Natural gas in Canada

Natural gas is a naturally occurring hydrocarbon that primarily consists of methane but also contains smaller amounts of ethane, propane, butane and pentanes. It is brought to the surface using wells and then transported to processing plants where it is treated to become pipeline ready natural gas.

Natural gas has played a significant part of Canada’s energy mix for more than a century.  Today, natural gas is delivered to almost 6.8 million homes, businesses and institutions, providing 20 million Canadians coast to coast to coast with a clean, affordable, safe, and reliable energy solution.

Canada is currently the fifth largest producers of natural gas, and has an estimated reserve that can meet 200 years of current energy demand. The availability of natural gas combined with Canada’s extensive natural gas transportation and distribution network and storage facilities owned by utilities across Canada represent a strong framework upon which a natural gas transportation re-fuelling system could be built.

An Affordable Fuel for Vehicles

Natural gas is an affordable transportation fuel offering a price advantage compared to of traditional transportation fuels. The main savings results from natural gas being a lower-cost commodity compared to crude oil. However, another part of the savings comes from natural gas being exempt from federal and provincial fuel taxes. The tax exemptions typically account for less than half of the savings on a cost-per-diesel-litre equivalent basis.

Looking at liquefied natural gas (LNG) and compressed natural gas (CNG) prices in British Columbia for example (a market where the industry has been making important progress in advancing the natural gas transportation industry) the “pump price” of natural gas compared to competing fuel options in diesel litre-equivalent (DLE) ranges from approximately 10 to 55 cents per litre less. When looking at the price advantage of natural gas versus diesel for transportation, end users need to compare natural gas to diesel in DLE as it is the amount of natural gas needed to have the same energy content as a litre of diesel. The pump price includes: the commodity cost of natural gas; the conversion costs of compressing (for CNG) or liquefying (for LNG) the natural gas; and the infrastructure costs of the refuelling station.

National Energy Board Commodity Price outlook