CANADA S NATURAL GAS

Transcription

1 THE FACTS ON: CANADA S NATURAL GAS CANADA S OIL SANDS PRODUCERS CANADASNATURALGAS.CA OILSANDSTODAY.CA

2 THE FACTS CONTENTS The Facts... 1 UNIT 1: The Resource...3 UNIT 2: Energy UNIT 3: Economy...25 UNIT 4: Environment 4.1 Air Water Land HANDY AND CREDIBLE CAPP is the voice of Canada s upstream oil and gas industry representing companies that produce about 90 per cent of Canada s natural gas and crude oil. Our 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 natural gas facts that will 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 public 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. 1

3 MORE FACTS? Are you curious about facts that aren t covered here? Send your questions and comments to publications@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 A regularly updated online version of this natural gas fact book is available at UNIT 1: THE RESOURCE Canada is the world s fifthlargest producer of natural gas. To order more printed copies of The Facts on Natural Gas, publications@capp.ca. 2 3

4 NATURAL GAS Natural gas is a naturally occurring hydrocarbon consisting primarily of methane, but it may also contain small amounts of ethane, propane, butane and pentanes. As natural gas flows out of the ground it may also contain sulphur compounds, nitrogen, carbon dioxide, water and other substances. These compounds are removed from the natural gas at processing plants. LOCATION Natural gas is found in many regions of North America. The amount of recoverable resources continues to grow through exploration and as technological advances make unconventional natural gas sources economically viable. THE RESOURCE Methane Ethane NORTH AMERICAN NATURAL GAS RESERVOIRS Hydrogen Carbon FORMATION Natural gas was formed over millions of years as heat and pressure transformed decaying plant and animal matter buried in sedimentary rock layers. The gas produced is trapped under an impermeable layer of rock that keeps it from flowing to the surface. CANADA S GAS HISTORY Natural gas has been a part of Canada s energy mix since it was first discovered in 1859 in New Brunswick, where it was flared as a waste product. In 1883, natural gas was discovered in southeast Alberta. Canada s first offshore discovery was made south of Sable Island, N.S., in Today almost one third of Canada s entire energy needs are met by natural gas. Natural Gas Reserves 4 5

5 NATURAL GAS ATTRIBUTES Abundant Canada s resources can provide natural gas to consumers for the next 300-plus years at current consumption levels. With advances in recovery technology, potential supplies of natural gas have grown dramatically. Affordable Canadian natural gas is a cost-competitive, economic energy source that meets a wide range of needs. Cleaner-burning Natural gas is the cleanest-burning hydrocarbon. Appliances, vehicles and power plants using natural gas are highly efficient. This high efficiency makes it a cleaner energy option than other fossil fuels. In fact, it is 50 per cent cleaner-burning than coal when used to generate electricity. Source: Natural Resources Canada SOURCES Natural gas extraction is often referred to as conventional and unconventional. The key difference is in the manner, ease and costs associated with extracting it. North America s recoverable natural gas resources have increased over the past decade. Canada is now estimated to have 1,100 trillion cubic feet (tcf) of remaining natural gas. The increase is mainly due to technological advances in the recovery of natural gas through unconventional means. These new technologies now make it possible to develop these resources in a manner that is more cost-effective and economically viable. Unconventional natural gas includes shale gas, coalbed methane and tight gas. CANADA S NATURAL GAS RESOURCES (TCF) THE RESOURCE Reliable Natural gas is there for Canadians when we need it. About 450,000 kilometres of pipeline help deliver natural gas safely and dependably to more than six million homes, businesses Coalbed Methane, 35 Shale Gas, 222 Frontier Conv.*, 223 and institutions across Canada. Produced, 202 Source: CGA Versatile Natural gas is used to heat homes and businesses, to Tight Gas, 530 generate electricity, to fuel vehicles, for industrial use and as a feedstock for fertilizers and chemical processes. Source: CGA WCSB Conv., 74 Other Conv., 9 Source: National Energy Board *Inc. Northern Canada & Eastcoast Offshore 6 7

