harm or any other event which could be...
and profitably turn raw gas into products to be safely
shippedShipping has multiple meanings. It can be a physical process of transporting goods and cargo, by land, air, and sea. It also can describe the movement of objects by ship.Land or "ground" shipping can be by train or by truck...
(mostly by pipeline) to market. The discussion covers gas processing as an
engineeringEngineering is the discipline, art and profession of acquiring and applying technical, scientific and mathematical knowledge to design and implement materials, structures, machines, devices, systems, and processes that safely realize a desired objective or inventions.The American Engineers' Council...
feat, critical developments in exploration and development and the
fundamentals of the marketplaceMarket fundamentalism is a political epithet for laissez-faire or free market economic views or policies....
.
Early times
A small natural gas industry in
Central CanadaCentral Canada is a region consisting of Canada's two largest and most populous provinces: Ontario and Quebec. Due to their high populations, Ontario and Quebec have traditionally held a significant amount of political power in Canada, leading to some amount of resentment from other regions of the...
had already been around for several decades, but the most significant event in the industry's early history was probably the drilling of a well near
Medicine HatMedicine Hat, known to locals as "The Hat", is a city of 61,097 people located in the southeastern part of the province of Alberta, Canada. It is enclaved within Cypress County along with the nearby town of Redcliff, although neither is part of the county....
in 1890, in search of
coalCoal is a readily combustible black or brownish-black sedimentary rock normally occurring in rock strata in layers or veins called coal beds. The harder forms, such as anthracite coal, can be regarded as metamorphic rock because of later exposure to elevated temperature and pressure...
for the railway. The well encountered a large flow of natural gas, and this prompted town officials to approach the
Canadian Pacific RailwayThe Canadian Pacific Railway , known as CP Rail between 1968 and 1996, is a Canadian Class I railway operated by Canadian Pacific Railway Limited. Its rail network stretches from Vancouver to Montreal, and also serves major cities in the United States such as Minneapolis, Chicago, and New York City...
with a view to drilling deeper for gas. The resulting enterprise led to the discovery of the Medicine Hat gas field in 1904. The community took advantage of the
natural resourceNatural resources occur naturally within environments that exist relatively undisturbed by mankind, in a natural form. A natural resource is often characterized by amounts of biodiversity existent in various ecosystems.Natural resources are derived from the environment...
and became the first town or city in western Canada with a gas utility.
Natural gas service began in Calgary somewhat later, when A.W. Dingman formed the Calgary Natural Gas Company. He drilled a successful well in east Calgary, laid pipe to the Calgary Brewing and Malting Company site and began providing gas to the brewery on April 10, 1910. As in Medicine Hat, gas mains soon provided domestic fuel and street lighting.
In a parallel development Eugene Coste, who had been a pioneer in the development of Ontario's natural gas industry, moved west. He drilled the locally famous Old Glory gas well near
Bow Island, Alberta{{Infobox Settlement|official_name = Town of Bow Island|other_name =|native_name = |nickname =|settlement_type = Town|motto =|image_skyline =...
, in 1909. In 1912, his
Canadian Western Natural Gas CompanyATCO Ltd. is an Alberta based corporation with more than 7,000 employees operating across three main business divisions: Power Generation; Utilities and Global Enterprises, with companies active in industrial manufacturing, technology, logistics and energy services.ATCO Ltd...
built a 280-kilometre pipeline connecting the Bow Island field to Lethbridge and Calgary. It augmented the Dingman enterprise in Calgary, which was unable to supply the growing demands of the city. By 1913, several other towns in southern Alberta boasted natural gas service from the Canadian Western system. Coste's pioneering enterprise provided fuel to nearly 7,000 customers.
Canada's first sweetening plant
Sour gasSour gas is natural gas or any other gas containing significant amounts of hydrogen sulfide . Natural gas is usually considered sour if there are more than 5.7 milligrams of H2S per cubic meter of natural gas, which is equivalent to approximately 4 ppm by volume...
, as it is known, in its natural state is laced with
hydrogen sulfideHydrogen sulfide is the chemical compound with the formula H
2S. This colorless, toxic and flammable gas is partially responsible for the foul odor of rotten eggs and flatulence....
(H
2S), which can be lethal if inhaled in even tiny concentrations. (The more general term
acid gasAcid gas is natural gas or any other gas mixture which contains significant amounts of hydrogen sulfide , carbon dioxide , or similar contaminants. The terms acid gas and sour gas are often incorrectly treated as synonyms...
refers to natural gas with any acidic gas in it -
carbon dioxideCarbon dioxide is a chemical compound composed of two oxygen atoms covalently bonded to a single carbon atom. It is a gas at standard temperature and pressure and exists in Earth's atmosphere in this state...
(CO
2), for example.)
The process of taking hydrogen sulfide out of a gas stream is called "sweetening" the gas. The Union Gas Company of Toronto built Canada's first sweetening plant in 1924 at Port Alma, Ontario, to scrub Tillbury gas. Hydrogen sulfide is a dangerous substance which at low concentrations has an obnoxious rotten egg smell. This odour annoyed Union's customers and prompted it to build the Port Alma plant. It removed hydrogen sulfide by exposing the sour gas to dissolved soda ash. Although previously used on coal gas, the application at the Port Alma plant was the first time this process sweetened natural gas.
