Our Petroleum Challenge Book PDF

Our Petroleum
Challenge
Canadian Resources.
Global Markets.
Eighth Edition
Calgary is home to the Canadian headquarters of some of the world's
largest energy producers, including Suncor Energy, Imperial Oil and
Husky Energy. In this image of Calgary’s downtown core, the energy
resources managed by companies like those that dominate the city's
skyline are on display as a dynamic interplay of motion and light:
vehicles powered by gasoline and streetlights powered by electricity.
Photo courtesy Brian Harder Photography.
Inside the Industry
The oil and gas industry discovers and extracts hydrocarbon resources, then delivers
these resources to consumers in a usable form. Collectively, the processes that move
hydrocarbon resources from the field to consumers are the petroleum industry.
1. Exploration 5. Tra
Finding the resource Mov
page 26 pag
Drilling 2.
Accessing the resource
page 34
3. Production 7. Ma
Extracting the resource Selli
page 46 pag
Processing 4.
Preparing the resource
page 64
s
ve
5. Transportation
Moving the resource
page 70
g 2. Refining 6.
e Transforming the resource
4 page 82
7. Marketing
Selling the resource
page 88
Copyright 2012 Canadian Centre for Energy Information

1
Connections
Canada’s petroleum industry is about connections. In literal terms, its

chain of producers, refiners and pipelines connects Canadian consumers
to the hydrocarbon resources that are buried throughout Canada’s
onshore and offshore producing regions. In turn, Canada’s crude oil and
natural gas are connected to a global marketplace for unprocessed
hydrocarbons and refined petrochemical products, with the United States
serving as our primary trading partner.
Our resources are also connected to a history that reaches millions of
years into the past, to the transformation of decaying organic material
into crude oil and natural gas. Now, as we extract these ancient resources,
we find ourselves connected to our future, to a society that depends on
both hydrocarbon resources and the environment that must continue
to sustain us. It is this last connection, to a future of sustainable
development that addresses both our prosperity and our survival, that
compels Canada’s oil and gas industry to use increasingly advanced
technology at every stage of its operations.
This book illustrates these numerous connections: between Canadian
markets and the world’s, between the industry’s initial searches for
hydrocarbon resources and its final sales to consumers and between
our resources’ past and their sustainable future. As a publication of the
Canadian Centre for Energy Information, a non-profit organization devoted
to informing the public about energy issues, Our Petroleum Challenge is
designed to be a comprehensible overview of all the connections that
form Canada’s petroleum industry.
OUR PETROLEUM CHALLENGE EIGHTH EDITION

2
0102
Petroleum in our lives
Chapter one
Understanding Crude Oil
inside the industry
Chapter one
Exploration 26
Chapter three
Production 46
Truck and rail transport
Natural gas pipelines
72
72
and Natural Gas 6 Gathering information 27 Producing crude oil Storage 76
Introduction 7 Gaining access 28 and natural gas 47
Crude oil and
Using crude oil and Conducting Conventional crude oil 47 natural gas sales 76
natural gas 7 seismic surveys 33 Unconventional oil 50 Transportation
Hydrocarbon resources 8 Exploration Oil sands 50 and the environment 78
Chapter two and the environment 33 Water quality 56 Chapter six
Oil and Gas in Canada 14 Chapter two Conventional Refining 82
Canada’s reserves 15 Drilling 34 natural gas 58 Oil refineries 83
Canada’s global role 20 Preparing to drill 35 Unconventional Products from refining 83
Economic benefits 20 Drilling rigs 35 natural gas 58
Petrochemical plants 85
Employment 22 Well completion 40 Shale gas 58
Canada’s refineries 85
Training and education 22 Well control 40 Offshore petroleum 61
Canada’s
Footnotes 24 Evaluating the resource 42 Chapter Four petrochemical industry 85
Abandonment Processing 64 Refining and the
and reclamation 42 Processing crude oil environment 86
Offshore and and natural gas 65 Chapter seven
frontier drilling 42 Crude oil 65 Marketing 88
Drilling and the Natural gas 67 Customers 89
environment 44 Processing and the Petroleum products 89
environment 69
Natural gas 91
Chapter Five Marketing and the
Transportation 70 environment 91
Types of pipelines 71 Footnotes 92
Oil pipelines 71
OUR PETROlEUM CHAllENGE EIGHTH EDITION

3
03
SuStainable Development
Chapter one
Sustainability 94
Chapter three
Regulation 106
04 aDDitional inFormation
Measurement
Crude oil, natural
120
Introduction 95 Upstream – exploration, gas liquids and refined

drilling and production 107 oil products 120
About sustainability 95
Midstream – processing Natural gas 120
Key forces 96
and transportation 107 Energy 121
Sustainability’s history 97
Downstream – refining, Acknowledgements 122
Chapter two and marketing 107 Selected Bibliography 123
Sustainability in Action 100 Industry standards 107 Graphs, Maps,
Improving governance 101 Tables and Illustrations 124
Chapter Four
Joining socially Sustainability Issues 108 Other Information Sources 127
responsible investor
indexes 101 Air quality 109 Selected Industry Timeline 131
Biodiversity 109 Technology Milestones 131
Investing in research
and development 101 Climate change 110 Glossary 138
Meeting and Land management 113 Index 144
exceeding compliance 102 Water management 113
Developing Spill and
cleaner products 102 leak prevention 114
Improving efficiency 102 Cumulative effects 116
Engaging communities 103 Worker safety 116
Promoting Aboriginal relations 116
energy literacy 103
A sustainable future 117
Contributing to policy 103
Footnotes 118 Pictured are the large pumps that move tailings from
Reporting performance 105 the extraction process to the tailings pond. Industry
is developing technologies to more efficiently extract
bitumen and reduce oil sands development’s water
use, environmental impacts and emissions.
Photo courtesy Brian Harder Photography.
TABLE OF CONTENTS
4
Our Petroleum Challenge

Canadian Resources. Global Markets.
Eighth Edition. First Printing.
Editor: J.J. Kubik
The Canadian Centre for Energy Information
Writers: Robert D. Bott, David M. Carson, David Coglon
All about energy. All in one place.
As concerns about the environment and economy increase, so too
Canadian Centre for Energy Information does the need for balanced and credible information about energy in
T: 403-263-7722 Canada. The Canadian Centre for Energy Information was created in
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We believe an informed and educated public better understands and
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supports energy policy and regulatory choices, makes better business
decisions related to energy, considers careers in energy, invests in
Canadian Cataloguing in Publications Data energy and uses energy wisely.
Main entry under title: Supported by research and vetted by reputable, independent
Our Petroleum Challenge sources, we are Canada’s key resource for credible, up-to-date
First to 3rd editions have title: energy information.
Our Petroleum Challenge
4th edition has title: About this publication
Our Petroleum Challenge in the 1990s
This textbook provides a general introduction to Canada’s crude
5th edition has title: oil and natural gas industry. Section 1 presents an overview of the
Our Petroleum Challenge in the 21st Century nation’s crude oil and natural gas resources and the role they play in
6th edition has title: Canada and around the world. Section 2 describes the steps involved
Our Petroleum Challenge: Exploring Canada’s oil and gas industry in finding, producing, processing, transporting, refining and selling
(includes bibliographic references and index) petroleum products and natural gas to energy consumers. Section 3
discusses sustainable development and the approaches the oil and gas
7th edition has title: industry take to ensure that Canada’s energy resources are developed
Our Petroleum Challenge in a responsible and sustainable manner. Section 4 provides further
Sustainability into the 21st Century information about the oil and gas industry’s history, technology
(includes bibliographic references and index) milestones, terminology, measurements and additional resources.
1. Petroleum industry and trade – Canada This symbol i is used throughout the publication to denote key
2. Gas industry – Canada. I. Bott, Robert, 1945-II statistical information and key examples of the crude oil and natural
Canadian Centre for Energy Information gas industry in action.
Readers may use the contents of this book for personal study or
review only. Educators and students are permitted to reproduce
ISBN 978-1-894348-30-0
portions of this book, unaltered, with acknowledgement to the
Canadian Centre for Energy Information.
Our Petroleum Challenge is produced by the Canadian Centre for Copyright to all photographs and illustrations belongs to the
Energy Information. Although the Centre for Energy endeavours to organizations and individuals noted as the source for each image.
provide accurate and current information, it does not: For other usage information, please contact the Canadian Centre
• make any warranty or representation, expressed or implied, with for Energy Information.
respect to the accuracy or completeness of the information in this
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• assume any responsibility or liability to any party with respect to
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• endorse any organization, product, service or process which may
be described or implied in this publication

5
A Nexen safety contractor and a safety advisor inspect pipes on the pipe rack at a well pad site in the Horn River Basin. Photo courtesy Nexen Inc.
Oil and natural gas are indispensable elements of Canadians’ lives

– they fuel our vehicles, heat our homes and provide a range of
01In this section, you will learn
about the characteristics of
hydrocarbons and how these
products that we use every day. Understanding how hydrocarbons resources are being used
across Canada.
are used and why they are important to all Canadians is essential
for informed decisions about our energy.
Petroleum
in Our Lives
SECTION 1 PETROLEUM IN OUR LIVES
6
A Baker Hughes employee measures the injection rate of a specialty chemical used to remove oil and solids from water, in preparation for
steam generation. A graduated sight glass is used to measure the chemical at Nexen’s Long Lake SAGD facility. Photo courtesy Brian Harder Photography.
Chapter One Understanding Crude Oil and Natural Gas
Petroleum is essential to our quality of life. Canadians rely on

petroleum to provide gasoline and diesel for cars, trucks, buses, trains
and boats; jet fuel for airplanes; and natural gas to heat homes and
businesses. Countless other products around us are also made from
crude oil and natural gas, such as plastics, synthetic rubber, lubricants,
paints, solvents, asphalt, insulation and fertilizers.

7
In this chapter, you’ll learn about the USING CRUDE OIL AND NATURAL GAS
petroleum resources that make the oil Crude oil and natural gas provide more than 70 per cent of the
and natural gas industry possible, as well energy Canadians consume. While these commodities are essential
to modern life, it’s easy to take them for granted.6 Here are just a few
as how these resources were formed. everyday uses and products:
• transportation – gasoline, diesel fuel and natural gas for vehicles,
aviation fuel, lubricants, antifreeze, synthetic rubber tires, plastic
components, fibres and resins in composite materials, paint,
shatterproof glass, asphalt pavement for roads and runways
INTRODUCTION
• heating – natural gas or fuel oil for furnaces, natural gas for
The oil and gas industry that makes our way of life possible is vast
water heaters
and complex – a long chain of enterprises and facilities that find,
produce and deliver energy to our homes and businesses. About • electricity – generated from natural gas or, in some areas,
190,000 Canadians are directly employed by the petroleum industry diesel fuel
and another 360,000 are indirectly employed.1, 2 All Canadians are • pharmaceuticals and cosmetics – lipstick, nail polish and many
connected in some way to this industry. common pain relievers
Modern economies around the world depend on petroleum, and • building materials – insulation, polyethylene vapour barriers,
Canada is one of the few countries that produces more oil and natural glues in plywood and panel board, insulation on wiring, shingles
gas than its citizens consume. This is due to our country’s abundant and sealants, plastic pipes
hydrocarbon resources and our ability to find, extract, process and
transport this buried wealth. • plastics – components in computers, cell phones, electronics and
other consumer products
International sales of crude oil and natural gas make a major
contribution to the Canadian economy, accounting for 22.7 per cent The industry that makes these goods and services possible includes
of the country’s total exports in 2011.3 Canada’s largest customer, many kinds of businesses, from those exploring for petroleum to
the United States, imports more than half of its crude oil and about those that sell natural gas and refined oil products to the consumer.
one-eighth of its natural gas supply.4, 5 However, because of increasing The industry also requires other industries that produce the goods
shale gas production, the United States is expected to become a net and services – such as steel, motor vehicles, engineering and
exporter of natural gas liquids. As a result, while energy exports will computer systems – that are used in its operations.
continue to contribute substantially to Canada’s economy, our natural
Employment and spending in the oil and gas industry are spread
gas production will require a more diversified market.
throughout the economy and across the country. The direct and
But along with its economic importance, producing and using indirect income generated from crude oil and natural gas production
crude oil and natural gas comes with costs. As existing sources are contributes significantly to the national economy and to the
exhausted, companies must search for new resources. They must economies of the producing provinces and territories. In addition, the
also manage the potential adverse effects of their activities on industry generates royalties and pays taxes and land rental fees that
communities and the surrounding environment. contribute to government revenues at all levels.
This management requires a commitment to responsible But what are these resources that provide such a significant
development, which is essential in maintaining the public’s trust. contribution to Canadians’ economy and to their way of life?
Industry leaders must manage the environmental and social impacts
of oil and gas development while ensuring Canadians continue to
enjoy its economic benefits. This requires a commitment to the
safety of employees and surrounding communities, the integrity
of the ecosystems that neighbour these operations and consistent
engagement with the public and regulators.
While the industry produces billions of dollars of economic activity
and employs thousands of Canadians, most of us experience the oil
and natural gas industry through the products and services we use
every day.
KEY DEFINITION PETROLEUM

Petroleum is the general term for solid, liquid or gaseous hydrocarbons.
KEY DEFINITION HYDROCARBONS

Hydrocarbons are a class of organic compounds consisting only of
carbon and hydrogen that are the basis for crude oil, natural gas and coal.
Hundreds of products are made by separating and sorting hydrocarbon
molecules, then re-combining or further processing them.