6 Produced Represents cumulative natural gas that has already been recovered primarily from conventional sources. Conventional Conventional natural gas refers to gas trapped in multiple, relatively small, porous zones in various rock formations, such as sandstone. This natural gas is often difficult to find, but once discovered, it is typically the easiest to produce through standard methods, including hydraulic fracturing, which have been used for the last 60 years. Unconventional Most growth in supply from today s recoverable natural gas resources is found in unconventional reservoirs. Technological advances in horizontal drilling and multi-stage hydraulic fracturing have made shale, tight gas and other unconventional gas supplies commercially viable. Shale gas Natural gas found in fine-grained sedimentary rock called shale. The natural gas is tightly locked in small pore spaces in the reservoir rock requiring advanced technologies to drill and fracture the gas-bearing zones. Coalbed methane Coalbed methane (CBM) is natural gas found in coal seams. The natural gas is trapped in the matrix of the coal by a process called adsorption. Reducing the pressure in the coal seam allows the natural gas to be released from the coal and flow to the wellbore. Tight gas Natural gas found in sands and carbonate that have a very low permeability, which is a measure of how well a gas or fluid flows through a rock. The natural gas is stored in the very small pore spaces in the rock. RECOVERING THE RESOURCE Natural gas resources are developed and processed using various methods and technologies. Vertical drilling Drilling rigs drill vertical wells directly into the porous geological formations that hold the natural gas. Horizontal drilling Horizontal drilling uses the flexibility of drilling pipe coupled with a steerable motorized bit to turn a vertical well onto a horizontal plane at a measured depth. This process of intersecting the reservoir horizontally allows the well to have much greater contact with the reservoir and access to natural gas. Hydraulic fracturing Hydraulic fracturing pumps fluid (water with 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 well and leaves a thin layer of sand to prop open the cracks. This layer acts as a conduit to allow the natural gas to escape from tight (low permeability) formations and flow to the well where it is recovered and shipped by pipeline to market. Hydraulic fracturing has been used in conventional natural gas production for over 60 years. Recent innovations using multiple stages in hydraulic fracturing have helped open up unconventional fields. THE RESOURCE 8 9

7 Processing Once out of the ground, natural gas flows through pipelines to plants where the product is processed, and liquids and impurities are stripped out. The resulting natural gas is shipped to Canadian users and for export. Production Canada produced 5.4 trillion cubic feet (tcf) of natural gas and Eastern Canada imported 0.8 tcf in 2014, with Canadians consuming 3.1 tcf of natural gas. This represents about one third of all energy consumed in Canada. Canada exported 2.7 tcf of natural gas to the U.S. in GEOLOGY OF NATURAL GAS RESOURCES Pipelines Natural gas pipelines are used to transport natural gas from gas wells, to processing plants, and to distribution systems from where it is delivered directly to homes and businesses across Canada through an extensive network of distribution pipelines. Producing Wellheads NATURAL GAS DELIVERY NETWORK (ACTUAL CONFIGURATIONS MAY VARY) Gathering Lines Compressor Station Processing Plant Electricity Generating Station THE RESOURCE Transmission Lines Compressor Stations 300m Aquifers rock 2000m Underground Storage City Gate Commercial Customers Delivery Lines Residential Customers Residential Customers Source: CEPA Source: EIA 4000m Natural gas comes out of the ground at the producing wellhead, where it is fed into gathering lines that connect to a compressor station. Compressor stations pump the natural gas through pipelines to a processing plant or underground storage for later use. Processing plants remove natural gas liquids from the natural gas to ready it for end use. From the processing plant, the natural gas is pumped via compressor stations to electricity generating stations or, through a city gate, to residential and commercial customers

8 PERSPECTIVE ON HYDRAULIC FRACTURING Regulations The Canadian natural gas industry is highly regulated by government. While each province has its own regulations, all jurisdictions have laws to manage environmental impacts, to protect freshwater aquifers, and to ensure safe and responsible development. Size and depth of fracturing When a horizontal well is fractured, the wellbore is drilled into the geological zone containing the natural gas. Shale and tight natural gas resources are contained within specifically identified zones. These zones are typically tens of metres thick and extend hundreds of metres laterally. The fractures created extend like a three-dimensional spiderweb in the formation, up to 150 metres, into the hydrocarbon zone. The fractures are only a few millimetres wide, enough for a few grains of sand to prop them open. The fractures created are contained within the natural gas-bearing zone (or in close vertical proximity to it). They are separated by a sufficiently thick layer of rock that prevents communication between the fractures and the zones containing shallow water aquifers. Depth of resource Shale and tight gas reservoirs are found two to three kilometres below ground. As a comparison, the CN Tower in Toronto is 550 metres tall. Depth of drinking water aquifers Drinking water aquifers are usually found at depths less than 300 metres. When natural gas wells are drilled through these shallow aquifers, multiple layers of steel casing is cemented into place to isolate the aquifer from the natural gas-bearing zone and all activity inside the well. The protection of freshwater aquifers is strictly regulated by provincial governments. THE RESOURCE 12 13

