Canadian Natural GasIntroduction

Canadian Natural Gas

Smart energy for today and tomorrow.Canada requires an energy mix that meets the needs of a growing economy and population, while n

helping to ensure a lower carbon future. Canadian Natural Gas is smart energy: an abundant growing domestic resource; a signifi cant n

source of revenue; an affordable energy choice; a safe and reliable fuel; the cleanest-burning hydrocarbon; and a fl exible partner in generation and in transportation.If Canada is to achieve its energy and environmental objectives, Canadian Natural Gas must be n

recognized as a core strategic asset. Natural gas is a foundation of a sustainable energy future.Canadian Natural Gas. Smart energy for today and tomorrow. n

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Natural gas is a signifi cant contributor to Canada’s well being, providing jobs and a source of revenue for provinces and the federal government.

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Natural gas provides almost one-third of all energy used in Canada. Each year, more Canadians join the estimated six million customers who enjoy the benefi ts of natural gas. And all Canadians enjoy the economic benefi ts from Canada’s production of more than 5.6 trillion cubic feet produced each year and shipped to domestic and export markets. Natural gas is a signifi cant contributor to Canada’s well being, providing jobs and a source of revenue for provinces and the federal government. Like diamonds, coal, and oil, natural gas develops naturally over millions of years from the carbon and hydrogen molecules of ancient organic

matter trapped within Canada’s remarkable and varied geological formations. Raw natural gas is located in most regions of the country, with the majority of commercial production currently taking place in western Canada. Raw gas – mostly methane gas, mixed with varying quantities of natural gas liquids (ethane, propane, butane and pentane) or other substances (nitrogen, carbon dioxide, hydrogen sulphide or water) -- can be recovered and processed into pure, highly effi cient methane and shipped to market via pipeline or in specialized containers in the form of liquefi ed natural gas (LNG).

Canada’s pipeline system is equally a vital national asset, built from more than 480,000

kilometres of pipe forming an extensive, continent-wide natural gas gathering, transmission, and distribution network. This transportation system enables the use of reliable and economical natural gas in homes, businesses, and industries across the country and provides the opportunity for Western Canadian natural gas to be delivered to central Canada. Today, almost half of Canadian homes and businesses are warmed by natural gas. The system also carries natural gas to the United States, where 14% of the natural gas used is Canadian. As the leading non-American supplier of natural gas, Canada exported over $33 billion worth of natural gas in 2008, accounting for close to 7% of all Canadian merchandise exports.

It’s Canadian

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North America’s natural gas resources have been increasing over the past decade, mainly due to technological advances in the recovery of natural gas from unconventional sources. Horizontal drilling and new reservoir stimulation technologies have meant that economical recovery of previously undeveloped resources has become a reality.

Today, North America has a century of supply it can rely on to deliver economical, versatile, cleaner burning fuel, with advances in technology continuing to unlock new supply.

Natural gas is also the cleanest-burning, commercially available combustion fuel. Technologies using natural gas are highly effi cient. This high-effi ciency in combination with the relatively low inherent CO2 content of natural gas makes it a low-greenhouse gas emission option in a wide variety of applications including space heating, industrial use, and electric power generation.

As with the development, production and use of all forms of energy, natural gas

has environmental impacts, but all components of its environmental footprint are carefully managed and regulated to minimize impacts on air, land and water. All parts of the exploration, recovery, processing, and transportation process are subject to strict environmental assessments and approvals.

Air emissions from natural gas production and processing are monitored and reported under programs such as the federal Government’s National Pollutant Release Inventory (NRPI) which requires the reporting of Criteria Air Contaminants (CAC) such as sulphur dioxide, nitrogen oxides, carbon monoxide, volatile organic components and primary particulate matter.

CACs are produced during primary production, processing, transmission, and combustion of natural gas. Through industry best practices and compliance with provincial regulations, the emissions profi le of the upstream gas industry has shown signifi cant improvement, year over year.

Industry has also developed a number of land use practices over the years to protect habitat, minimize land use, and replace physical exploration wherever possible with low- or

It’s Abundant

It’s Clean

Canadian Natural Gas Comes In Many Forms

Conventional Gas is recovered from natural gas deposits that have higher permeability, such as sandstone, allowing the natural gas to fl ow more readily to producing wells.