8
Shale oil is conventional crude oil found in an unconventional

HYDROCARBON RESOURCES reservoir. Because the shale reservoir has such low permeability,
Hydrocarbons, a class of organic compounds consisting of carbon more sophisticated production methods, such as horizontal drilling
and hydrogen, are the basis of oil and natural gas. These and multi-stage hydraulic fracturing, must be used to unlock the oil
hydrocarbon resources are, in turn, defined as either conventional from the reservoir and bring it to the surface.
or unconventional based on qualities of the resource itself and the
reservoir that contains it.
Unconventional oil
Crude oil that does not flow, or cannot be pumped without being
Crude oil heated or diluted, is called unconventional crude oil. Unconventional
Crude oil is a black, brownish or amber liquid that is a complex mix oil deposits include bitumen and extra heavy oil that is thick, viscous
of hydrocarbons. It consists of carbon (83 to 87 per cent), hydrogen and more difficult to produce than conventional oil.
(10 to 14 per cent), sulphur (up to six per cent), nitrogen (up to two Canada’s oil sands are an example of unconventional oil. The oil
per cent), oxygen (up to 1.5 per cent) and metals (less than 1,000 sands consist of bitumen, which is naturally found mixed with sand,
parts per million).7 clay and water. Bitumen occurs at varying depths, from near the
Crude oil is classified as light, medium, heavy or extra heavy. The surface to hundreds of metres underground.
‘weight’ of different crude oils can be measured on either the metric Bitumen mined from the oil sands deposits in the Athabasca area
density scale (kilograms per cubic metre) or the American Petroleum of Alberta has an API gravity of around 8°. This oil is upgraded to
Institute gravity scale (°API). The higher the API gravity number, the an API gravity of 31° or higher through a complex process that
lighter and less viscous the oil is. Light crude, with an API of 40°, involves adding hydrogen or removing carbon from the hydrocarbon
floats on water while the oil found in Canada’s oil sands, with an API molecules.
CANADIAN This produces
CRUDE OILaRESERVES
light, sweet ‘synthetic’
BY TYPE crude. Synthetic
of less than 10°, sinks in water. crude oil sells
(percentage at a premium price compared to most other crude oils.
of total)
Source: Canadian Association of Petroleum Producers
Crude oil is also characterized by its density, making it either
conventional or unconventional.
Using crude oil
Oil meets about 42 per cent of Canada’s total energy needs through
Conventional oil a variety of products
BCD
created through refining.8 On average, refining
Conventional crude oil is oil that flows naturally or can be pumped crude oil yields the following range of products:
to the surface without being heated or diluted. This includes light, • gasoline to fuel most cars, some trucks, piston-driven aircraft and
medium and heavy forms of oil. other machines like emergency generators
• Light crude oil has an API gravity higher than 31.1° and flows • diesel fuel for some cars, most trucks and buses, railway
easily through wells and pipelines. When light oil is refined, it locomotives, boats and ships and larger electric generators
produces a large quantity of transportation fuels such as gasoline,
• other products including asphalt for road paving and roofing,
diesel and jet fuel. Light oil commands the highest price per barrel. A as motor oil and grease, waxes for candles and
lubricants such
• Medium oil has an API gravity between 22.3° and 31.1°. Medium polishes and the raw materials for petrochemicals such as
crudes are priced lower than light crudes because they yield fewer polystyrene and synthetic rubber %
high-end products, such as gasoline and diesel, and are more A Oil Sands 97.40
• heavy fuel oil for electric power generation, large ships and some
expensive to refine. B Conventional Light 1.81
industrial processes
C Conventional Heavy 0.56
• Heavy oil has an API gravity below 22.3° and contains a smaller
• light fuel oil for
D Pentanes heating homes and buildings, many industrial0.23
Plus
proportion of natural gasoline and diesel fuel components.
processes
Total and the fuel for some ships 100.00
Therefore, heavy oil requires more extensive refining to make
transportation fuels. • aviation jet fuel for turbine-powered airplanes
Conventional deposits are found between layers of saltwater and raw Heavy oil and bitumen are used to make the same petroleum products
natural gas. The layer of raw natural gas puts pressure on the crude as conventional forms of crude oil, but require more processing.
oil reservoir, causing it to flow out when a well is initially drilled.
CANADIAN CRUDE OIL RESERVES BY TYPE

(percentage of total)
KEY DEFINITION CONVENTIONAL AND UNCONVENTIONAL
Conventional crude oil has an API gravity above 10° and can flow or be A
pumped to the surface without being heated or diluted. Unconventional %
oil is degraded oil, such as bitumen, that cannot be pumped to the surface A Oil Sands 97.4
without heating or dilution and that requires upgrading prior to refining.
B Conventional Light 1.8
Conventional natural gas is naturally occurring gaseous petroleum, C Conventional Heavy 0.6
consisting primarily of methane (CH4) found in a reservoir that does not
D Pentanes Plus 0.2
need extensive treatment for the gas to flow to surface. Unconventional BCD
natural gas is found in unconventional reservoirs such as shale or tight sand. Total 100.0

9
Inclement weather and demanding, round-the-clock schedules are daily realities for the companies that produce Canada’s crude oil and
natural gas. Photo courtesy Brian Harder Photography.

10
REFINERY PRODUCTS FROM CRUDE OIL (percentage of total)

Source: Statistics Canada A
%
E F
A Gasoline 35.1 Hundreds of products can be made from crude oil. The product range
D
A B Diesel Fuel 23.9 varies according to the type of crude oil and refinery design.
On average, refining light crude oil yields gasoline and diesel fuel,
C Other Products 23.2 fuel oil, jet fuel and other products such as asphalt, motor oil and
D Light Fuel Oil 7.8 synthetic rubber.
C
E Heavy Fuel Oil 6.3 The refining process also consumes crude oil or other fuels, such as
F Aviation Fuel 3.7 natural gas.
B Total 100.0
CONVENTIONAL AND UNCONVENTIONAL CRUDE OIL

Source: AJM Petroleum Consultants
Conventional Oil
Oil that flows if permeability Conventional oil Conventional oil

Oil that flows with
is enhanced – for example, in unconventional in conventional minimal intervention
shale oil and tight oil reservoir rocks reservoir rocks
REFINERY PRODUCTS FROM CRUDE OIL (percentage of total)

Unconventional
Source: Reservoir
Statistics Canada A Rock Conventional Reservoir Rock
%
E F
A Gasoline 35.1 Hundreds of products canDegraded
be made from crude
oil that oil.
requires
D Unconventional oil Unconventional
The rangeoil
A
Immature or degraded B Diesel in
Fuel 23.9 in conventional varies according to the type to
intervention of produce
crude oiland
oil in low-quality rock unconventional and refinery design. On average,
upgraderefining light crude
– for example,
C Other Products
reservoir rocks 23.2 reservoir rocksgasoline and diesel
oil yields fuel, fuel
Canada's oil, jet fuel and
oil sands
D Light Fuel Oil 7.8 other products such as asphalt, motor oil and
C synthetic rubber.
E Heavy Fuel Oil 6.3
The refining process also consumes crude oil or other
F Aviation Fuel 3.7 fuels, such as natural gas.
B Unconventional Oil
Total 100.0
THE DIFFERENCE BETWEEN HEAVY AND LIGHT OIL
45.4º 800
API Gravity
40.0º 825 Degrees on the American Petroleum
Light
Institute (API) gravity scale
35.0º 850 Light REFINERY PRODUCTS FROM CRUDE OIL
F (percentage of total) Source:
Hundreds of products can be made from 31.1º 870 E Specific
StatisticsGravity
Canada
crude oil. The range varies according to Density in kilograms per cubic metre
the type of crude oil and refinery design. 30.2º D
875 %
A
On average, refining
Mediumlight crude oil yields 25.7º 900 900 (25.7º API) A Gasoline 35.1
The ‘weight’ of different crude oils can be
gasoline and diesel fuel, fuel oil,
jet fuel and other products such as 22.3º 920 B Diesel Fuel measured on either the metric density 23.9
scale (kilograms per cubic metre) or the
asphalt, motor oil and synthetic rubber. C Other Products
American Petroleum Institute gravity 23.2
21.5º C925
The refining process also consumes crude D Light Fuel Oilscale (°API). Government authorities in 7.8
oil or other fuels, such as natural gas. 17.4º 950 Canada only distinguish between ‘heavy’
E Heavy Fuel Oil 6.3
Heavy and ‘light’ crude oil types, while various
13.6º 975 F Aviation Fuelother definitions are used by the industry.3.7
B Heavy
Total The illustration shows definitions 100.0
10.0º 1000
suggested by the Petroleum Society
6.5º 1025 of the Canadian Institute of Mining
and Metallurgy.
Extra Heavy 3.3º 1050
(crude bitumen) Copyright 2012 Canadian Centre for Energy Information
0.1º 1075
Industry Government