9 WHY DO WE FRACTURE? Here s an analogy: Imagine you are making coffee in a drip coffee machine. If you use 200 coffee beans without grinding them, they have a surface area of about 0.02 m 2, slightly larger than this page. If you grind them, their surface area increases to about 800 m 2, about half the size of an NHL rink. With ground beans, as water passes through them, you get coffee in about one second, while whole beans have to be boiled in water continuously for about 40,000 seconds (11 hours) to make coffee! The larger surface area makes all the difference. When we drill into shale rock and perform hydraulic fracturing, it increases the surface area open to the wellbore to free the natural gas. Without fracturing it would take 27 years to recover natural gas from one metre around the wellbore. Source: Dr. Basim Faraj, Questerre Energy CAPP GUIDING PRINCIPLES FOR HYDRAULIC FRACTURING Canada s shale gas, tight gas and tight oil industry support responsible and safe approaches to hydraulic fracturing and water. Protecting water during sourcing, use and handling is a priority for our industry. We support and abide by all regulations governing hydraulic fracturing operations, water use and water protection. In addition, we commit to following these guiding principles: 1 We will safeguard the quality and quantity of regional surface and groundwater resources, through sound wellbore construction practices, sourcing fresh water alternatives where appropriate, and recycling water for reuse as much as practical. THE RESOURCE 2 We will measure and disclose our water use with the goal of continuing to reduce our effect on the environment..02 m beans 800 m 2 3 We will support the development of fracturing fluid additives with the least environmental risks. 4 We will support the disclosure of fracturing fluid additives. 11 hrs 1 sec 5 We will continue to advance, collaborate on and communicate technologies and best practices that reduce the potential environmental risks of hydraulic fracturing

10 CAPP HYDRAULIC FRACTURING OPERATING PRACTICES The operating practices support the guiding principles for hydraulic fracturing. They strengthen the shale gas, tight gas and tight oil industry s focus on continuous environmental performance improvement and transparency, and they apply nationally. GROUNDWATER PROTECTION Every natural gas well has an engineered steel casing system that is cemented externally to prevent any fluids from migrating from the wellbore to groundwater aquifers. HE RESOURCE Fracturing Fluid Additive Disclosure: Publicly disclose on a well-bywell basis the chemical ingredients in fracturing fluid additives used, 1 including trade names, general purpose and concentrations. Fracturing Fluid Additive Risk Assessment and Management: Identify and manage the potential health/environmental risks associated with fracturing fluid additives and increase demand for more environmentally sound fracturing fluids. 2 Baseline Groundwater Testing: Develop domestic water well testing programs and participate in regional groundwater monitoring 3 programs. Wellbore Construction and Quality Assurance: Ensure the proper design and installation of the wellbore, confirm wellbore integrity prior to initiation of hydraulic fracturing operations, and develop remedial plans in the unlikely event that the wellbore is compromised. Water Sourcing, Measurement and Reuse: Evaluate available water source options, monitor water sources as required to demonstrate sustainability of the resource, and measure and report water withdrawals. Fluid Transport, Handling, Storage and Disposal: Identify, evaluate and mitigate potential risks related to the transport, handling, storage and disposal of fluids, and ensure a quick response to accidental spills. Anomalous Induced Seismicity: Where appropriate, establish monitoring, mitigation and response procedures to avoid or minimize any adverse effects of induced seismicity associated with hydraulic fracturing Source: Apache Corporation 16 17