The second Canadian sweetening plant followed a year later in
Turner ValleyTurner Valley is a small town in Alberta, Canada. It is located southwest of Calgary.Situated on Highway 22 , the town was once the centre of an oil and natural gas boom...
, and used the same process. The first gas found at Turner Valley had been sweet but the Royalite #4 discovery of 1924, from a deeper horizon, was sour. Royalite built the Turner Valley sweetening plant in order to sell its gas to Canadian Western Natural Gas for distribution.
The technology of the day did not render the hydrogen sulfide harmless. Instead, the producer disposed of the substance by burning it and dispersing the by-products into the air from two tall stacks. One chemical result of burning hydrogen sulfide emissions was
sulfur dioxideSulfur dioxide is the chemical compound with the formula SO
2. It is produced by volcanoes and in various industrial processes. Since coal and petroleum often contain sulfur compounds, their combustion generates sulfur dioxide...
, another toxic gas. Since hydrogen sulfide is heavier than air, it settled to the ground, dispersed enough to be less than lethal.
Hydrogen sulfide was always in the air in small concentrations. Turner Valley had a rotten egg odour on most days.
Gas conservation after Leduc
As
AlbertaAlberta is one of Canada's prairie provinces. It became a province on September 1, 1905.Alberta is located in western Canada, bounded by the provinces of British Columbia to the west and Saskatchewan to the east, the Northwest Territories to the north, and the U.S. state of Montana to the south....
became an ever-larger oil producer after the Leduc discovery, the
Conservation BoardThe Ministry of Energy is a Cabinet-level agency of the government of the Canadian province of Alberta responsible for coordinating policy relating to the development of mineral and energy resources. It is also responsible for assessing and collecting non-renewable resource royalties, freehold...
acted to prevent any repetition of the natural gas waste so common in Turner Valley. The board developed a broad conservation policy for natural gas. It prohibited producing natural gas from an
oil reservoirA petroleum reservoir or an oil and gas reservoir, is a subsurface pool of hydrocarbons contained in porous or fractured rock formations. The naturally occurring hydrocarbons are trapped by overlying rock formations with lower permeability.-Formation:...
's gas cap before the oil was fully produced, and included provisions aimed at conserving the natural gas often produced along with the oil. For this reason, these plants became known as "gas conservation plants."
The first of these new plants was
ImperialImperial Oil Limited is Canada's largest petroleum company. The company is engaged in the exploration, production and sale of crude oil and natural gas. It is controlled by US based ExxonMobil, which owns 69.6% of its stock...
's Leduc facility (sometimes called Imperial Devon or Imperial Leduc). It sweetened the gas with monoethanolamine (MEA), then extracted the liquid hydrocarbons by
refrigerationRefrigeration is the process of removing heat from an enclosed space, or from a substance, and moving it to a place where it is unobjectionable. The primary purpose of refrigeration is lowering the temperature of the enclosed space or substance and then maintaining that lower temperature.The term...
. Northwestern Utilities Limited bought the gas at $14.12 per thousand cubic metres and distributed it in
EdmontonEdmonton is the capital of the Canadian province of Alberta. The city is located on the North Saskatchewan River in the central region of the province, an area with some of the most fertile farmland on the prairies...
. Trucks transported the
propanePropane is a three-carbon alkane, normally a gas, but compressible to a transportable liquid. It is derived from other petroleum products during oil or natural gas processing...
,
butaneButane, also called n-butane, is the unbranched alkane with four carbon atoms, CH
3CH
2CH
2CH
3...
and "pentanes plus" (the Canadian term for heavier gas liquids) until 1954, when three pipelines began moving the products from Imperial Leduc to Edmonton. When markets could not be found for the propane, the board occasionally granted permission to flare it.
The next important plant built in Canada resulted from the discovery in 1944 of a wet
sour gasSour gas is natural gas or any other gas containing significant amounts of hydrogen sulfide . Natural gas is usually considered sour if there are more than 5.7 milligrams of H2S per cubic meter of natural gas, which is equivalent to approximately 4 ppm by volume...
find by Shell Oil at Jumping Pound, west of
CalgaryCalgary is the largest city in the Province of Alberta, Canada.The Calgary census metropolitan area is the third most diverse in Canada in terms of visible minorities after Toronto and Vancouver when considering only CMAs with population greater than 200,000...
. Calgary,
ExshawExshaw, Alberta is a small hamlet of about 350 people. Located at least 45 minutes driving time from Calgary city limits, and 60 minutes from downtown Calgary, Exshaw is located on the north side in the eastern portion of the Bow River valley...
(where there was a cement factory) and
BanffBanff is the largest town in Banff National Park, in Alberta's Rockies, Canada. It is also the first incorporated municipality located within a national park in Canada. At , it is the town with the highest elevation in Canada...
were all potential markets for Jumping Pound gas, but the sour gas first required processing and sweetening. The gas plant began operating in 1951.