11
Natural gas Unconventional natural gas

Natural gas is naturally occurring gaseous petroleum. Natural gas Unconventional natural gas is defined by the characteristics of
is mostly methane (CH4), although it usually occurs in nature as a the reservoirs that contain it, such as much lower porosity, lower
mixture with other hydrocarbons such as ethane (C2H6), propane permeability and different host rocks such as coal or shale. While
(C3H8), butane (C4H10) and pentane (C5H12), and with other substances unconventional reservoirs may contain large quantities of natural
such as carbon dioxide (CO2), nitrogen (N2), sulphur compounds or gas, it is usually more difficult to produce this gas than it would be
helium (He). from conventional reservoir rocks. New technologies are continually
being developed to allow more accurate estimations of the amount
Methane remains in a gaseous state at relatively low pressures,
of gas in these unconventional reservoirs and to stimulate the rock
while ethane, propane, butane and pentane condense into liquids at
formations to produce the gas.
different but relatively low temperatures and pressures.
• Shale gas is natural gas that must be produced using horizontal
Natural gas can also be classified by the reservoirs in which it is
drilling and multi-stage hydraulic fracturing. It is produced from
found. The Canadian Association of Petroleum Producers and the
reservoirs predominantly composed of shale with lesser amounts
Canadian Society for Unconventional Resources both refer to natural
of other fine-grained rocks rather than from more conventional
gas in unconventional reservoirs, such as shale gas, tight gas and
sandstone or limestone reservoirs. Most of the shale gas in Canada
coalbed methane, as unconventional gas.
is found in the Western Canada Sedimentary Basin, but other
Conventional natural gas areas include southern Ontario, southern Quebec, New Brunswick
and Nova Scotia. Canada’s total marketable shale gas resource
Natural gas that can be produced from more accessible geological
potential is estimated at between 128 and 343 trillion cubic feet.9
formations is referred to as conventional natural gas. Conventional
reservoirs are more porous and permeable; conventional production • Coalbed methane (CBM), also known as natural gas from coal, is
does not require advanced technologies to extract the gas from the natural gas formed and trapped in coal beds. All current production
surrounding formation. Once the conventional reservoir is tapped by is from reservoirs in the Western Canada Sedimentary Basin, but
a well, gas can flow to the surface, with its release regulated by an potential exists wherever coal is found in large quantities. Canada’s
assembly of valves and fittings called a ‘Christmas tree.’ total marketable coalbed methane potential is estimated at 44.8
trillion cubic feet.10
Most of Canada’s conventional natural gas deposits lie in the Western
Canada Sedimentary Basin. However, production is increasingly • Biogas is natural gas formed from the anaerobic decomposition
moving toward unconventional sources of natural gas, which are also of organic material such as plant and animal matter, manure and
found primarily in the Western Canada Sedimentary Basin, as well as sewage. Because biogas can be produced as landfill gas or digester
in the St. Lawrence Lowlands and the Maritime provinces. gas, which uses a digester unit to break down organic material, it is
considered a renewable source of methane.
• Tight gas is natural gas found in sandstone or carbonate reservoirs
with very low permeability. The gas is produced using horizontal
RAW NATURAL GAS COMPONENTS drilling and multi-stage hydraulic fracturing.
• Gas hydrates are crystals of water and methane molecules found
in vast quantities on ocean floors and in the Arctic. The U.S.
Geological Survey conservatively estimates worldwide amounts of
Energy Components
(order of abundance) carbon bound in gas hydrates to be twice the amount of carbon
Methane (CH4) found in all known fossil fuels on Earth. However, no economical
Ethane (C2H6) method has yet been found to produce natural gas from hydrates.
Propane (C3H8)
Butane (C4H10) Using natural gas
Condensates (C5H12 – C10H22)
Natural gas is abundant, relatively easy to transport through pipelines
and burns more cleanly than other hydrocarbons. Because of these
properties, natural gas has become an important fuel for residential,
Non-Energy Components
commercial and industrial applications.
(not in order of abundance)
Nitrogen (N2)
Carbon dioxide (CO2)
Hydrogen sulphide (H2S)
Helium (He)
Copyright 2012 Canadian Centre for Energy Information KEY DEFINITION POROSITY
The capacity of a rock to hold natural gas, oil or water, or the open or void
spaces within a rock, usually expressed as a percentage of the rock volume.
Natural gas is the leading source of heat for homes and businesses
in Canada. The primary energy component of raw natural gas is
methane. Natural gas liquids (ethane, propane, butane and KEY DEFINITION PERMEABILITY
condensates) produced with natural gas are the primary feedstocks
for petrochemicals. Non-energy components are removed before The capacity of reservoir rock to transmit fluids, or how well the pore
natural gas is transported and marketed. spaces of a reservoir are connected to allow fluid flow to the well.

12
In Canada, natural gas is the leading source of heating fuel for homes How hydrocarbon resources were formed
and businesses, but generating electricity from natural gas is one of Hydrocarbons like oil and natural gas were derived from simple plant and
its fastest-growing uses. Natural gas is also vital in making cement, animal matter and are found in the pore spaces between grains of rock.
processing forest products and manufacturing steel.
The Earth is about four and a half billion years old. Early in its
As well, natural gas is a key raw material in the petrochemical formation it was at least partially molten, but over time it cooled and
and fertilizer industries and provides energy and hydrogen for the formed a solid crust. Volcanic eruptions and comets brought water to
production of synthetic crude oil from oil sands bitumen. the Earth’s surface and sediments eroded from the original layers.
Natural gas liquids produced along with natural gas – ethane, propane, The earliest of the sediments that produced almost all crude oil
butane and condensates (pentanes and heavier hydrocarbons) – are and natural gas were deposited about 560 million years ago. To
used as fuels for heating and motor vehicles, and are a primary source of understand the time scale involved, imagine that one second equals
feedstocks for petrochemicals and oil refining. one year. If you started counting one number per second, you would
But whether the crude oil or natural gas is extracted from a conventional reach one million in 11.5 days, one billion in 31.5 years and
or unconventional reservoir, their origins remain largely the same. 4.5 billion in 141.7 years. On this accelerated time scale, petroleum
resources have been accumulating for more than 16 years and the
Canadian petroleum industry, now more than 150 years old, has been
around for 2.5 minutes.
COMMON OIL AND GAS TRAPS
Thrust Fault Normal Fault Stratigraphic Pinch-Out Reef

The original limestone layer is folded Faults drop one side down and push A porous limestone reservoir either Coral reefs grew in the seas that
and then thrust-faulted over itself. An the other side up to place the reservoir loses its porosity and becomes once covered much of Western
overlying seal of impermeable rock rock against impermeable sealing impermeable limestone or the Canada. Often overlying porous rock
completes the trap. Examples include rocks, forming a structural fault trap. porous sandstone reservoir thins and layers are ‘draped’ or folded over
Alberta’s Turner Valley oil and gas An example is the Dunvegan gas field pinches out. Examples include many the reefs and form separate traps.
field and Jumping Pound gas field. in northwestern Alberta. oil and gas fields in Saskatchewan. An example is the Leduc oil and
gas field in Alberta.
Traps are reservoir rock formations that halt the natural upward
migration of hydrocarbons from the source rock to the surface. In a
typical trap, gas accumulates on top of the reservoir as a ‘gas cap’ over
the ‘oil leg’ which in turn overlies the water-saturated zone in the
reservoir. This occurs because natural gas is lighter than oil, which is
lighter than water.
However, all three fluids are often intermingled in parts of the reservoir.
Porosity is the ability of rock to hold oil and gas like water in a sponge.
Permeability indicates how easily fluids can flow through the rock.
A trap requires three elements: a source for the oil and gas, typically
black organic-rich shales; a porous reservoir rock, such as sandstone,
limestone or dolomite, to accumulate the oil and gas; and an overlying
impermeable rock to prevent the oil and gas from escaping.
Rock Types Reservoir Rocks
Anticlines Surface overburden Gas-bearing sandstone Salt Dome
The oil and gas migrate to the Limestone Oil-bearing sandstone Under the weight of overlying rock,
crests of the anticlines within the layers of salt will push their way
reservoir rock, and are trapped if Sandstone Gas-bearing limestone toward the surface in salt domes.
overlain by an impermeable layer. Shale Oil-bearing sandstone Oil and gas are trapped in folds along
Examples include the Bubbles and Salt faults above the dome and within
Jedney gas fields in northeastern porous sandstones. Examples are
British Columbia. found off Canada’s East Coast.

13
Organic energy These reservoirs are often far away from the original source. A seep
Hydrocarbon deposits began forming millions of years ago with occurs when hydrocarbons migrate to the Earth’s surface. Over
photosynthesis. During photosynthesis, plants absorb solar energy time, huge amounts of these hydrocarbons have been degraded by
and use it to convert carbon dioxide and water into oxygen and sugar. bacteria or have escaped into the atmosphere. Flowing water can also
Additional processes convert sugar into starch and cellulose. These wash away hydrocarbons. Sometimes only the lighter, more volatile
carbohydrates and other organic materials from decaying organisms compounds are removed, leaving behind heavier types of crude oil.
eventually settle in lakes and seas. As the organic materials are
buried, heat and pressure transform them into solid, liquid or gaseous Canada’s oil sands
hydrocarbons known as fossil fuels – coal, crude oil or natural gas. Canada’s oil sands are different from most petroleum reservoirs in
both their size and how they were formed. About 50 million years
Coal is formed from the remains of land-based plants. Crude oil
ago, huge volumes of conventional crude oil migrated upward until
is formed from marine plants and animals, mainly algae and
they reached large areas of porous sand at or near the surface.
plankton that have ‘cooked’ for at least one million years at a
temperature between 50° and 150° C. Natural gas can be formed Bacteria then degraded the hydrocarbons for millions of years.
from marine or land-based organic materials under a variety of Geologists believe the original volume of crude oil digested by the
temperatures and pressures. micro-organisms was at least two or three times larger than what
now remains as bitumen; and yet Canada’s oil sands are still one of
Movement the world’s largest known hydrocarbon resources.
Due to the force of gravity and the pressures created by the overlying Bacteria usually degrade the simplest hydrocarbons first, converting
rock layers, crude oil and natural gas seldom stay in the source them into carbon dioxide and water, leaving behind the big
rock in which they are formed. Instead, they migrate through the hydrocarbon molecules that cannot be digested. The bacteria may
underground layers of sedimentary rocks until they either escape at also modify some of the simpler sulphur molecules, leaving complex
the surface or are trapped by a barrier of less permeable rock. sulphur compounds. As a result, there are more heavy hydrocarbons,
Most of the world’s petroleum has been found trapped in porous rocks complex sulphur compounds and metals in bitumen than in
under a layer of relatively impermeable rock. In such reservoirs, crude conventional crude oil. This makes extraction and processing more
oil and natural gas do not pool in underground ‘lakes’ but are held in difficult and expensive.
the pores and fractures of rock, like water in a sponge.
FORMATION OF A SEDIMENTARY BASIN

Increasing Rivers carry Swamps White Coral Bahama-like 1 Delta sand
temperature, sand to the may form beach reefs island
pressure and basin coal if sand
2 Coal
compaction covered 3 White sandstone
(compacted beach sand)*
4 Black mud settled from ocean water
5 Shale formed by compaction of mud
6 Brown sandstone (formed by
compaction of river and delta sand)*
7 Ancient shale (the heat turns
15 organic matter into oil)
13
14 8 Ancient sandstone*
10 9 Limestone (compacted lime mud)*
1
12 10 Lime mud washed offshore
11
2 11 Ancient reef*
4
3 5
12 Oil migrates from shale to the
9 reef and forms an oil reservoir*
6 13 Lime, sand and shell debris
14 Limestone (rock) formed by
7
compaction of lime sediment*
8
15 Dolomite formed by
groundwater altering limestone*
s
ometre
,000 kil * Potential future oil or gas reservoir
500 - 1
Petroleum is most often found in a sedimentary basin. A sedimentary basin is a depressed area of the Earth’s crust where tiny plants and animals lived or
were deposited with mud and silt from streams and rivers. These sediments eventually hardened to form sedimentary rock. When exposed to heat and
pressure over millions of years, the soft parts of plants and animals gradually changed to crude oil and natural gas. The temperature, pressure and
compaction of sediments increase at greater depths.

14
Electricians work at Shell’s tight gas operations at Groundbirch in northeast British Columbia. Photo courtesy Shell Canada.
Chapter Two Oil and Gas in Canada
Just how much oil and natural gas does Canada have? The National
Energy Board (NEB), which collects information from provincial and
territorial authorities, has estimated that Canada’s oil and natural
gas resources include 343 billion barrels of recoverable crude oil
and bitumen and approximately 424 trillion cubic feet of recoverable
natural gas.11 However, only a fraction of the resources in place can be
produced economically with existing technology.