11 ENERGY Natural gas is a vital source of energy for Canada and the world. CANADA S ENERGY Natural gas is an important part of Canada s energy mix, along with oil, coal, hydro, nuclear and renewable energy sources. Currently, natural gas meets about one third of Canada s energy needs. The average natural gas consuming home in Canada used about 110,000 cubic feet of natural gas per year. Source: CGA ENERGY 5.4 TRILLION CUBIC FEET Canada produced 5.4 tcf of natural gas in Source: CAPP 3.1 TRILLION CUBIC FEET Canadians consumed 3.1 tcf of natural gas in Canada produces more than enough natural gas to meet domestic demands. 1,100 TRILLION CUBIC FEET An estimated 1,100 tcf of Canadian natural gas can be recovered and marketed. Given current domestic natural gas consumption, Canada has enough of the resource for 300- plus years. Source: NEB 2013 & CAPP 18 19

12 NATURAL GAS USE Residential Natural gas is the single-largest form of energy used in Canadian homes. More than six million homeowners use natural gas to heat their houses and their water. Canadian homes are also enjoying the benefits of increasingly efficient natural gas furnaces and appliances. Industrial Natural gas accounts for about 44 per cent of the energy used in the industrial sector. Industrial customers prefer natural gas because it is readily available and provides heat 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 10 per cent of Canada s power generation, and because it can be delivered and scaled quickly as appropriate, it is an excellent partner for renewable power sources such as wind and solar. Transportation Heavyduty natural gas trucks and buses can reduce greenhouse gas (GHG) emissions by 20 to 30 per cent. Source: NRCan NATURAL GAS USE BY SECTOR IN CANADA (% SHARE) Electricity Generation 16% Industrial 50% Residential 17% Commercial 12% Other 5% ENERGY SUPPLY Canada is the world s fifth-largest producer of natural gas. Total annual production reached 5.4 trillion cubic feet in 2014 and could reach 6.2 trillion cubic feet by Source: CAPP 2015 TOP 10 WORLD NATURAL GAS PRODUCERS IN 2014 United States Russia Qatar Iran Canada China Norway Saudi Arabia Algeria Indonesia Trillion Cubic Feet Source: BP Statistical Review 2015 Source: BP Statistical Review 2015 CANADIAN PRODUCTION YEAR (CONT. LOW PRICE) 2030 (PRICE RECOVERY) Production average ( billion cubic feet/day) Conventional natural gas 100% 78% 47% 35% Unconventional natural gas 0% 22% 53% 65% Total annual natural gas production (tcf) ENERGY Source: CIEEDAC & Natural Resources Canada, CGA Source: CAPP

13 CHANGING MARKETS ENERGY DEMAND GLOBAL NEEDS Global demand for energy is expected to increase 37 per cent* by 2040 as economies in both developed and emerging countries continue to grow and standards of living improve. Global demand for natural gas is expected to increase 57%* by Traditional markets for western Canadian natural gas are changing: exports to the U.S., Canada s only export market for natural gas, have dropped 17 per cent over the past five years and are projected to drop further because of the U.S. s own growing supply. In the major eastern Canadian markets, western natural gas competes against supplies primarily from the U.S. that are closer. In 2014, Canada imported 0.8 tcf of natural gas from the U.S. Source: NEB ENERGY Source: International Energy Agency (IEA) 2014 *Growth from 2012 to 2040, New Policies Scenario. Billion tonnes oil equivalent GLOBAL PRIMARY ENERGY DEMAND 20 Other renewables Biomass and waste 18 Hydro 16 Nuclear Natural gas Oil Coal ongoing reliance on fossil fuels (share of energy consumption): 2012: 82% 2040: 75% Source: Interntional Energy Agency World Energy Outlook 2014 With exports to the U.S. declining, Canada s industry is exploring new markets for Canadian natural gas. Several liquefied natural gas (LNG) export terminals have been proposed and approved on Canada s West Coast. Asian energy demand continues to grow, with China s demand for natural gas growing five per cent annually. LNG is natural gas cooled to -162 degrees Celsius, at which point it condenses into a liquid. LNG is ideal to store and transport natural gas. 23