Built "California-style," with few buildings or other provisions for a cold climate, the original Jumping Pound plant ran into problems. During the first winter, water condensation and other cold weather problems led to one operational failure after another. When the second winter arrived, buildings sheltered most of the facilities. Shell Jumping Pound is sometimes referred to as Canada's "sour gas laboratory," for much of the industry's early understanding of sour gas processing came from experience there. It was the first sulfur plant in the world, its sulfur unit going into production in 1952. For this distinction it narrowly beat out the Madison Natural Gas plant which began extracting sulfur at Turner Valley later the same year.
As the Westcoast and TransCanada natural gas pipelines went into operation in 1957, a new and better day dawned for Canadian gas processing. Most of the gas that travelled those pipelines needed processing to meet the specifications of pipeline companies. Consequently, the late 1950s and early 1960s saw a boom in gas plant construction.
In 1957, a new gas plant at Taylor, near
Fort St. John, British ColumbiaThe City of Fort St. John is a small city in northeastern British Columbia, Canada. A member municipality of the Peace River Regional District, the city covers an area of about 22 km² with 17,402 residents . Located at Mile 47, it is the second largest city along the Alaska Highway, after...
, began supplying Westcoast Transmission Co. Ltd. This plant's practices differed from those used in Alberta in a number of ways. For example, although it generally required
dehydrationDehydration is defined as excessive loss of body water. It is literally the removal of water from an object. In physiological terms, it entails a relative deficiency of water molecules in relation to other dissolved solutes...
, sweetening and processing for liquid hydrocarbons, companies transported the natural gas from northeastern
British ColumbiaBritish Columbia is the westernmost of Canada's provinces and is famed for its natural beauty, as reflected in its Latin motto, Splendor sine occasu . In 1871, it became the sixth province of Canada.The capital of British Columbia is Victoria, the 15th largest metropolitan region in Canada...
long distances before processing it further. Consequently, while planning the Westcoast pipeline, the field operators agreed to process all the gas at a single facility, rather than have individual gas plants in every major production area. At 10 million cubic metres per day, the Taylor plant had the capacity to process as much natural gas as all eleven of the other gas plants operating in Canada combined. The plant was also by far Canada's most northerly. Heavily insulated buildings protected the processing facilities and allowed them to function at temperatures typical of more southerly climes.
Selling the products
The enormous growth in Canadian processing capacity in the late 1950s and early 1960s created large inventories of natural gas liquids, liquefied petroleum gases and
sulfurSulfur or sulphur is the chemical element that has the atomic number 16. It is denoted with the symbol S. It is an abundant, multivalent non-metal. Sulfur, in its native form, is a yellow crystalline solid. In nature, it can be found as the pure element and as sulfide and sulfate minerals...
. Growing supplies sometimes created marketing problems.
Natural gas liquids
Sales of gas liquids were seldom difficult because of their ready use in oil refining. Refiners also used butane for blending. Propane, on the other hand, presented a challenge because the volumes available greatly exceeded demand.
Companies set out to widen the market with considerable success. Farmers and small communities not served by natural gas adopted it for home heating
fuelFuel is any material that is burned or altered to obtain energy and to heat or to move object. Fuel releases its energy either through a chemical reaction means, such as combustion, or nuclear means, such as nuclear fission or nuclear fusion...
. In the early 1960s, markets for liquid petroleum gases grew rapidly.
Companies responded by building "straddle" plants. These facilities straddled gas pipelines to extract additional volumes of gas liquids from the gas stream. Where economic, field processors began "deep cutting" their own gas by installing facilities that culled more
LPGLPG may stand for:* Liquefied petroleum gas* Laboratoire de Planetologie, Grenoble, France* Landwirtschaftliche Produktionsgenossenschaft * Llanfairpwll railway station, Wales; National Rail station code LPG.* LPG...
from the gas through deep refrigeration. In the early 1970s, companies began extracting the even lighter hydrocarbon
ethaneEthane is a chemical compound with chemical formula C
2H
6. It is the only two-carbon alkane that is an aliphatic hydrocarbon. At standard temperature and pressure, ethane is a colorless, odorless gas....
at some field processing and straddle plants. Ethane became a feedstock for Alberta's growing
petrochemicalPetrochemicals are chemical products made from raw materials of petroleum or other hydrocarbon origin. Although some of the chemical compounds that originate from petroleum may also be derived from coal and natural gas, petroleum is the major source...
industry, used in the manufacture of
ethyleneEthylene is the chemical compound with the formula C
2H
4. It is the simplest alkene. Because it contains a carbon-carbon double bond, ethylene is called an unsaturated hydrocarbon or an olefin. It is extremely important in industry and also has a role in biology as a hormone...
.
Sulfur
From a slow start in 1952, sulfur production from gas processing snowballed as plant construction boomed in the late 1950s and early 1960s. Tough new regulations enacted by the Alberta government in 1960 forced the industry to reduce its emissions of such sulfur compounds as
sulfur dioxideSulfur dioxide is the chemical compound with the formula SO
2. It is produced by volcanoes and in various industrial processes. Since coal and petroleum often contain sulfur compounds, their combustion generates sulfur dioxide...
and hydrogen sulfide.
Over the years, sour gas processing technology steadily improved. By 1970, more stringent emission standards were technically feasible. The Alberta government announced new, tougher regulations in 1971. Improvements in sulfur extraction technology and the addition of tail gas clean-up units enabled processors to meet these stricter standards.