15
97 21
In this chapter, you’ll learn about Canada’s i i
oil and natural gas resources, their global
importance and the benefits they provide
to Canadians.
CANADA’S RESERVES Just over 97 per cent of Unconventional natural gas

Canada’s total crude oil represents about 21 per cent of
About 90 per cent of Canada’s technically recoverable oil resources reserves are found in the Canada’s recoverable natural
are oil sands bitumen, of which half is economically recoverable with oil sands. gas reserves.
existing technologies.12 Fifty-three per cent of Canada’s natural gas
resources (excluding tight gas, shale gas and coalbed methane) are
located in Arctic and offshore areas.
Crude oil Unconventional sources

Canada has the third-largest proved crude oil reserves in the world, Canada’s unconventional hydrocarbon resources include oil sands,
after Saudi Arabia and Venezuela, and is the world’s sixth-largest shale oil and shale gas.
oil producer.13, 14 Just over 97 per cent of these reserves are from
unconventional sources, mainly the oil sands. Of the estimated 173 • oil sands – Canada’s oil sands deposits are located in northeastern
billion barrels in Canada’s total oil reserves, today’s technology could and north-central Alberta near Fort McMurray. There are three
recover four billion barrels of oil from conventional sources and 169 distinct deposits: the Athabasca Deposit, the Cold Lake Deposit and
billion barrels from the oil sands.15, 16 the Peace River Deposit. There are also bitumen deposits in the
northwestern part of Saskatchewan.
Natural gas • shale oil – Technological extraction innovations, such as horizontal
At 70 trillion cubic feet,17 Canada has the 18th-largest proven natural drilling and multi-stage hydraulic fracturing, are enabling
gas reserves in the world.18 This is only a portion of the gas that companies to access and develop shale formations that contain oil.
could ultimately be produced. Recent estimates show that Canada Shale oil formations include the Bakken and Spearfish in southern
has almost 700 trillion cubic feet of recoverable or marketable Saskatchewan and Manitoba, the Cardium in central Alberta and
natural gas in the form of coalbed methane, shale gas and tight gas the Winterhouse on the west coast of the island of Newfoundland.
in addition to its conventional reserves.19 Although development New Brunswick’s Albert Formation contains the country’s greatest
of these resources is still in the early stages, they are a significant potential for shale oil but is not yet being developed.
potential source for future natural gas production growth. • shale gas – There are extensive shale gas formations in Canada,
including northeastern British Columbia, Alberta, Ontario, Quebec,
Where are Canada’s resources?
Nova Scotia and New Brunswick. Most development of shale gas is
Canada’s hydrocarbon resources are found across the country. occurring in the Horn River Basin in northeastern British Columbia.
Oil production in Canada comes mainly from three sources: the Advances in horizontal drilling technologies and hydraulic
Western Canada Sedimentary Basin (WCSB); Canada’s oil sands, fracturing of shale make it possible to economically recover
which are within the WCSB; and the offshore oil fields in the Atlantic. this resource.
Other reserves exist in the Beaufort Sea and off the Pacific Coast.
Most of Canada’s natural gas reserves are found in the WCSB.
Although conventional production is declining, advances in
technology have spurred investment, especially in Alberta’s and
KEY DEFINITION RESOURCES
British Columbia’s shale and tight gas plays. Natural gas reserves
are also concentrated off the coast of Eastern Canada, mainly around Remaining total volume of recoverable oil and natural gas. This includes
deposits not currently economical to produce, deposits not yet discovered but
Newfoundland and Labrador, Nova Scotia, the Arctic region and off presumed to exist and deposits that may be recovered with future technology.
British Columbia’s coast.
Conventional sources KEY DEFINITION RESERVES

Crude oil and natural gas are found in sedimentary rocks formed over The amount of oil and natural gas which is known to exist in a particular
millions of years by the accumulation in sedimentary basins of sand, area. Proved reserves are known reserves that can be recovered under
existing economic conditions using existing technology.
silt and the remains of plants and animals. Canada has seven distinct
regions of sedimentary rocks: the Western Canada Sedimentary Basin,
the Atlantic Margin, the Arctic Cratonic, the Arctic Margin, the Eastern KEY DEFINITION MULTI-STAGE HYDRAULIC FRACTURING
Cratonic, the Intermontane and the Pacific Margin. Every province and Where a reservoir is fractured in stages with each stage being isolated to
territory includes at least a portion of a sedimentary basin. concentrate the pressure, creating a more effective fracture zone.

16
MAJOR SEDIMENTARY BASINS

Source: Natural Resources Canada
YUKON
NORTHWEST NUNAVUT
TERRITORIES
ALBERTA
BRITISH SASKATCHEWAN NEWFOUNDLAND AND LABRADOR

COLUMBIA
MANITOBA
ONTARIO QUEBEC PRINCE

EDWARD
ISLAND
NEW NOVA
BRUNSWICK SCOTIA
Legend
Western Canada Sedimentary Basin Eastern Cratonic

The most productive hydrocarbon area in Canada is the Eastern Cratonic sedimentary rocks occur in Manitoba, Nunavut,
Western Canada Sedimentary Basin, which includes Alberta, Ontario, Quebec, the Maritime provinces and Newfoundland and
Saskatchewan, British Columbia, Manitoba, Yukon and the Labrador. This area has been producing crude oil since the 1850s
Northwest Territories. and natural gas since 1889.
Atlantic Margin Intermontane

The Atlantic Margin extends along the East Coast, from U.S. Intermontane sedimentary rocks occur in British Columbia and
waters to Baffin Island. This area is the site of major offshore the Yukon between the Canadian Rockies and the West Coast
crude oil and natural gas deposits discovered since the 1960s. mountain ranges. There has been some oil and gas exploration
in Intermontane areas but, to date, no production.
Arctic Cratonic Arctic Margin
Substantial crude oil and natural gas resources have been Pacific Margin
identified in the Arctic Islands, Beaufort Sea and Mackenzie The Pacific Margin off the B.C. coast is estimated to contain 9.8
Delta. Development has been slow due to the remote location, billion barrels of oil and 43.4 trillion cubic feet of natural gas, but
production costs, a lengthy regulatory process, the absence of there has been no exploration since 1972. In 1972, the federal and
pipeline systems and low natural gas prices. provincial governments imposed moratoria on offshore drilling in
the area to prevent oil spills from drilling, production and shipping.

17
06 04 03 18
i i i i
Canada has been producing With abundant conventional Canada has the world’s third- Canada has the 18th-largest
conventional crude oil for more and unconventional reserves, largest crude oil reserves, proven natural gas reserves
than a century and is the sixth- Canada is the world’s fourth- most of which are found in in the world, though it is only
largest crude oil producer in largest natural gas producer. the oil sands. a portion of what could
the world. ultimately be produced.
2011 WORLD CRUDE OIL PRODUCTION (thousand barrels per day)

Sources: United States Energy Information Administration (International), Canadian Association of Petroleum Producers (Canada)
11,146 Saudi Arabia
10,213 Russia
9,052 United States
4,231 Iran
4,059 China
3,468 CANADA
3,079 UAE
2,934 Mexico
2,682 Kuwait
2,638 Iraq
2011 WORLD MARKETED NATURAL GAS PRODUCTION (billion cubic feet per day)
66.2 United States
64.9 Russia
16.7 Iran
14.3 CANADA
11.8 Qatar
10.1 Norway
9.9 China
9.9 Saudi Arabia
9.5 Algeria
7.9 Indonesia

Almost 95 per cent of Canada’s natural gas production comes from the Western Canada Sedimentary Basin. About 63 per cent of Canadian production is
exported to the United States.
18
CANADIAN OIL FIELDS

Sources: Natural Resources Canada,
Alberta Energy Resources Conservation Board,
Canadian Society for Unconventional Resources
YUKON
NORTHWEST NUNAVUT
TERRITORIES
ALBERTA

COLUMBIA
MANITOBA

EDWARD
ISLAND
NEW NOVA
Legend BRUNSWICK SCOTIA
Conventional Oil Tight Oil
Oil Sands and Heavy Oil Sedimentary Basin
Shale Oil
2011 WORLD PROVED CRUDE OIL RESERVES (billion barrels)

Sources: United States Energy Information Administration (International), Energy Resources Conservation Board (Canada Oil Sands), Canadian Association of Petroleum Producers (Canada Conventional)
CONVENTIONAL OIL SANDS
262.60 0.00 Saudi Arabia
99.37 *111.80 Venezuela
4.10 169.00 CANADA
137.01 0.00 Iran
115.00 0.00 Iraq
104.00 0.00 Kuwait
97.80 0.00 UAE
60.00 **0.00 Russia
46.42 0.00 Libya
37.20 0.00 Nigeria
* This estimate of Venezuela’s oil sands reserves is based on an U.S. Energy Information Administration report of an increase of between 111 and 113 billion barrels of extra-heavy oil between 2010 and 2011.
** While Russia has extra-heavy oil deposits, recent estimates are not available.

19
CANADIAN NATURAL GAS FIELDS

Sources: Natural Resources Canada, National Energy Board,
Canadian Society for Unconventional Resources
YUKON
NORTHWEST NUNAVUT
TERRITORIES
ALBERTA

COLUMBIA
MANITOBA

EDWARD
ISLAND
NEW NOVA
Conventional Gas Tight Gas
Shale Gas Sedimentary Basin
Coalbed Methane
2011 WORLD PROVED NATURAL GAS RESERVES (trillion cubic feet)

1,680.0 Russia
1,045.7 Iran
895.8 Qatar
275.7 Saudi Arabia
272.5 United States
265.0 Turkmenistan
227.9 UAE
186.9 Nigeria
178.9 Venezuela
159.0 Algeria
70.0 CANADA (18TH)

20
CANADA’S GLOBAL ROLE ECONOMIC BENEFITS

2011 CANADIAN ENERGY EXPORTS ($ millions)
Based on United States Energy Information Administration data, The economic contribution of energy to Canada’s economy is
Source: Statistics Canada
Canada is among the top five energy producers in the world, following considerable. The energy sector contributed $87.4 billion, or 7.1 per
China, the U.S., Russia and Saudi Arabia.20 Given Canada’s abundance cent, to Canada’s E gross domestic product in 2011. Of this, about
32
of hydrocarbon resources and its relatively small population, its D

$52.2 billion came from oil and gas extraction, refining, pipeline
energy production is higher than its consumption. This allows Canada transportation
C and natural gas distribution.33
to be a significant energy exporter.
Trade
Crude oil OilBand natural gas exports make up a key part of Canada’s
Canada is the world’s sixth-largest oil producer behind Saudi Arabia, merchandise trade. Energy exports, almost entirely to the United
Russia, the United States, Iran and China.21 In 2011, oil production in States, amounted to $103.5 billion in 2011, about 22.7 per cent of
A
Canada amounted to three million barrels per day.22 the value of Canada’s total exports.34
Canada has been producing conventional crude oil for more than a
Revenue
century, mostly in Alberta, Saskatchewan and offshore Newfoundland
and Labrador, with smaller production in other provinces. Production In Canada, the revenues generated by finding, producing, processing,
$ millions %
from unconventional sources such as the oil sands started in the transporting, refining and selling petroleum contribute to a relatively
A Crude Oil and Bitumen 68,315.6 66.03
1960s and has increased rapidly since the late 1990s. high national standard of living. The Canadian Association of Petroleum
B Natural Gas and NGLs 15,562.7 15.04
Producers estimates that Canadian oil and natural gas producers had
In 2011, Canada exported 2.2 million barrels of crude oil per day, C Refined Petroleum Products 10,451.5
sales of $121.9 billion in 2011. About 34 per cent of this amount
35 10.10
99 per cent of which went to the United States.23 Canada also imported D Other Energy Products 7,098.3
came from the sale of conventional crude oil and condensate, about 6.86
679,450 barrels of crude oil per day in 2011, primarily from Africa E Electricity 2,031.5
40 per cent came from oil sands production and about 26 per cent 1.96
(37.3 per cent), Europe (19 per cent), the Middle East (14.9 per cent) Total gas, natural gas liquids and sulphur.36103,459.6 100.00
from natural
and elsewhere (28.8 per cent).24 Given Canada’s pipeline infrastructure,
it is less expensive to import crude oil to refineries in Quebec and the Petroleum development in Canada provides economic benefits,
Maritimes via ocean tanker than it is to transport oil by pipeline from including royalties, employment, taxes and regional development.
Western Canada.
2011 GDP contribution by industry
Canada has been the biggest supplier of imported crude oil and
petroleum products to the United States since 1999.25 In 2011, $ million
Canada supplied 24.3 per cent of U.S. oil and product imports.26 All Industries E 2011 CANADIAN ENERGY EXPORTS ($ millions)
1,226,536
D Source: Statistics Canada
Energy Industry
Natural gas C
Oil and Gas Extraction 41,393 $ mi
Canada is the world’s fourth-largest natural gas producer and the A Crude Oil and Bitumen 68,
fourth‑largest natural gas exporter.27, 28 In 2011, Canada produced Electricity Generation, Transmission, Distribution 28,362
B Natural Gas and NGLs 15,
5.2 trillion cubic feet of natural gas, primarily from Alberta, British B Support Activities 5,763
C Refined Petroleum Products 10,
Columbia, Saskatchewan and offshore Nova Scotia.29 Canada supplied Pipeline Transportation 4,229
D Other Energy Products 7,
almost 90 per cent of the natural gas imported to the United States in
2011.30 Canada also imports liquefied natural gas (LNG) from Trinidad Natural Gas DistributionA E Electricity 3,413 2,
Total 103,
and Tobago and Qatar.31 Petroleum and Coal Refining 3,134
However, if access to unconventional sources of natural gas such as Coal Mining 913
shale gas continues to increase in the U.S., Canada’s market share Uranium Mining 212
in the U.S. will likely decrease. For this reason, Canada is likely to
Energy Industry Total 87,419
gradually diversify its export markets, with a particular focus on
countries in the Pacific Rim. Three liquefied natural gas export Per Cent of GDP 7.13
terminals are planned along Canada’s West Coast. Source: Statistics Canada
2011 CANADIAN EXPORTS ($ millions) 2011 CANADIAN ENERGY EXPORTS ($ millions)