14 ECONOMY EXISTING MARKETS Canada has the infrastructure to move natural gas from Western and Eastern Canada to other parts of Canada and for export to the U.S. British Columbia Natural gas is an important part of Canada s economy, Western Canadian Supply providing thousands of jobs and Western Canada Washington Ontario New York Midwest State significant revenue for provincial and federal governments. East Coast Economy Rockies California Québec Eastern Canadian Supply FUTURE MARKETS Asian markets would be an eight-day to 11-day sail from proposed LNG terminals on Canada s West Coast. Kitimat China South Korea South East Asia 24 Japan Pacific Ocean Source: Apache Corporation BC 25

15 INDUSTRY IN ACTION ECONOMIC CONTRIBUTION GOVERNMENT REVENUES $405 billion could be collected in personal, corporate and indirect taxes across Canada from western Canadian natural gas production over the next 20 years. Source: CERI 2015 $1.9 billion has been collected by the province of Nova Scotia from the natural gas projects from December 31, 1999 (project inception) to March 31, Source: Nova Scotia Department of Finance Dalhousie Dalhousie University and Jeffery Hale Hospital have switched to natural gas as a heat source. Their decision is environmentally and fiscally responsible, and positions both as leaders in environmental responsibility. Dalhousie s annual savings from the fuel switch are estimated to be more than $2 million, and will eliminate the university s sulphur emissions and significantly reduce carbon dioxide emissions. This translates to a reduction of more than 12,000 tonnes of greenhouse gas emissions or the equivalent to the removal of 2,400 vehicles from our roads. Jeffery Hale Hospital decided to replace its heavy fuel oil equipment with high energy efficiency natural gas appliances. The conversion could save the hospital up to $25,000 a year. By converting to natural gas, the hospital will also reduce its GHG emissions by more than 31 per cent. That s 600 tonnes of GHGs that will be avoided annually, which is equivalent to permanently ECONOMY 26 READ MORE INDUSTRY IN ACTION STORIES: 27

16 JOBS In addition to paying significant royalties and taxes, the natural gas industry is a major employer and creates jobs throughout North America. 650,000 JOBS The natural gas sector is expected to provide 650,000 jobs (direct, indirect and induced) across Canada by This is from 250,000 natural gas jobs in Source: CERI 2015 $950 BILLION Over the next 20 years, natural gas employees could earn $950 billion. Source: CERI ,000 U.S. JOBS By 2030, Canadian natural gas operations could provide 76,000 jobs (direct, indirect, induced) in the United States. Source: CERI 2011 ECONOMY Canada s natural gas producing industry is centered in the West, so the majority of the direct jobs are focused there. However, all provinces have natural gas-related jobs. Even those with no natural gas production have direct jobs in areas such as natural gas distribution, pipeline transportation and construction services. $13.3 BILLION In 2014, natural gas provided $13.3 billion in export revenue to producers. Source: Statistics Canada 28 29

17 AIR Natural gas is the cleanestburning hydrocarbon with a wide variety of uses in our homes, businesses, industry and communities. GHG EMISSIONS Canada, with less than one per cent of the world s population, produces two per cent of global GHG emissions as we produce energy the world needs. Natural gas, the cleanest-burning hydrocarbon, can be used in a variety of ways to help reduce Canada s GHG emissions, including in the transportation and CANADA S GHG EMISSIONS BY ECONOMIC SECTOR % Emission intensive and trade industries 12% Buildings 10% Agriculture 23% Transportation 7% Waste and others 8.5% Oil sands 12% Other Upstream ENVIRONMENT 12% Electricity 4% Downstream and transmission AIR Source: Environment Canada

18 CO 2 EMISSIONS Carbon dioxide (CO 2 ) is a GHG emitted by burning fossil fuels for electricity generation, industrial uses, transportation, and for heat in homes and buildings. The natural gas industry reports GHG emissions annually to provincial and federal regulatory agencies. FLARING Flaring is the controlled burning of natural gas as part of production and processing. The flaring of natural gas is highly regulated across Canada. In Alberta, environmental regulations cut the amount of natural gas flared by 72 per cent from 1996 to In British Columbia, regulations will eliminate routine flaring by END-USE EMISSIONS The cleanest-burning of the fossil fuels, natural gas still results in the release of CO 2 and nitrogen oxides when burned. Particulate matter and sulphur oxides are also produced but in very small amounts compared to the combustion of other fossil fuels. Source: Environment Canada Life cycle GHG emissions of natural gas produced from shale resources are only slightly higher than those of natural gas produced from more conventional sources. Source: NRCan 32 GHG REDUCTIONS ELECTRICAL GENERATION Electricity generated by natural gas has 50 per cent fewer GHG emissions than coal-generated electricity. Source: NEB 2010 CANADA S POWER GENERATION PORTFOLIO Oil 4% Other 5% Hydro 57% Natural Gas 15% Coal/Coke 9% Nuclear 10% Canada generates about 6,950 MW of electricity from coalfired plants. For every 1,000 MW of coal-fired power generation converted to natural gas power generation, annual CO 2 emissions are reduced by 5.1 million tonnes or about one per cent of Canada s total. 33 ENVIRONMENT AIR