The amount of sulfur produced in Alberta increased rapidly, and soon far outstripped demand. By 1963, Alberta's annual sulfur production exceeded one million tonnes, compared with 30,000 tonnes in 1956. In 1973 it peaked at slightly more than 7 million tonnes. Stockpiles grew annually. By 1978, 21 million tonnes of sulfur in large yellow blocks dotted the Alberta countryside. These inventories grew almost every year after 1952, and government and industry became seriously concerned about the surplus. Beginning in 1978, a strong sulfur marketing effort made Canada the largest supplier to international trade. Sales of sulfur generally exceeded production and stockpiles at gas plants began to shrink.
Looking at the large, sophisticated, high-tech enterprise that Canadian gas processing is today, it is hard to imagine the challenges the industry faced as it grew up. Gas processing developed as an adjunct to the construction of the major gas transmission pipeline system, which began operating in the late 1950s.
Gas sausage
During the 1980s and 1990s the natural gas industry faced a new series of problems. As demand for gas grew, suppliers expanded their capacity and soon a "gas bubble" developed. There was more producible gas than markets demanded. Although market analysts regularly forecast the end of the bubble as only a few years away, the bubble refused to burst. Some called it the "gas sausage", as it extended over time. The perceived problem of large gas inventories overhanging the market and keeping down prices did not begin to disappear until the late 1990s.
Crude oil prices dropped throughout the 1980s and natural gas supplies remained abundant, so consumers began taking advantage of the twin surpluses. Individuals, corporations and governments alike window-shopped for the cheapest crude oil and natural gas available, and demand grew.
In the mid-1980s, conservative governments in
Washington, D.C.Washington, D.C. , formally the District of Columbia and commonly referred to as Washington, the District, or simply D.C., is the capital of the United States, founded on July 16, 1790...
,
OttawaOttawa is the capital of Canada and a municipality within the Province of Ontario. Located in the Ottawa Valley in the eastern portion of Southern Ontario, the city lies on the southern banks of the Ottawa River, a major waterway forming the local boundary between the Provinces of Ontario and...
and
EdmontonEdmonton is the capital of the Canadian province of Alberta. The city is located on the North Saskatchewan River in the central region of the province, an area with some of the most fertile farmland on the prairies...
moved their petroleum sectors towards deregulation. Throwing the market open to competition added to the gas surplus and to depressed gas prices. Suppliers across the continent began looking for new customers to make up in volume sales what they were unable to earn from low gas prices. But gas pipelines, built decades before, had little excess capacity.
Debate on a second gas pipeline from Alberta to California served as a good example of changing values during this period. For decades, California consumers opposed rival pipelines for fear of having to pay higher gas prices to cover pipeline construction.
DeregulationDeregulation is the removal or simplification of government rules and regulations that constrain the operation of market forces.Deregulation is the removal or simplification of government rules and regulations that constrain the operation of market forces.Deregulation is the removal or...
made the pipeline companies
common carrierA common carrier is a business that transports people, goods, or services and offers its services to the general public under license or authority provided by a regulatory body. A common carrier holds itself out to provide service to the general public without discrimination for the "public...
s so that any producer or marketer could buy space on the pipeline to move its gas. Gone were the days when the pipeline company moved the gas and also marketed it.
As deregulation put an end to
vertically integratedIn microeconomics and management, the term vertical integration describes a style of management control. Vertically integrated companies are united through a hierarchy with a common owner. Usually each member of the hierarchy produces a different product or service, and the products combine to...
gas delivery and marketing, consuming regions began crying for additional pipeline capacity. In Alberta, half a continent away from America's east coast and from the San Francisco Bay, cheap gas awaited. All they needed were pipelines. By the late 1980s and early 1990s, governments generally supported throwing open to all contenders the race to build pipelines. Competition among operators moving the gas to market - not government regulation - was supposed to keep transmission costs reasonable in the new milieu.
As pipeline projects proliferated, natural gas producers sought new markets for their inexpensive and apparently plentiful product. Electrical power generation with gas became a growth industry. As
coalCoal is a readily combustible black or brownish-black sedimentary rock normally occurring in rock strata in layers or veins called coal beds. The harder forms, such as anthracite coal, can be regarded as metamorphic rock because of later exposure to elevated temperature and pressure...
, hydroelectric and
nuclear-poweredNuclear power is power produced from controlled nuclear reactions. Commercial plants in use to date use nuclear fission reactions....
generation facilities came under attack for environmental reasons, gas stepped in and sold itself as a clean alternative. Businesses arranged for pipelines to transport natural gas for them, found markets for electricity, and even created "
cogenerationCogeneration is the use of a heat engine or a power station to simultaneously generate both electricity and useful heat...
plants" to sell the heat created by gas-fired generators to other markets.
As long as natural gas supplies exceeded demand, these facilities remained attractive. They used an inexpensive and environmentally friendly fuel. They met immediate needs at only a fraction of the cost of large nuclear, hydro-electric or coal-powered facilities. Although their share of the market would shrink if gas prices rose, these ingenious projects filled an important market niche during the long period of gas surplus.