Unconventional Gas is found in other types of rock formations, generally having lower permeability. New reservoir stimulation technologies have made it possible to recover large quantities from various sources, including:

Shale Gas, found in extremely fi ne-grained sedimentary rocks.

Tight Gas, found in the pore space of sedimentary rocks that have very low permeability.

Coal Bed Methane (CBM), found along some coal seams.

Frontier Gas is natural gas in conventional reservoirs occurring in remote locations, including offshore and the Arctic.

Liquefi ed Natural Gas (LNG) is manufactured by cooling natural gas to -160 C, which turns the gas to a liquid that can be stored and shipped in specialized containers.

Renewable Natural Gas is produced from waste biomass sources such as landfi ll gas, wastewater treatment, and anaerobic digestion of organic matter.

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no-impact seismic programs. Further, once a well is no longer in use, the site is cleaned and restored in a regulated reclamation program that takes up to fi ve years. Industry programs such as the Alberta Orphan Well Association ensure that well locations abandoned due to business failures are also restored.

Water is another aspect of the environment that Canada’s natural gas companies pay close attention to, following provincial regulations, securing appropriate permits and applying industry best practices. The interface between water and natural gas development occurs in four main ways: surface water used during drilling; water pumped into tight and shale gas formations for reservoir stimulation; water produced from reservoirs where it is naturally occurring but not drinkable; and the penetration of ground water aquifers by wells drilled for natural gas production. In every case, drinking water is protected and water use, recovery, recycling

and disposal is regulated by government and carefully managed by industry to ensure that groundwater impacts are minimized. The Canadian natural gas producing industry has a long and successful record in applying the technologies used for natural gas production and the protection of ground water supplies.

Market-ready natural gas has many specifi c environmental benefi ts:

No ash content, and not a 3primary or major source of particulates,

Contains no sulphur dioxides 3(SO2) and has negligible sulphur content,

Produces minimal nitrogen 3oxides (NOx), Has a relatively low 3GHG profi le because of both its low inherent CO2 and its use in high-effi ciency technologies for combustion. Natural gas is also the primary feedstock for hydrogen production for use in fuel cells.

Canadian natural gas is an instant, on-demand energy source and natural gas-based

technologies can be scaled to size. From boiling a kettle at home, to running a pulp and paper mill, to generating electricity for a city, natural gas provides the right amount of energy where and when it is needed.

SPACE AND WATER HEATING More Canadian homes and business use natural gas for space and water heating than any other single fuel source. Because it is safe, reliable, affordable and effi cient, natural gas is a choice welcomed by consumers wherever it is available. Many customers also choose natural gas for their stoves and barbecues where it provides instant and controllable heat. Emerging technologies are also offering opportunities for new and increasingly effi cient ways to use natural gas, such as district heat systems and residential micro combined heat and power systems.

INDUSTRIAL USEThe same qualities of being able to quickly access and control natural gas heat that make it the choice of many Canadian home and business owners also make it an excellent fuel for industrial processes requiring heat. It is used in most of Canada’s top resource-based industries including steel, metal smelting,

It’s Versatile

Fact:More homes and businesses use natural gas for space and water heating than any other single fuel source.

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pulp and paper, fertilizer and chemical industries, as well as the oil and gas recovery, processing, and transportation industries. Combined heat and power (CHP) systems offer many industries great scope for maximizing the effi ciency of natural gas for both thermal and electricity generation applications. Natural gas is also used as feedstock for certain chemical processes. Natural gas currently provides the feedstock for most of the hydrogen that is produced in Canada and the United States. ELECTRICITY GENERATIONWith its low emissions profi le, compact land footprint, and “on-demand” availability, natural gas electricity generation plants are a welcome solution for areas where power is needed during peak or mid-peak periods. Because there are very limited options for storing electricity, natural gas generation is particularly suited to provide the unpredictable back-up power availability required for an electricity system that seeks to use signifi cant amounts of intermittent renewable generation such as wind turbines or solar power. TRANSPORTATIONThe Canadian transportation sector can also benefi t from the fl exibility and economy

of natural gas in a range of applications involving Canadian technologies. The use of natural gas vehicles results in lower lifecycle carbon emissions compared to conventional transportation fuels. Return-to-base heavy vehicles and trucks operating in regional corridors are particularly well-suited to natural gas, since refueling infrastructure investments can be minimized. Urban transit buses, delivery trucks, and work trucks operated by fl eets are good fi ts for natural gas. Renewable natural gas produced from waste sources can further enhance the carbon benefi ts and no vehicle modifi cations are required.