19 INDUSTRY IN ACTION TRANSPORTATION Heavy-duty trucks and buses running on natural gas reduce GHG emissions by an estimated 15 to 30 per cent compared to diesel trucks and buses. For example, compared to a diesel truck, a Westport GX-equipped liquid natural gas truck provides a 26 per cent reduction in carbon emissions over the life of the vehicle. For a truck that travels 200,000 kilometres per year, this represents an estimated Waste Management Vancouver Collection Vehicle 70-tonne annual carbon benefit. Waste Management, Inc. LIFECYCLE GHG BENEFIT WESTPORT GX-EQUIPPED TRUCK QUEBEC 2009 Extraction Processing Fueling, transportation and storage Emissions at end use Total life cycle For Waste Management, Inc. natural gas plays an increasingly important role in moving the wheels that pick up our garbage and recyclables. In Vancouver, North America s leading waste management company plans to replace 100 diesel trucks with collection 94 g/km 25 g/km 55 g/km been switched already. They re fuelled at a company-owned filling 842 g/km station in Coquitlam, just east of Vancouver. 1,365 g/km Diesel 148 g/km 132 g/km 6 g/km vehicles running on compressed natural gas (CNG). Sixty have 1079 g/km Source: Westport Innovations; modeled by (S&T)2 Consultants Inc. using GHGenius model 3.15, May 25, 2009 * includes 3% diesel pilot fuel In Ottawa, Waste Management is using 25 brand-new natural gas-powered trucks to pick up loads. Another 18 diesel trucks that collect industrial waste in the capital will be gradually replaced with natural gas-fueled vehicles. an average of 30,280 litres per year. That s equivalent to reducing greenhouse gas emissions by 22 metric tonnes annually AIR Each CNG truck lowers Waste Management s use of diesel fuel by ENVIRONMENT 1,016 g/km Natural gas (LNG*)

20 INDUSTRY IN ACTION (Continued) WATER The CNG trucks will take Waste Management a step closer to meeting one of its sustainability goals of reducing its fleet carbon footprint by 15 per cent and increasing fuel efficiency by 15 per cent by the end of Waste Management first started looking at natural gas as an alternative to diesel in the mid-1990s. Today, almost 10 per cent of the company s vehicles are running on either CNG or liquefied natural gas (LNG). The benefits of using natural gas rather than diesel are numerous, according to Waste Management. Natural gas is more affordable than the diesel used by most heavyduty trucks. It burns cleaner, making it easier and less costly to maintain than a diesel truck, and CNG-fuelled trucks are quieter than their diesel-run counterparts. Canada s natural gas industry is committed to using water responsibly and to protecting water resources. READ MORE INDUSTRY IN ACTION STORIES: CAPP.CA 36 37