Exploration and development
The demand for larger supplies of natural gas to meet expanding markets created a need for more gas processing facilities. Industry responded by developing new fields in the rural west. Occasionally this led to tragedy, as in the case of the second of
Amoco CanadaAmoco Corporation, originally Standard Oil Company , was a global chemical and oil company, founded in 1889 around a refinery located in Whiting, Indiana. It later absorbed the American Oil Company founded in Baltimore in 1910 and incorporated in 1922 by Louis Blaustein and his son Jacob. Amoco is...
's Lodgepole blowouts.
Lodgepole blowout
In 1982, the company was drilling a
sour gasSour gas is natural gas or any other gas containing significant amounts of hydrogen sulfide . Natural gas is usually considered sour if there are more than 5.7 milligrams of H2S per cubic meter of natural gas, which is equivalent to approximately 4 ppm by volume...
well, which blew wild. Especially because the company had experienced a serious blowout in the same gas field five years earlier, regulatory and public opprobrium was intense. Much of the public outrage occurred because, on some days, the rotten-egg odour of
hydrogen sulfideHydrogen sulfide is the chemical compound with the formula H
2S. This colorless, toxic and flammable gas is partially responsible for the foul odor of rotten eggs and flatulence....
in the gas could be smelled as far away as
WinnipegWinnipeg is the capital and largest city of Manitoba, Canada. It is located near the longitudinal centre of North America, in south central Canada, near the eastern edge of the Canadian Prairies, at the confluence of the Red and Assiniboine Rivers...
, nearly 1,500 kilometres distant.
In this spectacular event, sour gas flowed at an estimated rate of {{convert|150|Mcuft|m3}} per day. The
H2SHydrogen sulfide is the chemical compound with the formula H
2S. This colorless, toxic and flammable gas is partially responsible for the foul odor of rotten eggs and flatulence....
content of the gas was 28 per cent, and the well also produced {{convert|20|koilbbl/d|m3/d}} of sulfur-contaminated, orange-coloured
condensateNatural gas condensate is a low-density mixture of hydrocarbon liquids that are present as gaseous components in the raw natural gas produced from many natural gas fields....
. The well was out of control for 68 days, during 23 of which the well was not ignited. During that time hydrogen sulfide from the blowout took the lives of two blowout specialists and sent another 16 people to hospital. Today, operators are required to ignite the well quickly in the event of a major sour gas blowout. This eliminates the dangers of highly toxic hydrogen sulfide in the air.
When the crew ignited the well, the fire destroyed the Nabors 14E rig (worth about $8 million) in nine minutes; it also scorched {{convert|400|acre|km2|1}} of forest. Amoco's direct costs to bring the well under control were approximately $20 million. Huge amounts of natural gas, natural gas liquids and sulfur were wasted through the disaster. This meant energy lost to consumers, revenues lost to the company, and royalties and taxes lost to government. According to a report commissioned by Alberta's
Energy Resources Conservation BoardThe Energy Resources Conservation Board is an independent, quasi-judicial agency of the Government of Alberta. It regulates the safe, responsible, and efficient development of Alberta's energy resources: oil, natural gas, oil sands, coal, and pipelines...
, these and other direct costs totalled about $200 million.
The incident spawned a generation of safety
regulationRegulation is "controlling human or societal behaviour by rules or restrictions." Regulation can take many forms: legal restrictions promulgated by a government authority, self-regulation, social regulation , co-regulation and market regulation. One can consider regulation as actions of conduct...
s that require the industry to designate hazardous drilling targets as "critical wells" and to use elaborate safety precautions at the drill site. The new regulations imposed much more stringent drilling procedures at critical wells, required specialized safety features on drilling and other equipment, and forced companies to develop detailed emergency response plans before beginning to drill. Combined, these additional costs can range from $250,000 to $500,000 for a single deep sour gas well. Thus, the indirect costs of the blowout have probably been on the order of $1 billion.
Caroline
Later in the decade, many large companies began reviewing their existing land holdings, looking for discoveries that had eluded earlier exploration. This was partly a money-saving idea - necessary because both gas and oil prices were in decline throughout much of the decade.
One find from such a program was the
CarolineCaroline is a village in central Alberta, Canada. It is located southwest of Red Deer. It is most famous for being the hometown of figure skater Kurt Browning, for whom the local ice rink is named.-Notable residents:*Kurt Browning*Kris Russell...
sour gas discovery in south-central Alberta, in the mid-1980s. This discovery brought the industry into a new era. Because of the costs and dangers involved in developing sour gas, producers in the past had often shut in these discoveries. In the case of Caroline, this was unthinkable.
As the biggest Canadian gas discovery since the 1970s and its richest gas project ever, the Shell-operated Caroline field stood out as a $10 billion resource jewel. Although classified as a
gas fieldOil and natural gas are produced by the same geological process: anaerobic decay of organic matter deep under the Earth's surface. As a consequence, oil and natural gas are often found together...
, in the lower-price environment of the day sulfur, liquids and other by-products from the gas promised to exceed the value of the natural gas itself.
However, this discovery proved complicated, environmentally sensitive and economically challenging. The planning and review process took from 1986 to 1990, and set a new standard for community participation and consultation. Two companies, Shell and
HuskyHusky Energy Inc. is a large Canadian company which is integrated energy company based in Calgary, Alberta. Focusing on petroleum and natural gas exploration, production, refining and retail sales, the company primarily conducts operations in Canada, the United States, China and Indonesia...