Source: Statistics Canada Source: Statistics Canada A
GH $ millions $ millions
F D E
A A Industrial Goods 114,713.1 A Crude Oil and Bitumen 68,315.6
E C
B Energy Products 103,459.6 B Natural Gas and NGLs 15,562.7
C Machinery/Equipment 64,870.1 C Petroleum Products 10,451.5
D D Automotive Products 59,590.0 B D Other Energy Products 7,098.3
E Other Consumer Goods 49,846.3 E Electricity 2,031.5
A
B F Forestry 30,460.5 Total 103,459.6
C
G Farm/Fishing Products 24,136.4
H Other 9,442.6
Total 456,518.6

21
2010 - 2035 PROJECTED WORLD PRIMARY ENERGY DEMAND BY FUEL (quadrillion British thermal units)
Source: United States Energy Information Administration
800
700
600
500
400
300
200
100
0
2010 2015 2020 2025 2030 2035
Renewables 55.2 68.5 82.2 91.7 100.6 109.5
Nuclear 27.6 33.2 38.9 43.7 47.4 51.2
Coal 149.4 157.3 164.6 179.9 194.7 209.1
Natural Gas 116.7 127.3 138.0 149.4 162.3 174.4
Crue Oil and NGLs 173.2 187.2 195.8 207.0 216.6 225.2
2011 MAJOR SUPPLIERS OF CRUDE OIL AND REFINED PRODUCTS TO THE UNITED STATES (thousand barrels per day)
3,000
2,500
2,000
1,500
1,000
500
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Canada 1,807 1,828 1,971 2,072 2,138 2,181 2,353 2,455 2,493 2,479 2,535 2,796
Saudi Arabia 1,572 1,662 1,552 1,774 1,558 1,537 1,463 1,485 1,529 1,004 1,096 1,195
Venezuela 1,546 1,553 1,398 1,376 1,554 1,529 1,419 1,361 1,189 1,063 988 951
Mexico 1,373 1,440 1,547 1,623 1,665 1,662 1,705 1,532 1,302 1,210 1,284 1,206

Canada has been the biggest supplier of imported crude oil and products to the United States since 1999. In 2011, Canada supplied 24.3 per cent of
U.S. oil and product imports.
22
Petroleum Human Resources

EMPLOYMENT
Council of Canada
The oil and gas industry is a significant source of employment in
every province and provides a range of jobs in exploration and www.petrohrsc.ca
production, refining, energy transportation and in the retail sector.
According to Statistics Canada, there were about 190,000 direct jobs The Petroleum Human Resources Council of Canada is supported
in the petroleum industry in 2011.37 When indirect employment is by 11 oil-and-gas-related organizations, offering solutions to the
included, the number increases to 550,000 jobs.38 industry’s human resources concerns.
The Petroleum Human Resources Council of Canada is predicting that Tracking the industry’s employment statistics by sector, the council
the oil and gas industry will need to fill at least 9,500 jobs by 2015 regularly publishes its Labour Market Information report, an analysis
due to growth in certain operations and age-related attrition across of labour demand and supply across the country. In large part, the
the industry. This does not include replacing workers who move to council’s current focus is on the difficulties of a transitional workforce.
other companies or industries.39
One of the most important issues identified by this report is the fact
that an aging workforce is retiring without an equivalent number of
skilled employees to take their place.
TRAINING AND EDUCATION The exploration and production sector may see a decrease in its
Education, training and information on the petroleum industry are workforce due to low natural gas prices, but the services sector is
critical components in any effort to recruit employees. With varied, expected to add up to 5,400 jobs, the oil sands sector up to 5,850
often highly technical positions available in every aspect of the jobs and the pipeline sector up to 530 jobs.
industry, from exploration to production and onward, would-be Representing the petroleum industry’s key sectors – exploration,
employees need to understand their available career opportunities development, production, service industries, pipeline transmission,
and the skills that are required before applying. gas processing and upgrading heavy oil and bitumen – the council is
While most companies address recruitment and professional supported by the Canadian Association of Geophysical Contractors,
development directly, they also partner to provide resources to sector Canadian Association of Oilwell Drilling Contractors, Canadian
councils – non-profit organizations formed specifically to encourage Association of Petroleum Producers, Canadian Energy Pipeline
skill development and address other employment issues. Canadian Association, Communications, Energy, and Paperworkers Union of
sector councils that deal with the petroleum industry include the Canada, Energy Services BC, Newfoundland and Labrador Oil and
Petroleum Human Resources Council of Canada and ECO Canada. Gas Industries Association, Ontario Petroleum Institute, Petroleum
Services Association of Canada, Explorers and Producers Association
The Petroleum Industry Human Resources Committee (PIHRC) is of Canada and The Maritimes Energy Association.
another organization concerned with encouraging employment,
focusing regionally on Newfoundland and Labrador’s offshore oil
and gas industry.
Career possibilities in the oil and gas industry
Geoscience professionals Engineers Seismic crews Drilling crews

Geologists, geophysicists, Biological, petroleum, pipeline Surveyors, line cutters, jug Toolpushers, drillers, derrickmen,
geochemists and environmental and mining engineers; computer, hounds, drillers, blasters, motormen, floorhands, mudmen,
scientists electrical, environmental, vibroseis operators and recorders; leasehands and coiled tubing
instrumentation and process marine seismic operators and operators
Land professionals control engineers helicopter pilots
Negotiators of surface and mineral Logging and testing
rights and land administrators Technologists Lease preparation Wireline operators, well testers
and technicians and road construction and mud loggers
Roles that mirror engineering Surveyors and heavy equipment
operators

23
2011 DIRECT EMPLOYMENT

IN THE CANADIAN OIL AND GAS INDUSTRY
(per cent of total energy industry workforce)
Petroleum Industry Human ECO Canada
Source: Petroleum Human Resources Council of Canada
Resources Committee Dwww.eco.ca

C
www.oilandgascareerinfo.ca
The Petroleum Industry Human Resources Committee was While Environmental Careers Organization (ECO) Canada doesn’t
established in 1998 to consider employment, training and other exclusively address the petroleum industry, its focus on environmental
relevant human resource development issues related to the emerging B
careers provides essential skillsA to the industry’s sustainable
petroleum operations in Newfoundland and Labrador. The committee development practices such as land use and reclamation. As
comprises senior industry and government representatives. companies are increasingly compelled to integrate sustainability
The committee is co-chaired by representatives from the solutions into their practices, environmental employees will become
Newfoundland and Labrador Oil and Gas Industries Association (NOIA) an increasingly important resource.
and the Canadian Association of Petroleum Producers (CAPP). The council’s employment resources include a range of products and
%
Its remaining seats are held by: services,
A Oil including:
and Gas Services 47
B Exploration
• the and Production
ECO Job Board 39
• one supply and service company (NOIA member) C Oil Sands 11
• one upstream operator (CAPP member) • ECO Canada Certification
D Pipelines 3
• one member of the Canadian Association of Offshore Drilling • internships
Total 100
Contractors • academic institution accreditation
The committee also has three seats for representatives from each of • professional development and training
the Newfoundland and Labrador provincial departments of:
• K-12 career awareness
• Human Resources, Labour and Employment
• Natural Resources
• Education 2011 DIRECT EMPLOYMENT
IN THE CANADIAN OIL AND GAS INDUSTRY
(per cent of total industry workforce)
D
C %
A Oil and Gas Services 47.0
B Exploration and Production 39.0
B A C Oil Sands 11.0
D Pipelines 3.0
Total 100.0
D
2011 DIRECT EMPLOYMENT
C IN THE CANADIAN OIL AND GAS INDUSTRY
Well service and completions Field support Trades (per cent of
Business andtotal energy industry workforce)
Vacuum truck operators, Camp operators, caterers, Crane operators, heavy duty operations support
measurement-while-drilling transport drivers and emergency equipment mechanics and Personnel in energy asset
specialists, fishing crews, medical technicians technicians, industrial electricians, management,
A Oil and oil Gasand gas
Services
cementers, pumper truck industrial
B instrument mechanics, A marketing, environment,
B Exploration health
and Production
operators, service rig operators, Operators insulators, machinists, andCsafety, regulatory affairs,
Oil Sands
perforations specialists, fracturing Operators of control centres, millwrights, rig technicians, Aboriginal relations, community
D Pipelines
crews and acidizing crews field production facilities, gas pipefitters and steamfitters and consultation, community
Total
plants and batteries; refinery and instrumentation technicians investment, investor relations,
Pipeline construction upgrader personnel government relations and public
Surveyors, heavy equipment relations; lawyers and accountants
operators and welders