21 WATER USE Natural gas operations require water in the well drilling and completions phase that is, before the well begins producing natural gas. Natural gas processing plants also require water. 400 TO 600 m 3 78% of Canada s a natural gas production comes from conventional wells. Drilling of a conventional natural gas well uses 400 to 600 m 3 of water. Most water used for natural gas production is withdrawn from surface freshwater sources, such as lakes, rivers and dugouts. The natural gas industry is working to reduce freshwater use by using poorer quality water sources. So what are these alternative water sources? BRACKISH WATER Water extracted from slightly saline aquifers is called brackish and can be used with limited treatment. SALINE GROUNDWATER Water extracted from deep saline aquifers can be used for hydraulic fracturing with treatment in some cases. 13,000 m 3 The amount of water used for hydraulic fracturing varies considerably across northeast B.C., depending on the geology of the target formation. Shale gas and tight gas resources currently being developed in B.C. using horizontal wells with multi-stage hydraulic fracturing typically require 5,000 to 100,000 m 3 of water per well. In 2014, the average water use for hydraulic fracturing was 13,000 m 3 per well. Source: BC Oil and Gas Commission FLOWBACK Water injected during hydraulic fracturing that flows back out of a well can be reused in subsequent wells with limited treatment. PRODUCED WATER Water naturally present in the reservoir or injected into the reservoir to enhance production. It is recovered along with the natural gas and can sometimes be reused with limited treatment. MUNICIPAL WASTE WATER Municipal effluent can be reused by industry in some cases. ENVIRONMENT WATER 38 39

22 WATER USE Fresh water is an important resource. Government and industry are working together to ensure it is used in a responsible manner. Provincial governments regulate how much water can be diverted from freshwater sources The amount of surface water reported withdrawn by industry in 2014 represents just per cent of annual runoff in NEBC river basins. Arc Resources for use by both citizens and industry. Companies are required to report their Water recycling unit in the Montney shale gas play. water use data to provincial regulators. In 2014, about 8.25 million m3 of water was used by 33 companies for hydraulic fracturing of 643 wells in B.C. 98.5% WATER SOURCES FOR HYDRAULIC FRACTURING IN B.C Saline Groundwater 3% Fracturing fluid is about 98.5% water and sand. Source: CSUR 2010 Fresh Groundwater 2% Agriculture 11% Private Acquisition/ Produced Water 16% Flowback 15% Surface Water 62% Public disclosure of fracturing fluid additives is mandatory in Alberta B.C., New Brunswick and the Northwest Territories TO 40 % Between 25 and 40% of water injected during hydraulic fracturing is recovered. This water is reused or injected into deep water disposal wells. Source: CAPP ENVIRONMENT WATER Municipal Wastewater 2% Source: BC Oil and Gas Commission

23 INDUSTRY IN ACTION INDUSTRY IN ACTION (Continued) Dawson Creek Reclaimed Water Project DEBOLT WATER TREATMENT PLANT INNOVATION REDUCES FRESHWATER USE IN NATURAL GAS DEVELOPMENT Natural gas producers are continuously decreasing freshwater use in hydraulic fracturing operations by switching to alternatives where possible. In September 2012, Shell Canada and the City of Dawson Creek opened the Dawson Creek Reclaimed Water Project. The facility, with a capacity of 4,000 cubic metres per day, treats municipal waste water for use in Shell s Groundbirch natural gas venture and the City of Dawson Creek s municipal operations. Shell will pipe its share of the water from the plant to its natural gas operations about 48 kilometres west of Dawson Creek where the company operates the Groundbirch gas field. This innovation will virtually eliminate Shell s need to draw on local freshwater sources for their Groundbirch operations. By doing so, Shell not only reduces its reliance on fresh water but will also remove three million kilometres a year in truck traffic from local roads. Another example of industry innovation is the Debolt Water Treatment Plant, opened in June 2010 as a joint venture between Encana and Apache Canada in the B.C. Horn River Basin. The water treatment plant the first of its kind in North America takes sour, saline water from the Debolt formation, an aquifer about 700 metres below potable water sources. The plant pumps the water to the surface, removes the hydrogen sulfide, and then Encana and Apache use the water for hydraulic fracturing in the Horn River Basin. Using treated water from the plant means a drastic reduction in the volume of fresh water needed for fracturing operations. The materials used in the plant have to deal with a highly corrosive product caused by high temperatures, hydrogen sulfide, carbon dioxide, water and acidity. As a result, very precise water analyzers had to be developed. The plant also functions as a closed system. The flowback water management system allows for reuse of the water over time by re-injecting it in to the Debolt formation so that it can be treated. While water treatment is a great solution in these particular cases, the water realities are different in different regions. Local factors have to be considered to make such projects a reality. Both projects, however, demonstrate there are water alternatives that make economic and environmental sense given the right geological and geographic circumstances. ENVIRONMENT WATER 42 READ MORE INDUSTRY IN ACTION STORIES: CAPP.CA 43

