Oil and Natural Gas
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Oil and natural gas play an essential role in the daily lives of Ontarians, supplying three-quarters of the province’s primary energy use. There are approximately 3.5 million residential, commercial and industrial natural gas customers in Ontario. Natural gas is used for space heating and domestic hot water within our homes and businesses, steam and process heat for industry, as well as providing approximately 15% of the electricity generated within Ontario. Oil continues to be the primary energy source for our vehicles.
Almost all of Ontario’s oil and natural gas comes from outside the province and is delivered by interprovincial pipelines, which are under federal jurisdiction and regulated by the National Energy Board.
Within our province, the OEB regulates the natural gas sector by approving distribution rates and commodity prices, as well as licensing gas marketers. The oil sector is not subject to economic regulation by Ontario.
It is expected that there will be ample future supply of natural gas from the US Great Lake states for Ontarians. The adoption of new technologies allows gas to be economically extracted from shale and coal beds. It is estimated that North America now has a 100-year supply of natural gas.
The increase in production of oil in Western Canada, and shale gas from the US has had a significant impact on the oil and natural gas market in Ontario. The government must continue to ensure that Ontario consumers are able to benefit and the interests of its residents are protected.
Ontario’s geographic location and natural gas infrastructure put it in a strategic position to take advantage of North America’s changing natural gas market. The Dawn and Tecumseh underground natural gas storage facilities play an important role in the delivery of natural gas within Ontario as well as supporting the delivery of natural gas to consumers in Québec and the northeastern United States.
The Union Gas Dawn storage hub in southwestern Ontario is the largest underground storage facility in Canada, with 155 billion cubic feet of highly deliverable storage. The Enbridge Gas Distribution Tecumseh storage facility has 100 billion cubic feet of storage and is located adjacent to Dawn. Both natural gas storage facilities are regulated by the OEB.
These facilities can store massive quantities of natural gas and provide it to customers on demand. Natural gas can be bought and stored when prices are low and then sold when demand and prices are higher. This helps suppliers minimize price volatility and ensure that sufficient gas is available to meet peak heating demand.
It is anticipated that the Dawn and Tecumseh storage facilities will increase in strategic importance as US pipeline infrastructure expansion allows for increased delivery of shale gas from the Marcellus and Utica basins to southwestern Ontario.
Natural gas is a key input for Ontario’s petrochemical industry. Focused in Sarnia and employing about 12,000 people, the industry is strategically located to take advantage of Ontario’s southwestern natural gas storage facilities.
Ontario wants to make sure communities have access to natural gas to take advantage of the changing North American market and low prices. Natural gas heating is significantly less expensive than that provided by electricity or heating oil. There is also increasing interest in the use of compressed or liquid natural gas as a transportation fuel for corporate car and truck fleets, to reduce costs and the emissions of greenhouse gases.
The quality of life and economic prosperity of Ontario depends on having secure access to competitively priced natural gas and an equally competitively priced natural gas transmission and distribution system.
For the oil market, industry developments have led to major pipeline proposals directly affecting Ontario that require thoughtful consideration. The government must ensure the province’s interests are taken into account.
One such undertaking involves the proposed TransCanada Energy East project, which would repurpose a section of its Canadian Mainline natural gas pipeline to crude oil service across Canada. Within Ontario, the Energy East project would cross northern Ontario, run through North Bay and southeast to Cornwall where a section of new pipeline running to the Québec border is proposed.
While approval of the Energy East project is a federal responsibility, Ontario’s input is crucial in making any decision. To that end, the Ministry of Energy has asked the OEB to undertake consultation with the public, including First Nation and Métis communities, local communities, and stakeholders on the proposed Energy East project. These consultations will be broad and transparent, allowing time and opportunity for stakeholders and the public to express their views through oral and written comments.
The government evaluates oil and natural gas energy pipeline projects using the following six principles:
- Pipelines must meet the highest available technical standards for public safety and environmental protection;
- Pipelines must have world-leading contingency planning and emergency response programs;
- Proponents and governments must fulfill their duty to consult obligations with Aboriginal communities;
- Local municipalities must be consulted;
- Projects should provide demonstrable economic benefits and opportunities to the people of Ontario, over both the short and long term; and
- Economic and environmental risks and responsibilities, including remediation, should be borne exclusively by the pipeline companies, who must also provide financial assurance demonstrating their capability to respond to leaks and spills.
Oil and natural gas, as well as the pipelines that deliver these products are essential to the quality of life and economic prosperity that Ontarians enjoy. Ontario will continue to work with its federal and provincial partners to ensure that oil and natural gas are delivered economically while maintaining the highest safety and the environmental standards.
- Ontario relies on oil and natural gas to support basic needs such as heat and transportation. These fuels are also essential to Ontario’s economy and quality of life.
- The government will work with gas distributors and municipalities to pursue options to expand natural gas infrastructure to service more communities in rural and northern Ontario.
- Ontario has adopted principles it will use to review large scale pipeline projects to ensure that they meet the highest environmental and safety standards as well as benefit Ontario’s economy.