, competed for the right to operate the field. The public hearing into the development forced the corporations to compete for the right to develop the resource on new terms.
Farmers, acreage owners and other interested parties quickly made their concerns known. The competing corporations were required to respond to these concerns, so the Caroline experience made public consultation an integral part of planning. Sustainable development theories came under close scrutiny, as did all aspects of the gas processing system. When they recognized that public consultation had become critical to the winning bid, the companies raised community relations to a new level.
Eventually, Shell and its backers won the bid. They constructed a processing plant that recovered almost all the sulfur from Caroline production, and was environmentally advanced in other areas.
By the early 1990s, natural gas processing had come of age. Since its infancy, when operators removed only few of a gas stream's impurities, the gas sector had matured to become an important part of the petroleum industry and of the economy itself. Gas moved around the North American continent in unprecedented volumes. It was and is an environmentally desirable fuel, and gas processing is the handmaiden of natural gas sales.
Supply, demand and price
While Canada is one of the world's three largest gas producers (the other two are Russia and the United States), she does not host many of the
world's largest gas fields. It is therefore not surprising that, although in the final years of the 20th century
Western CanadaWestern Canada, also referred to as the Western provinces and commonly as the West, is a region of Canada generally including all parts of Canada west of the province of Ontario. The West is considered by many to be a cultural region with an identity separate from that of the rest of Canada...
saw a rapid escalation in natural gas drilling, for the first time the rate of production growth began to falter.
In early 2000, as
Murphy OilMurphy Oil Corporation is a petroleum corporation. It is an S&P 500 company. In 2009, it was ranked as the 92nd largest company in America on the Fortune 500...
,
ApacheApache Corporation is an American independent oil and gas corporation. It is headquartered in Suite 100 at 1 Post Oak Central in the Uptown district of Houston, Texas....
and Beau Canada announced their discovery of the Ladyfern Slave Point gas field in a remote area of Northeastern British Columbia, their achievement seemed to herald a new era of successful wildcat exploration. As word of a major discovery leaked out, many of the significant players in the industry jumped on the bandwagon. A frenzy of land purchases, drilling and pipeline construction followed. In little more than a year, production from the new fields rose to more than {{convert|700|Mcuft|m3}} per day - and this from an area only accessible during the cold winter months. Production from this region helped raise Canada's gas production to a new peak (in late 2001) of {{convert|17.4|Gcuft|m3}} of sales gas per day. Then production began to decline slightly.
Rather than representing a new era of large discoveries, Ladyfern appears to have been just another increasingly-rare large gas find. During boom periods in the 1950s, for example, gas exploration yielded large new gas fields almost every year, and many discoveries waited for years to be tied into the pipeline network. As the industry matured, such discoveries became unusual. Prior to Ladyfern, the last large gas discovery had been at Caroline, more than ten years earlier.
Unconventional gas
In any given area, free-flowing, buoyancy-driven
conventional gasNatural gas is a gas consisting primarily of methane. It is found associated with fossil fuels, in coal beds, as methane clathrates, and is created by methanogenic organisms in marshes, bogs, and landfills...
represents a very small fraction of the natural gas resources present. For an explanation, see "Resource Triangle" on this page. Unconventional gas represents possibly hundreds of times more natural gas resource than there is for conventional gas. It comes from five major sources:
- One is shallow, biogenically-derived gas in mixed sand and shale sequences. Shallow biogenic gas is considered to be an unconventional gas resource
Natural resources occur naturally within environments that exist relatively undisturbed by mankind, in a natural form. A natural resource is often characterized by amounts of biodiversity existent in various ecosystems.Natural resources are derived from the environment...
since it is not generated in the same temperature and pressure systems found in conventional hydrocarbon generation. The Milk River and Medicine Hat sands of southeastern Alberta and southwestern Saskatchewan are classic examples of this type of unconventional gas. This is the area where gas was first produced in western Canada, and it is still a major producing region. This continuously gas-producing area is the largest in the Western Canadian Sedimentary BasinThe Western Canadian Sedimentary Basin is a vast sedimentary basin underlying of Western Canada including southwestern Manitoba, southern Saskatchewan, Alberta, northeastern British Columbia and the southwest corner of the Northwest Territories. It consists of a massive wedge of sedimentary rock...
.
- Coalbed methane
Coalbed methane or coalbed gas is a form of natural gas extracted from coal beds. In recent decades it has become an important source of energy in United States, Canada, and other countries. Australia has rich deposits where it is known as coal seam gas.The term refers to methane adsorbed into...
is natural gas within the structure of coal. Special production techniques to remove this gas from its coal seam reservoirA petroleum reservoir or an oil and gas reservoir, is a subsurface pool of hydrocarbons contained in porous or fractured rock formations. The naturally occurring hydrocarbons are trapped by overlying rock formations with lower permeability.-Formation:...
include lowering reservoir pressures rather than keeping them high. Coalbed methane knowledge has advanced rapidly. So has the development of water-free natural gas from coal in the Horseshoe Canyon FormationThe Horseshoe Canyon Formation is part of the Edmonton Group and is up to 230m in thickness. It is Late Campanian to Early Maastrichtian in age and is composed of mudstone, sandstone, and carbonaceous shales...
in Central AlbertaCentral Alberta is a region located in the Canadian province of Alberta.Central Alberta is the most densely populated rural area in the province...