24 LAND Canada s natural gas industry is committed to minimizing its footprint, reclaiming all land affected by operations LAND USE Advances in horizontal drilling and the use of multi-well drilling pads have greatly reduced the amount of land disturbed in drilling operations. A 20-well horizontal drilling pad disturbs about five per cent of the land of an equal number of vertical drilling pads. and maintaining biodiversity. A HORIZONTAL MULTI-WELL DRILLING PAD VS VERTICAL SINGLE-WELL DRILLING PADS Environment ENVIRONMENT can access a greater area of the reservoir from a smaller piece of land than vertical wells drilled from single-well pads (right). Source: Encana 45 Land LAND Several horizontal wells, drilled from a multi-well pad (left),

25 INDUSTRY IN ACTION DEVON ENERGY LAND RECLAMATION Reclamation planning starts at the beginning of the project and physical reclamation proceeds when natural gas resources have been depleted. To minimize impact, companies avoid sensitive habitat, use narrow seismic lines, employ low impact pipeline methods and utilize mulch to reduce surface disturbance. In the past, access roads to natural gas drilling sites in forested areas involved creating wide rights-of-ways and trucking in large amounts of sand and gravel to build permanent roads for heavy equipment. Through innovative thinking and partnerships with stakeholders, Devon chose another option mulch. FIVE YEARS FIVE YEARS It generally takes at least five years for a well site to be reclaimed from capping the well and removing equipment to cleaning up any contaminants, replacing soil and replanting native vegetation. This minimal-disturbance technique involves reducing the size of the required right-of-way by up to 50 per cent. Any timber that cannot be sold or waste wood is mulched and layered on the right-of-way. Once the access road is no longer needed, the mulch can be collected and reused for another project. Benefits include conserving plant and wildlife habitat, maintaining natural vegetation and root structure, reducing the introduction of new species, recycling of natural and waste materials, and reducing the need and cost of reclamation. By using this alternative to traditional rights-of-ways, Devon is improving its land stewardship and environmental performance, as well as how it works with stakeholders, one project at a time. ENVIRONMENT Environment LAND Land 46 READ MORE INDUSTRY IN ACTION STORIES: CAPP.CA 47

26 ABORIGINAL OPPORTUNITIES The aboriginal youth population is growing and often lives near natural gas development projects across Canada. Canada s natural gas industry continues to build positive and mutually beneficial relationships with aboriginal communities where we work. An example is the Kitimat LNG export facility planned to be built on First Nations land under a partnership with the Haisla First Nation. CONSULTATION Industry understands the value of consulting with aboriginal communities at the earliest stages of project development to identify concerns and mitigate potential impacts in a proactive manner. PRINCIPLES OF ENGAGEMENT Industry supports and seeks to incorporate the following Principles of Aboriginal Engagement into our business practices: Respectful Relationships Respecting Unique Cultures and Traditions Respect for the Envirponment Susutainable Benefits 48 MORE FACTS FIND OUT MORE ABOUT NATURAL GAS. Alberta Energy Regulator (AER) Alberta Environment BC Oil and Gas Commission Canadian Industrial Energy End-Use Data and Analysis Centre (CIEEDAC) Canadian Association of Petroleum Producers (CAPP) Canadian Energy Research Institute Canadian Gas Association Canadian Society for Unconventional Resources (CSUR) Clean Air Strategic Alliance (CASA) Environment Canada Frac Focus Chemical Disclosure Registry 49

27 MORE FACTS Go with Natural Gas: An Industry and Government Initiative Government of British Columbia Ministry of Natural Gas National Energy Board Natural Resources Canada New Brunswick Department of Natural Resources www2.gnb.ca/content/gnb/en/corporate/promo/natural_ gas_from_shale.html Nova Scotia Department of Energy Statistics Canada U.S. Energy Information Administration NOTES 50 51

28 NOTES 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 per cent of Canada s natural gas and crude oil. CAPP s associate members provide a wide range of services that support the upstream crude oil and natural gas industry. Together CAPP s members and associate members are an important part of a national industry with revenues of about $110 billion-a-year. 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. PUBLICATIONS@CAPP.CA 52 53

29 CANADASNATURALGAS.CA SEPTEMBER 2015,