24
Footnotes
1 Statistics Canada CANSIM Table 281-0027 28 Energy Information Administration
http://www.eia.gov/cfapps/ipdbproject/IEDIndex3.cfm?tid=3&pid=26&aid=4
2 Canadian Association of Petroleum Producers
http://www.capp.ca/getdoc.aspx?dt=PDF&docID=206748 29 Canadian Association of Petroleum Producers, Statistical Handbook
http://membernet.capp.ca/SHB/Sheet.asp?SectionID=3&SheetID=269
3 Statistics Canada
http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/gblec04-eng.htm 30 Energy Information Administration http://www.eia.gov/dnav/ng/ng_move_impc_s1_a.htm
4 Energy Information Administration, Production 31 National Energy Board http://www.neb-one.gc.ca/CommodityStatistics/ViewReport.aspx
http://www.eia.gov/dnav/pet/pet_crd_crpdn_adc_mbblpd_a.htm
32 Statistics Canada, Gross Domestic Product by Industry
Energy Information Administration, Exports http://www.statcan.gc.ca/pub/15-001-x/2012006/t008-eng.htm
http://www.eia.gov/dnav/pet/pet_move_exp_dc_NUS-Z00_mbblpd_a.htm
33 Statistics Canada, Gross Domestic Product by Industry
Energy Information Administration, Imports http://www.statcan.gc.ca/pub/15-001-x/2012006/t008-eng.htm
http://www.eia.gov/dnav/pet/pet_move_impcus_a2_nus_epc0_im0_mbblpd_a.htm
34 Statistics Canada
5 Energy Information Administration, Consumption http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/gblec04-eng.htm
http://www.eia.gov/dnav/ng/ng_cons_sum_dcu_nus_a.htm
35 Canadian Association of Petroleum Producers, Statistical Handbook
Energy Information Administration, Imports http://membernet.capp.ca/SHB/Sheet.asp?SectionID=4&SheetID=265
http://www.eia.gov/dnav/ng/ng_move_impc_s1_a.htm
6 Natural Resources Canada http://oee.nrcan.gc.ca/corporate/statistics/neud/dpa/ http://membernet.capp.ca/SHB/Sheet.asp?SectionID=4&SheetID=265
tableshandbook2/aaa_ca_1_e_5.cfm?attr=0
37 Statistics Canada CANSIM Table 281-0027
7 Speight, James G. The Chemistry and Technology of Petroleum, Fourth Edition,
CRC Press, 2006 http://www.petroleum.co.uk/composition/
http://www.capp.ca/getdoc.aspx?dt=PDF&docID=206748
8 Natural Resources Canada http://oee.nrcan.gc.ca/corporate/statistics/neud/dpa/
39 Petroleum Human Resources Council of Canada Release http://www.petrohrsc.ca/news-
tableshandbook2/aaa_ca_1_e_5.cfm?attr=0
events/media-releases/2012/may-29,-2012-canada’s-oil-and-gas-industry-will-need-to-fill-
9 Canadian Society for Unconventional Resources at-least-9,500-jobs-by-2015.aspx
http://www.csur.com/sites/default/files/shale_gas_English_Web.pdf
10 National Energy Board
http://www.neb-one.gc.ca/clf-nsi/rnrgynfmtn/nrgyrprt/nrgyftr/nrgyftr-eng.html#s7
11 National Energy Board http://www.neb-one.gc.ca/clf-nsi/rnrgynfmtn/nrgyrprt/
nrgyftr/2011/nrgsppldmndprjctn2035-eng.pdf
12 National Energy Board http://www.neb-one.gc.ca/clf-nsi/rnrgynfmtn/nrgyrprt/
nrgyftr/2011/nrgsppldmndprjctn2035-eng.pdf
13 Energy Information Administration
14 Energy Information Administration http://www.eia.gov/cfapps/ipdbproject/iedindex3.cfm
?tid=5&pid=57&aid=1&cid=regions&syid=2007&eyid=2011&unit=TBPD
15 Canadian Association of Petroleum Producers, Statistical Handbook – Conventional Oil
16 Energy Resources Conservation Board ST98 http://ercb.ca/sts/ST98/ST98-2012.pdf
19 National Energy Board
http://www.neb-one.gc.ca/clf-nsi/rnrgynfmtn/nrgyrprt/nrgyftr/nrgyftr-eng.html#s7
?tid=5&pid=57&aid=1&cid=regions&syid=2007&eyid=2011&unit=TBPD
22 Canadian Association of Petroleum Producers, Statistical Handbook – Conventional
Canadian Association of Petroleum Producers, Statistical Handbook – Unconventional
23 Statistics Canada, Energy Statistics Handbook
http://www.statcan.gc.ca/pub/57-601-x/2012001/t052-eng.htm
24 Statistics Canada, Energy Statistics Handbook
http://www.statcan.gc.ca/pub/57-601-x/2012001/t049-eng.htm
?tid=3&pid=24&aid=1&cid=regions&syid=2007&eyid=2011&unit=BCF

25
The large compressors that operate along the Alliance pipeline system create heat that is otherwise vented into the atmosphere. NRGreen
obtains the waste heat and uses the ORegenTM system to convert it into electricity without the use of water or the creation of new emissions.
Photo courtesy Alliance Pipeline.
The oil and gas industry finds and extracts resources, transports
them across the country and refines them into usable products. This
02In this section, you will learn
about the seven primary
activities that make up
process is made up of three main sectors: upstream (exploration, the petroleum industry:
exploration, drilling, production,
drilling and production), midstream (processing and transportation) processing, transportation,
and downstream (refining and marketing). Together, these sectors refining and marketing.
form a chain of industry that delivers Canada’s hydrocarbon
resources to consumers around the world.
Inside the
Industry
SECTION 2 INSIDE THE INDUSTRY
26
Visualization rooms allow explorationists to synthesize data in an immersive 3D environment. Photo courtesy Shell Canada.
Chapter One Exploration
Exploration is the process of locating hydrocarbon resources,

the first in a series of steps designed to extract crude oil and natural
gas. Companies begin by reviewing existing geological and geophysical
data, which can either provide promising areas for exploration or
suggest existing reservoirs that can be further accessed with modern
technology. Once an area has been identified, companies use a variety
of surveying techniques to locate onshore and offshore resources.

27
In this chapter, you’ll learn how companies Identifying potential reservoirs

An explorationist may have a well-developed theory or intuition
gather information on areas that are likely about why an area should contain crude oil and natural gas. In
to have hydrocarbon deposits, how these onshore exploration, a first-hand look at outcrop geology (rocks
visible on the surface) and surface features sometimes helps
companies get permission from landowners confirm the basic requirements such as:
to begin exploration activities and how • sedimentary rocks
they conduct seismic surveys to acquire • potential reservoir rock
information about geological formations. • potential traps
• hydrocarbon-bearing source rocks in a sedimentary basin
Within a basin, the explorationist’s first step is to examine existing

information about the area. This might include academic papers,
GATHERING INFORMATION surface geology observations, records from previous wells drilled,
Before an oil or natural gas company moves a single piece of data from agencies such as the Geological Survey of Canada or
equipment onto a location, it must determine whether the area is provincial government departments and previous exploration results
likely to contain hydrocarbon deposits. from nearby or similar areas.
Exploration begins with advanced desk studies to project the likely In Canada, government regulations ensure that much of the
locations of hydrocarbon resources. These studies include identifying information obtained during exploration is recorded and made
promising locations, analyzing core samples and cuttings, and publicly available.
compiling existing geological data.
Examining cuttings and core samples
Explorationists, mainly geologists and geophysicists, guide the Results from previous drilling provide important information for
industry’s search for oil and gas. Most of their efforts have focused on explorationists. When a well is drilled the drill bit cuts into the rock,
the Western Canada Sedimentary Basin, the source of most current creating small rock chips called ‘cuttings,’ which are brought to the
production. They also study other current and potential petroleum- surface by drilling fluid. Geologists, geochemists and palynologists –
producing sedimentary basins in Canada and abroad. scientists who study pollen and small fossils – examine the cuttings
In the oil sands, the general characteristics of the resources are to learn more about the age, chemistry, porosity, permeability and
well known – where the deposits are and how much bitumen they other properties of the subsurface rock formations.
contain. Therefore, the oil sands involve less exploration activity. Larger, more continuous cylindrical rock samples, called cores, can
But billion-dollar mining and steam-injection projects still require also be cut using a special coring bit. Although coring adds to the cost
exact information on a deposit’s extent and configuration, which can of the well, laboratory analysis and visual examination of the core
include drilling stratigraphic test wells to obtain the information. provide additional important details about the basin’s history. Core
In the East Coast offshore, where theories about subsea geology are analysis provides critical information on the composition and physical
still evolving, even greater precision is required to locate deposits characteristics of the rock and any fluids within it.
given the large investments required for production facilities. Similar Even if a well fails to encounter crude oil or natural gas in commercial
challenges await the oil and gas industry in the Arctic. quantities, it still provides valuable information about underground
rocks and structures. This may allow explorationists to generate new
prospects or to match up certain seismic patterns with corresponding
rock formations, which can lead to success with the next well.
AT A GLANCE – EXPLORING FOR NEW OIL AND NATURAL GAS
Gathering Deciding whether Gaining access Conducting Carrying out

information to explore further to the resource seismic surveys exploration drilling
Exploration begins with Companies analyze If companies decide to Once companies have After identifying a
advanced desk studies to information and carry out invest further in an permission to operate in promising geological
project the likely locations economic and risk exploration program, they an area, they use seismic structure, the company
of hydrocarbon resources. analyses to decide whether negotiate access to the surveys to acquire more must drill exploration wells
These studies include a geological prospect is resource with landowners detailed information on the to confirm oil and gas are
identifying promising worth exploring further. and acquire oil and natural geological rock formations. present and to measure the
locations, analyzing core gas rights, including surface volume of the resource and
and cuttings samples and rights and mineral rights. the reservoir’s thickness
compiling existing and pressure.
geological data.

28
Compiling data They then make an economic calculation based on a number of

The next stage is to integrate all the available geological and factors:
geophysical information. It may be possible to obtain both types • geological risk
of data from regulatory bodies or purchase information acquired
• environmental risk
in recent geophysical surveys. Companies independently conduct
surveys, then package this data for producers to purchase. • stakeholder opposition
There has been long-standing co-operation among industry, • amount of expected crude oil or natural gas production from a
government and scientists in gathering data about crude oil and successful well
natural gas in Canada. Requirements to record information from • likely future price of the resource
the hundreds of thousands of wells drilled in Canada have given the
industry a valuable and reliable database. It is used to speed up the • drilling and operating costs
generation of new drilling prospects, the optimization of producing • distance to processing facilities and pipelines
fields and the evaluation of field operations.
• taxes and royalties
Visualization rooms allow companies to synthesize a variety of data
into an immersive, 3D environment. These rooms create a single • inflation and interest rates
digital image using data from maps, cores, well performance and • financial returns that might be earned by investing elsewhere
seismic surveys. Wearing 3D glasses, explorationists can then use
this image to study likely reservoirs and identify areas of potential The result tells companies if a geological prospect is worth
that might have been missed. exploring and how much they can afford to spend to acquire
the mineral rights for a parcel of land. This can be a precise
In offshore areas, there are fewer clues available for targeting
calculation in established producing areas such as Western
exploration, but some initial information can be obtained from
Canada. In other exploration areas, such as the offshore, factors
detailed mapping of the ocean floor, samples of the seabed
such as geological risk are more difficult to determine because
composition and comparisons with the geology of nearby areas and
fewer wells have been drilled.
similar features elsewhere in the world.
Companies may decide the numbers are too discouraging and shelve
Making a decision the prospect until economic conditions change, geological knowledge
Before deciding whether to invest further in an exploration program, of the area improves or production technology advances.
companies try to determine whether the well is likely to produce If, on the other hand, the company decides to proceed, it is faced with
crude oil or natural gas, based on the geological and geophysical a new task: obtaining permission to access the resource and conduct
information that they have collected. exploration activities like seismic surveying and exploration drilling.
GAINING ACCESS
In onshore oil and gas activities, company land departments
negotiate access with owners, make arrangements with joint venture
partners and acquire crude oil and natural gas rights. Specialized land
KEY DEFINITION GEOPHYSICAL SURVEYS
agents, known as landmen, are responsible for all these negotiations.
Geophysical surveys involve mapping the subsurface structure of the
Earth’s crust using seismic energy to locate probable reservoir structures Exploration companies deal with two types of rights:
capable of producing commercial quantities of natural gas and/or crude oil.
• mineral rights – the rights to explore for and produce the
resources below the surface
• surface rights – the rights to work on the surface of the land
The two kinds of rights are usually owned separately; however,

TESTING A THEORY certain companies and individuals that own land ‘in type’ own both
One example of evolving geological knowledge is the current surface and mineral rights under land concessions granted by the
development work in Alberta’s Carbonate Triangle region. federal government in the 19th century.
While Canada’s oil sands are the focus of Alberta’s Government-owned rights are referred to as Crown rights.
unconventional oil production, about 27 per cent of Approximately 90 per cent of mineral rights in Canada are held
Alberta’s original bitumen volume in place is found in the by either the federal government or provincial governments. In
carbonate rock of the Carbonate Triangle region and not in offshore areas, the federal and provincial governments own both
unconsolidated sands. Pilot projects are testing in situ recovery the surface (water and seabed) and mineral rights.
methods originally developed for the oil sands, including Privately owned rights are referred to as freehold rights. Much
steam-assisted gravity drainage (SAGD) and SAGD used in of the freehold or private mineral rights in Western Canada were
conjunction with solvents. If successful, another 80 to 90 acquired by the Hudson’s Bay Company, the Canadian Pacific
billion barrels could be recovered. Railway and the predecessors of the Canadian National Railway.