. First commercial production only occurred in 2002, but current production is already more than {{convert|500|Mcuft|m3}} per day.
- Tight gas is gas in low-permeability
Permeability in fluid mechanics and the earth sciences is a measure of the ability of a porous material to transmit fluids.- Units :...
rock. Reservoirs require artificial fracturing to enable the gas to flow. Canadian Hunter Exploration in the 1970s identified a huge gas resource in the Deep Basin of western Alberta. In this area, much of the sedimentary section is charged with natural gas. The rock can have extremely low permeability but production is not hampered by the presence of water. Horizontal drilling and hydraulic fracturingHydraulic fracturing is a method used to create fractures that extend from a borehole into rock formations, which are typically maintained by a proppant, a material such as grains of sand or other material which prevent the fractures from closing...
are techniques used to develop such resources. Similar gas-charged areas have been found in many parts of the world; a common term for this kind of reservoir is "basin-centred gas". The Montney PlayThe Montney Formation is a stratigraphical unit of Middle Triassic age in the Western Canadian Sedimentary Basin in British Columbia and Alberta....
has seen significant development in the early 2000s in the southern Peace River CountryThe Peace River Country is prairie land around the Peace River in Canada. It spans from northwestern Alberta to the Rocky Mountains in northeastern British Columbia, where the region is also referred to as the Peace River Block....
.
- Shale gas is held in shale
Shale is a fine-grained, clastic sedimentary rock composed of flakes of clay minerals and tiny fragments of other minerals, especially quartz and calcite. The ratio of clay to other minerals is variable...
reservoirs. This is also a highly-challenging, low-permeability resource. Large volumes of gas molecules are trapped in shales which represent one of the commonest rock types in any sedimentary sequence. Shale gas production has been pursued in the United States since the early days of the natural gas industry, and in recent years the Barnett ShaleThe Barnett Shale is a geological formation of economic significance. It consists of sedimentary rocks of Mississippian age in Texas...
in west TexasTexas is the second-largest U.S. state in both area and population, and the largest state in the contiguous United States.The name had wide usage among native Americans, meaning "friends" or "allies"...
has been a tremendous success. Many companies are experimenting with shale gas production in Saskatchewan, Alberta and even in Nova ScotiaNova Scotia is a Canadian province located on Canada's southeastern coast. It is the most populous province in Atlantic Canada. Its capital, Halifax, is a major economic centre of the region. Nova Scotia is the second-smallest province in Canada with an area of...
, New BrunswickNew Brunswick is one of Canada's three Maritime provinces and is the only constitutionally bilingual province in the confederation. The provincial capital is Fredericton...
and QuebecQuebec is a province in east-central Canada. It is the only Canadian province with a predominantly French-speaking identity and the only one whose sole official language is French at the provincial level....
. Large-scale projects are underway in northeastern British Columbia, tapping the Muskwa shalesThe Muskwa Formation is a stratigraphical unit of Frasnian age in the Western Canadian Sedimentary Basin.It takes the name from Muskwa River, and was first described in the Western National Gas Fort Nelson a-95-J/94-J-10 well by F.F. Gray and J.R. Kassube, in 1963.-Lithology:The Muskwa Formation is...
in the Horn River BasinThe Horn River Formation is a stratigraphical unit of Devonian age in the Western Canadian Sedimentary Basin.It takes the name from the Horn River, a tributary of the Mackenzie River, and was first described in outrop on the banks of Horn River in the Northwest Territories by Whittaker in 1922...
.
- Gas hydrates consist of natural gas trapped in ice
Ice is a solid phase, usually crystalline, of a non-metallic substance that is liquid or gas at room temperature, such as carbon dioxide ice , ammonia ice, or methane ice. However, the predominant use of the term ice is for water ice, technically restricted to one of the 15 known crystalline phases...
crystals in areas of permafrostIn geology, permafrost or permafrost soil is soil at or below the freezing point of water for two or more years. Ice is not always present, as may be in the case of nonporous bedrock, but it frequently occurs and it may be in amounts exceeding the potential hydraulic saturation of the ground...
and on the ocean floor.
In 1985, unconventional gas production received a boost when the United States introduced incentives to encourage the development of energy alternatives. This incentive advanced the technical understanding of the resources themselves and of ways to develop them. Canada has benefited from this, learning new ways to exploit her own unconventional resources.
Complacency
The existence of these resources has led to complacency among consumers, who still assume they will always be supplied with gas at "affordable" prices. Developing these resources can have substantial impacts on the environment through closer well spacing, more intensive infrastructure, additional noise from compression, the challenges of water disposal,
NIMBYNIMBY or Nimby is an acronym for Not In My Back Yard. The term is used pejoratively to describe opposition by residents to a proposal for a new development close to them. Opposing residents themselves are sometimes called Nimbies...
issues, and other factors. In recent years, changes in production technology (notably horizontal drilling and more advanced systems of
hydraulic fracturingHydraulic fracturing is a method used to create fractures that extend from a borehole into rock formations, which are typically maintained by a proppant, a material such as grains of sand or other material which prevent the fractures from closing...
or "fraccing") have greatly increased shale gas production. Greater shale gas production in the United States has been an important factor in reduced Canadian exports to that country.