The price Canadians pay for natural gas is driven transparently by the open-market forces of supply and demand. The wholesale price of Canadian Natural Gas is set by this market balance, and infl uenced by weather, economic growth rates, production, and storage levels.

Due to these factors, and particularly due to weather events, natural gas prices do fl uctuate. These fl uctuations are at least partially refl ected in consumer prices but are mitigated in part by regulatory

and industry pricing practices. Overall, gas prices will tend to remain affordable thanks to a variety of factors in the market, including an increasingly abundant supply, ample storage capacity, and a robust natural gas commodity market that can support buyers’ and sellers’ hedging strategies.

Canadian natural gas consumers can rely on the supply and delivery of affordable natural gas. Canada has a very large and geographically diverse resource base. This is continuously accessed as infrastructure expands, discoveries are made and as technologies emerge. Canada’s natural gas transportation and distribution system, a network of over 480,000 kilometres of pipelines, is designed with multiple redundancies and safety features to ensure the reliability of the system.

The transportation system is backstopped in Canada by signifi cant natural gas storage facilities, typically utilizing underground reservoirs. In North America, these storage sites can hold up to 14% of the entire annual North American natural gas consumption. Storage facilities ensure the availability for peak supply

It’s Affordable

It’s Reliable

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requirements near high-demand centres, along with helping to level seasonal prices for gas, which are set by the market according to supply and demand. Canada’s access to imported and domestic LNG also helps balance supply and demand.

Canada’s natural gas industry meets the highest standards, working with a world-class regulatory system for exploration, production, transportation, distribution and use. Protecting workers and the public is the top priority of the Canadian natural gas industry.

Natural gas itself is non-toxic and will easily disperse in open spaces. In a closed space natural gas will displace breathable air, so precautions must be taken to ensure safe handling and use. For this reason, natural gas distributors add a pungent odorant to the gas to give it a distinctive smell, alerting anyone to the presence of even a small amount

of natural gas. This allows emergency crews, who are available 24 hours a day, every day of the year, to immediately address any problems.

Whenever a well is opened, great care is taken to protect workers through monitoring and testing. One concern is that the unprocessed, raw natural gas may contain additional harmful or lethal substances such as hydrogen sulfi de or carbon monoxide. This type of natural gas is commonly referred to as sour gas. Special precautions are taken during production at a sour gas well, and the raw gas is processed in gas plants which are operated according to strict regulations. Only once all contaminants have been removed from the natural gas is it transmitted over Canada’s retail pipeline system. As an extra safeguard, processing plants and transmission pipelines contain automated monitoring equipment to ensure that no contaminants are present in any gas stream destined for end-use distribution.

All natural gas pipelines and facilities are carefully designed and built. These are monitored and regularly inspected for any signs of damage or aging. Canadian companies invest heavily in the operation,

maintenance and improvement of the natural gas infrastructure. In 2008, local distribution companies alone spent just over $3 billion on transmission and distribution systems, including $1.8 billion on operations and maintenance, $291.6 million on improvements, and almost $908 million on new capital projects.

Canada is the world’s third-largest producer of gas. With new access to an abundant supply today and resources accessible for tomorrow, generations of Canadians will continue to be able to benefi t in so many ways from this versatile, clean, affordable energy choice.

By supporting Canadian natural gas as a natural foundation in a progressively cleaner energy mix, decision makers can support the needs of a growing economy and population and meet environmental goals. Canada’s natural gas industry has smart energy ideas for you.

For more information:

info@canadiannaturalgas.cawww.canadiannaturalgas.ca

Canadian Natural Gas is Smart Energy

It’s Safe

Fact:Canada is the world’s third-largest producer of gas.

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Please recycle.

© 2011 Canadian Natural Gas.

Canadian Natural Gas is a made-in-Canada advocacy project sponsored by the following associations:

Canadian Energy Pipeline AssociationAssociation canadienne de pipelines d’énergie