29
A small amount of freehold rights are held by the descendants of Acquiring mineral rights
early settlers who were granted the rights as homesteaders. The process of acquiring mineral rights depends on the status of the
Freehold rights also include mineral rights surrendered by Aboriginal rights’ owner.
Peoples upon signing treaties with the federal government (except in • Crown – If an area’s mineral rights are held by the government,
British Columbia and the territories). However, federal and provincial the company submits a bid. The company with the highest
governments must consult with Aboriginal Peoples where the bid obtains conditional rights from the Crown to drill for and
Crown’s land management and resource development decisions may ultimately produce oil and gas. These conditional rights are
adversely affect First Nations’ rights and traditional use of Crown referred to as leases or licences. The owner of mineral rights also
lands including the rights to fish, trap and hunt. receives a royalty, which is a share of any future production or
equivalent revenue.
• freehold – If mineral rights are freehold, company land agents
KEY DEFINITION LEASE negotiate directly with the owner to acquire a ‘petroleum and
A petroleum and natural gas lease is an agreement between two or more parties natural gas lease.’ If the rights are already held or leased by
where the owner of the surface and/or mineral rights grants another party the another company, the agents will still have to acquire the rights by
right to drill and produce petroleum resources in exchange for payment.
negotiating an agreement with the rights owner.
TYPICAL LAND DISPOSITIONS IN WESTERN CANADA

Source: Petroleum Information/Dwights
Legend
C Crown land
PET-CAN-OLYM ENE
CPR P 94-3-14/X99 C C F Freehold lands undisposed
ALBERTA CPR Canadian Pacific Railway lands
17 16 15 14 (all oil and natural gas rights)
CP Canadian Pacific Railway lands
CPR Lic. 1998-10-14 OLYM ENE-OTHERS C (oil rights only)
93-11-8/X97
P Crown lands posted for a land sale
OLYM ENE
CPR Olympic Energy:
CANPAR-AMOCO R
P P (company that holds the lease);
1964-9-1X74 Lic. 1998-10-14 C C $311.12 (bonus) paid per hectare
97-10-30/X02
8 9 10 Date acquired and the year that the
CP CPR lease expires (X02 = the year 2002)
CANPAR-AMOCO R
1964-9-1X74 P C C 35 Section number; each section is
one mile square and contains
SCOTT LD OLYM ENE
1996-9-18 (NC) 93-11-8/X97 Lic. 1998-10-14 256 hectares
Gas well
CPR CP
Dry and abandoned well
PET-CAN OLYM ENE SCOTT LD SCOTT LD
97-10-29 $139.12 1996-9-18 1996-9-18 C C Depicts a Crown oil and natural
62-02-27/X78
gas lease
5 4 3 2
CPR SCOTT LD SCOTT LD

OLYM ENE C C
97-10-30/X02 1996-9-18 1996-9-18
SHEL C L CP
71-17-7/XCONT (SURF-AB RUND) OLYM ENE SCOTT LD
DASH EXP SHEL C L 97-10-29 $311.12 1998-2-7
97-5-14 $1011.11
F
32 33 34 35
97-5-14/X02 CP
(88 RUND -BSWT) 97-10-30/X02 SCOTT LD
SHEL C L 1998-2-7
SHEL C L
71-17-7/XCONT (SURF-AB RUND) F
Petroleum landmen acquiring petroleum and natural gas rights rely heavily on specialized mineral ownership maps. These maps identify current mineral
ownership, lands posted for sale when rights expire and the amount paid for mineral rights.
The petroleum and natural gas rights map shown above depicts an area measuring approximately four square miles located about 25 kilometres northwest
of Calgary. Because the land was surveyed prior to 1979, the grid is measured in miles rather than kilometres.

30
Licences or leases generally require that the holder begin exploration Aboriginal communities in the region are consulted regarding
activity within a specified period. If a company cannot afford to impacts of the proposed oil and gas activity. In some regions, these
develop the area or wants to reduce the financial risk, its agents may communities own the surface rights and negotiate agreements for
sign an agreement with another company to undertake exploration access to the mineral rights.
in exchange for an interest in the mineral rights and production. This Strict laws apply to an oil and gas company’s use of surface rights.
type of agreement is known as a ‘farmout.’ The company must:
In British Columbia and Saskatchewan, if the land has been drilled • lease the land from the surface owner
and crude oil or natural gas found by the end of the lease’s initial
term then the rights are held down to the deepest formation proved • establish an annual rental fee for use of the land
to be capable of production. The rights below that formation are • agree to pay for all damages or inconvenience caused by the
returned to the Crown to be posted for future Crown land sales. presence of equipment or facilities
This is referred to as ‘deep rights reversion.’ In Alberta, the rights
above the shallowest producing formation are also returned to the If surface access cannot be negotiated for Crown mineral rights,
Crown in what is known as ‘shallow rights reversion.’ the right to access an area may be obtained through a quasi-
judicial process known as ‘surface rights arbitration’ or ‘surface
Acquiring surface rights rights mediation.’
Land departments must arrange surface access agreements for Companies try to locate wells, roads and pipelines where they will
seismic surveys, well-sites, access roads and pipelines with the parties have the least impact on nearby residents and the environment.
directly affected by exploration activities. These parties may include:
• landowners Offshore and Arctic licences
• other oil and gas companies Off the East Coast and in the Arctic, federal licences are offered for
sale and awarded to the highest bidder on the basis of spending
• government departments commitments that must be honoured within a fixed period of time.
• grazing leaseholders If commercial quantities of crude oil or natural gas are found, the
company retains the mineral rights. The company then applies for a
• forestry companies significant discovery licence, on which rent is paid, and eventually a
production licence.
2011 REVENUE FROM LAND SALES ($ millions)

8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Oil Sands 139.5 82.7 24.9 17.8 83.5 433.1 1,963.0 649.7 288.1 9.9 26.8 104.7
Conventional 2,103.9 2,061.9 882.4 2,380.7 1,533.8 2,599.1 2,435.2 2,809.9 6,279.9 1,944.7 3,930.5 4,906.9
Total 2,243.4 2,144.5 907.3 2,398.5 1,617.3 3,032.2 4,398.2 3,459.6 6,568.0 1,954.6 3,957.3 5,011.6
Since 2000, conventional oil leases have accounted for 88.4 per cent of the land sold at land sales in Western Canada, but only 86.6 per cent of the revenue.
This is because over the same period, revenue from oil sands leases has averaged almost $600 per hectare while that from conventional leases has
averaged about $508 per hectare.

31
A geologist examines drill cuttings from the Horn River Basin in northeastern B.C. The advancement of both drilling and reservoir technology
has enabled the safe and cost-effective recovery of shale gas resources in the area. Photo courtesy Nexen Inc.

32
VIBROSEIS 3D SEISMIC METHOD
3
4
5 1 Company plans and designs a seismic program.

2 Surveyors use satellite-based GPS to precisely position
source and receiver locations.
3 Seismic crew members lay out cables and geophones.
4 Cables are attached to recording system.
5 Vibrator trucks generate a controlled vibration force of
up to 32,000 kilograms at each source point.
6 Underlying geologic structures reflect some of the
vibrations back to the surface where the geophones
convert them into electrical impulses that are recorded
on magnetic tape.
7 Magnetic tapes are sent for processing and
interpretation of the recorded data.
Imaging
The data from a single line of geophones gives a two-dimensional view, like
a slice. Another type of seismic survey uses several lines of geophones,
creating a three-dimensional image of the geology below and can show the
location and extent of porous layers within these structures.
While 3D is considerably more expensive, it can provide vital information
about the extent of a formation identified initially by 2D techniques or by
previous exploration in an area.
Four-dimensional seismic involves shooting 3D seismic repeatedly in the
same location, months or years apart, to observe changes as crude oil or
natural gas is drawn out of the reservoir. This also identifies areas where
oil or gas remains.
Seismic surveys are most useful where the rocks consist of layers of
different thickness and hardness or where the rocks are folded or faulted
into possible crude oil and natural gas traps. Geophysicists and geologists
examine the seismic data for the presence of suitable traps and for
similarities with other petroleum-producing areas. If the results seem
promising, they use the seismic data to pinpoint where and how deep to
drill a well. Seismic surveys use sound waves to produce images of the rock
Recent innovations that have improved the imaging process include formations below the Earth’s surface. These images provide critical data
advanced geophysical workstations and seismic wave generators. needed to identify formations and structures with the potential to host oil
Advanced geophysical workstations have a real-time mapping capability and gas deposits. Vibroseis surveys create sounds waves using vibrator
so that users do not have to import or export data. Advanced seismic plates mounted on the base of a series of large trucks, pictured here
wave generators emit stronger waves, which provide more detail on the working in British Columbia’s Nechako Basin.
surrounding formation. Photo courtesy A. Calvert, Simon Fraser University and Geoscience BC.

33
Once production begins, royalties are paid to the government at Detonating dynamite charges in shallow holes has been the
a low rate until exploration and development costs are recovered. traditional method of generating energy waves for onshore seismic
Then, royalty rates escalate according to a set schedule. Under surveys. To reduce environmental impact, many contractors today
agreements with the federal government, the provinces of Nova use the mechanical vibroseis method to send energy waves from
Scotia and Newfoundland and Labrador establish the royalty rates large, vehicle-mounted vibrators into the ground.
for their offshore crude oil and natural gas and collect the royalties
on production. Offshore
In Arctic regions with Aboriginal ownership, First Nation entities issue Seismic surveys are particularly important in offshore areas, where
their own permits or licences to conduct operations on their lands. precise information is needed before investing tens of millions of
dollars in exploratory wells. A marine seismic survey involves survey
Regulatory boards also require environmental assessments – vessels sending a sound wave through the water at regular intervals
including the potential impacts on fisheries and marine life – before while traveling along a predefined path.
any exploration or development activities begin.
In offshore exploration, air guns using compressed air have replaced
dynamite as a safer energy source that also minimizes the impact
on marine life. A marine vessel records the reflected energy from a
towed array of hydrophones, similar to the geophones used on land.
CONDUCTING SEISMIC SURVEYS
In shallow waters, the hydrophones may be laid out on the seabed.
Once a company has permission to operate in an area, it uses
In the offshore, environmental assessments are conducted before
seismic surveys to develop more detailed pictures of underground
seismic surveys begin. These assessments focus on minimizing the
rock formations. Seismic surveys are used to identify the structure,
environmental impacts of oil and gas activity.1 Special consideration is
configuration, thickness and depth of the rock layers within
given to conditions such as fish spawning seasons and sensitive species.
sedimentary basins by measuring the time taken for seismic energy
waves to pass through and be reflected from these sedimentary layers. In the Arctic, wildlife biologists and local Aboriginals are also
Other surveys measure slight variations in the Earth’s gravitational hired to provide guidance to companies conducting seismic
and magnetic fields which may indicate anomalies. surveys in environmentally sensitive northern waters. These
observers monitor the safety zone for marine mammals such as
Geophysicists use powerful computers and specialized software
whales while the sound source is operating.
to process the data from digitally recorded seismic surveys. The
computers filter extraneous ‘noise’ and enhance the desired signals
to identify different rock layers and structures. This is accomplished
by calculating the intensity and wave patterns of the reflected sound
waves and the time it takes them to travel through the rocks and EXPLORATION AND THE ENVIRONMENT
back to the surface. As the earliest phase of a well’s life cycle, exploration is a company’s
Survey techniques depend on whether the formation is onshore first chance to begin protecting the surrounding area and its plant
or offshore. and animal species. Two of the most important methods of reducing
exploration’s environmental impact are low-impact seismic surveying
Onshore and collaboration with other industries and local populations.
In an onshore seismic survey, the geophysical contractor’s crew lays
Low-impact seismic surveying
out a line or several lines of sensitive receivers, called geophones or
‘jugs,’ on the ground. This requires clearing cutlines, which provide Seismic surveying often requires the use of cutlines, which are cleared
a line of sight between survey points. Explosions or mechanical paths that provide line-of-sight between survey points. Modern
vibrations are then created at ‘shot points’ on the surface and the techniques, however, have reduced the amount of clearing that these
geophones record the energy reflected back as seismic waves from cutlines require. These techniques include:
rock layers at various depths. • narrower cutlines cleared by small mulchers, rather than full-size
Cables usually connect the geophones and the recording instruments, bulldozers
but recently wireless telemetry has sometimes been used to relay the • meandering cutlines that follow natural paths through forested
information with radio waves. The crew then moves to the next set of areas rather than imposing a straight line
shot points to repeat the process.
• reusing old seismic lines
Recent seismic developments also include positioning shot points

from helicopters and using GPS, which eliminate the need for
cutlines altogether.
Collaboration
KEY DEFINITION ROYALTIES Companies often work with local conservation groups and forestry
Royalties are the owner’s share of production or revenues retained by companies to plan seismic surveys that use existing trails to
government or freehold mineral rights holders. The royalty is usually based minimize environmental impacts and avoid sites such as bird nesting
on a percentage of the total production and the rate may vary according to areas. Companies can further reduce their demands on the land by
the selling price. transporting personnel to remote areas using helicopters.