Consider this matter in the context that natural gas producers generally buy
mineral rightsIn the United States, Mineral rights, mining rights, oil rights or drilling rights, are the rights to remove minerals, oil, or sometimes water, that may be contained in and under some land...
from the
CrownThe Crown is a corporation sole that in certain countries of the Commonwealth of Nations, as well as in any provincial or state sub-divisions thereof, represents the legal embodiment of executive government...
but must negotiate surface access and other
land rightsLand rights are those property rights that pertain to real estate land.Because land is a limited resource and property rights include the right to exclude others, land rights are a form of monopoly. Those without land rights must enter into land use agreements, as they must reside somewhere...
with their neighbours. In this environment, the chances are high that some projects will face delays as a result of public hearings - for example, as Shell and the other contenders did at the Caroline hearing. After all, those with an interest in a single
land useLand use is the human modification of natural environment or wilderness into built environment such as fields, pastures, and settlements. The major effect of land use on land cover since 1750 has been deforestation of temperate regions. More recent significant effects of land use include urban...
decision could include petroleum producers, Aboriginal communities, landowners, farmers, ranchers, loggers, trappers, campers, sports and environmental groups, and others. Many conflicting interests need to be resolved.
Forecasters now commonly suggest that western Canada's conventional gas production has peaked and will continue to decline. Gaps between traditional
supplyIn economics, supply is the amount of some product which will be available to customers. Usually, supply is plotted as a supply curve showing the relationship of price to the amount of product businesses are willing to sell.- Supply schedule :...
and growing
demandIn economics, demand is the desire to own anything and the ability to pay for it and willigness to pay . The term demand signifies the ability or the willingness to buy a particular commodity at a given point of time...
are already being filled with gas from such diverse sources as tight sands; coalbed methane; and since January 2000, frontier gas and liquids from Nova Scotia's
Sable Offshore Energy ProjectThe Sable Offshore Energy Project is a consortium based in Halifax, Nova Scotia which is attempting to locate and produce natural gas found near Sable Island on the edge of the Nova Scotian continental shelf in eastern Canada...
. Other likely future sources include
Mackenzie DeltaThe Mackenzie River originates in Great Slave Lake, in the Northwest Territories, and flows north into the Arctic Ocean. It is the longest river in Canada at and, together with its headstreams the Peace and the Finlay, the second longest river in North America at in length. The Mackenzie and...
gas and
liquefied natural gasLiquefied natural gas or LNG is natural gas that has been converted temporarily to liquid form for ease of storage or transport....
from abroad. This suggests higher future
costIn business, retail, and accounting, a cost is the value of money that has been used up to produce something, and hence is not available for use anymore. In economics, a cost is an alternative that is given up as a result of a decision. In business, the cost may be one of acquisition, in which case...
s and
riskRisk is a concept that denotes the precise probability of specific eventualities. Technically, the notion of risk is independent from the notion of value and, as such, eventualities may have both beneficial and adverse consequences...
s, and that suggests higher-
pricePrice in economics and business is the result of an exchange and from that trade we assign a numerical monetary value to a good, service or asset. If Alice trades Bob 4 apples for an orange, the price of an orange is 4 apples. Inversely, the price of an apple is 1/4 oranges.Price is only part of...
d future
energyIn physics, energy is a scalar physical quantity that describes the amount of work that can be performed by a force, an attribute of objects and systems that is subject to a conservation law...
.
Metric conversions
One cubic metre of oil = 6.29 barrels.
One cubic metre of natural gas = 35.49 cubic feet.
One kilopascal = 1% of atmospheric pressure (near sea level).
Canada's oil measure, the
cubic metreThe cubic metre is the SI derived unit of volume. It is the volume of a cube with edges one metre in length. An alternative name, which allowed a different usage with metric prefixes, was the stère...
, is unique in the world. It is metric in the sense that it uses metres, but it is based on volume so that Canadian units can be easily converted into
barrelsThe barrel is the name of several units of volume, generally in the range of about 100–200 litres .-Dry goods:* US dry barrel: 7,056 cubic inches ....
. In the rest of the metric world, the standard for measuring oil is the metric tonne. The advantage of the latter measure is that it reflects oil quality. In general, lower grade oils are heavier.
Sources
{{reflist}}
- Peter McKenzie-Brown, Gordon Jaremko, David Finch, The Great Oil Age, Detselig Enterprises Ltd., Calgary; 1993
- Fred Stenson, Waste to Wealth: The History of Natural Gas Processing in Canada, Canadian Gas Processors Association/Canadian Gas Processors Suppliers' Association; 1985
- Robert Bott, Our Petroleum Challenge: Sustainability into the 21st Century, Canadian Centre for Energy Information, Calgary; Seventh edition, 2004
- This original series written and maintained by Peter McKenzie-Brown. Section above on "Supply, demand and price" largely the work of Dave Russum; see this article.
{{Petroleum industry}}
{{Western Canadian Sedimentary Basin}}