34
A rubber ring around the drill pipe prevents fluids from spraying the worker or the drilling rig at Shell’s Groundbirch tight gas operations in
northeast British Columbia. Photo courtesy Shell Canada.
Chapter Two Drilling
Drilling is a part of both exploration and production activities, allowing

companies to extract samples from potential production areas and
create the wells necessary for both crude oil and natural gas production.
A variety of drilling rig types allows the petroleum industry to operate
in numerous environments both onshore and offshore, and all drilling
operations have to address their environmental impacts.

35
In this chapter, you’ll learn about the process 5. When the bit needs to be replaced because of wear or changing
rock layers, the crew has to pull out the entire drill string. Sections
of drilling a well, from the stages involved of pipe have to be unscrewed in single, double or triple sections,
to the technologies that drill the well and, depending on the height of the derrick, and stacked upright. The
whole string then has to be put back into the hole again, with the
finally, the remediation and reclamation that new bit in place. This process, which can be very labour-intensive
allows the area around a well to be returned and time-consuming for a deep hole, is called ‘tripping.’ Tripping
may also be necessary to place special equipment or remove
to productive use. obstructions. At each stage, additional casing is inserted to isolate
the wellbore from the walls of the open hole.
6. If the string breaks, a specialist is called in to catch and retrieve the
bit with special tools. If the bit can’t be retrieved, the crew drills a
curved section called a ‘sidetrack’ to bypass the problem area.
PREPARING TO DRILL
After a drilling program is approved and the surface leases are Major improvements in the durability of bits and the formulation
obtained, oil and gas companies are ready to drill. The first step of drilling fluids since the 1980s have greatly reduced the number
involves preparing to drill. Before drilling can begin in an area the of trips required to drill a well. Shallow wells today are often drilled
site must be prepared, which includes: without a bit change.
• clearing and levelling the land, and building access roads Yet another recent innovation, drilling with casing, can eliminate even
more steps in the drilling process.
• finding or drilling a source of water
In this method, casing pipe is used instead of conventional drilling
• digging a reserve pit, which is used to dispose of rock cuttings pipe and remote controls permit the downhole assembly to be
and drill mud detached and raised on a cable inside the casing. The well is drilled
and cased simultaneously. This method has been used to set surface
The next step is to set up the rig. Drilling occurs in stages: casing and to drill wells all the way to target depth. It can reduce or
1. A surface hole is drilled to a depth between 60 and 400 metres, eliminate the need for tripping and can reduce the time to drill a well
depending on underground aquifers and area conditions. by more than 20 per cent.
2. The crew pulls out the column of drill pipe, called a ‘drill
string,’ and inserts steel pipe, called ‘surface casing,’
which is cemented in place to isolate the wellbore and the
surrounding geological formations. It controls the return DRILLING RIGS
flow of mud and other fluids encountered during drilling and There are many different types of rigs, known as singles, doubles
prevents groundwater contamination. or triples based on how many 9.5-metre lengths of pipe can be
3. The crew installs blowout preventers (BOPs), specialized valves connected together and stacked in the derrick. As a general rule,
used to seal and control crude oil and natural gas wells. the bigger the rig the deeper it can drill.
4. The crew resumes drilling. A probe for shallow gas or heavy oil in The smallest rigs are mounted on trucks, while the largest are
eastern Alberta or Saskatchewan may require only two or three installed on ships or offshore platforms. Land-based rigs can be
days to drill 450 metres through soft shale and sandstone to the quickly assembled and taken apart in sections for moving between
target depth. However, a rig may work eight months or longer to locations, although this may require up to 60 semi-trailers.
penetrate 6,500 metres or more through hard, folded and tilted Companies decide which kind of rig to use on the basis of cost,
rocks in the foothills of the Rocky Mountains. availability, depth and the characteristics of the site and reservoir.
AT A GLANCE – DRILLING OPERATIONS

There are three distinct
types of drilling operations
performed during a well’s Exploration Appraisal Production
life cycle: exploration,
appraisal and production.
After explorationists have identified a Once hydrocarbons have been found, Wells drilled to extract hydrocarbons
promising formation, an exploratory further wells are drilled to determine for commercial production, a site’s
well is drilled to determine whether the size and extent of the reservoir. final drilling operation, are called
hydrocarbons are present. production wells. A company may use
existing appraisal wells for production,
and will drill further production wells
if the reservoir is larger.

36
ANATOMY OF A LAND-BASED DRILLING WELL
Crown
Monkeyboard
Mast
Mud-mixing shack
Traveling block Safety trapeze line
Lined pit
Pump house
Drilling floor
Combination
Manifold
building
Flow line
Boiler Substructure
V-door ramp
Fuel tank
Supply
Doghouse (on-site office) reel
Drilling
pipe Catwalk
Canadian land-based drilling rigs are designed to be assembled quickly with minimum impact on the environment. Buildings are insulated to protect workers
and equipment in cold weather. The flag on the crown is a safety measure to alert workers to changes in wind direction. The crown is often painted red and
lighted at night to warn low-flying aircraft.

37
ROTATING SYSTEMS
Conventional Drilling Top Drive Drilling

On most land-based rigs, a Top drive drilling replaces the
rotary table on the rig floor kelly method of rotation used
rotates the kelly, which turns Drilling line in conventional rotary drilling.
the drill pipe and drill bit. A hydraulic or electric motor
As the drill bit penetrates is suspended above the drill
deeper, the crew threads pipe and enables the top drive
additional pipe onto the top of rig to rotate and pump
the drill string. continuously while drilling or
Travelling during the removal of drill
Sections of pipe are typically block
9.5 metres long, but may be pipe from the hole.
longer. Diameters and wall Most offshore units and an
thickness also vary, depending increasing number of land rigs
on well depth. use top drives.
Hook
Goose neck
Hose Hydraulic
motor
Swivel
Elevator
Kelly
Kelly
bushing
Master bushing
Engines drive
the drawworks
and the rotary
table,which Engines drive
rotates the kelly drawworks
Rotary
table

38
Walking rigs are self-propelled and capable of moving about two Unlike vertical wells, directional wells use a slanted or curved
metres every five minutes. They can turn on their own axes, making (deviated) wellbore. This allows multiple wells to be drilled from
them ideal for drilling multi-well pads. a common drilling pad, which reduces the wells’ disturbance on
the land.
Conventional rotary table rigs are capable of drilling a single
9.5-metre length at a time. Directional drilling uses drilling sensors and global positioning
technology to control the drill bit in real-time. Directional wells can
Top drives are capable of drilling up to three connected lengths at
be drilled either by pointing the drill from the surface or by employing
a time, allowing for faster drilling.
a downhole steerable motor, which allows the drillbit to change
The rig itself is hinged so that it unfolds like a jackknife as cables directions underground.
and sheaves (pulleys) hoist it into the upright position. The other
components – such as the motor controls, blowout preventers, Horizontal drilling
pumps and mud mixing equipment – are all designed in modules Horizontal drilling involves a vertical well whose path turns more than
for easy hookup. The assembly process is known as ‘rigging up.’ 80 degrees in a horizontal direction. One of the most transformative
The cost of a well can range from $50,000 for a shallow land- technologies in the oil and natural gas industry, it is employed in both
based well to $10 million or more for a deep well in Western conventional and unconventional production, notably in in situ oil
Canada to more than $100 million for one in deepwater offshore.2 sands recovery and tight oil and shale gas development.
Arctic onshore wells are at least 25 per cent more expensive The technique extends the well into a much larger portion of a
than comparable wells in Western Canada, mainly due to higher reservoir, improving production and recovery. This can also reduce
transportation costs for the rig, supplies and workers. Some the amount of water and natural gas mixed with the crude oil.
onshore Arctic wells cost up to $30 million.
Though Canada’s first horizontal well was drilled in 1978 by Imperial
Directional drilling Oil, it wasn’t until the late 1980s, when other enabling technologies
like downhole motors improved telemetry equipment, that it saw
Within the last 25 years, directional drilling techniques have
wider use.
transformed both conventional and unconventional production.
Improved sensors, geopositioning and other advanced field
Multi-lateral drilling
technologies have moved drilling beyond traditional vertical wells,
reaching a greater volume of the available resources. Multi-lateral drilling reaches separate underground targets with
a single main well. Rather than drilling multiple wells, a company
can instead branch a single well to meet several targets.
Air and underbalanced drilling

HOISTING SYSTEM Occasionally, wells are drilled without mud to increase penetration
rates and to avoid sensitive rock formations coming into contact
with water. In air drilling, compressed air removes the cuttings.
Crown block
Drillers can also obtain many of the same benefits through
underbalanced drilling – using mud lightened by the addition of
nitrogen or other gas.
Underbalanced drilling has become increasingly common in Western
Deadline
Canada because it minimizes damage to the producing reservoir.
This is especially useful in clay formations.
Drilling line
Fast line (wire rope)
Travelling block
Drilling line
Dead line Coiled tubing

anchor
Coiled tubing is a continuous, jointless, high-pressure rated
Supply reel
hollow steel tube or pipe that is brought to the well-site or
Drawworks
offshore drilling platform on reels of up to 9,000 metres.
Special equipment is used to insert the coiled tubing through
the wellhead into the wellbore. This method is considerably
Copyright 2012 Canadian Centre for Energy Information quicker and more efficient than joining sections of pipe.
Coiled tubing has proved useful in applications such as well
stimulation and underbalanced drilling. It can also be used
The hoisting system works as an elaborate pulley to lift the travelling
block and remove the drill pipe. This action enables the installation of with downhole motors, drilling horizontal wells from existing
an extra length of pipe or a new drill bit. vertical wells.

39
CIRCULATING SYSTEM
Mud-mixing
shack
Discharge line Mud pumps
Hose
Kelly Mud tanks
Mud mixer
Standpipe
Blowout De-silter
preventer
(BOP)
Mud-gas separator (safety feature)
Annulus
Drill pipe
Drill collars
Drill bit Return line Shale shaker
Lined pit
Circulating System to Lubricate Drilling Bit

A drilling fluid called mud circulates through the drilling bit as it cuts through fittings in a top drive mechanism. After passing through the drill
through rock. The fluid lubricates and cools the bit, removes rock cuttings, bit, the mud and cuttings circulate back to the surface through the space
stabilizes the wall around the hole and controls the pressure in the outside the pipe, known as the annulus, and into the mud return line.
wellbore. The mud is a suspension of chemicals and minerals such as The shale shaker, a vibrating screen, then separates the cuttings from
bentonite clay in water or sometimes oil. In offshore production, a the mud. The cuttings then flow into lined pits or sumps, while the drilling
synthetic-based fluid (SBM), also known as a low-toxicity oil based mud, mud flows through the de-sander and de-silter and is recirculated. Fluid
is often used. additives flow through the mixer as the drilling progresses to greater
Workers blend the mixture in the mud-mixing shack. The mud pumps push depths. When drilling is completed, the remaining drilling mud is trucked
the fluid up the standpipe and into the drill string through the kelly, or away for safe disposal or reuse at another site.

40
54 44
i i 4. perforation – Holes are made through the casing and into the
formation to ensure that crude oil or natural gas can enter the
wellbore. Perforation is usually performed with a special device,
called a perforating gun, which is lowered to the target depth on
an electrical wireline. An electrical impulse fires explosive charges
to perforate the casing, surrounding cement and reservoir rock.
WELL CONTROL
Of the 375,119 wells drilled Since 2009, the percentage If drillers cannot control the pressure in a well, this can result in a
in Canada since 1955, 54 per of gas wells drilled in Canada
blowout or uncontrolled release. Today, blowouts are uncommon
cent have been natural gas has dropped to 44 owing to
wells. abundant supply from shale and nearly all wells are completed without incident. Some blowouts
gas production. release hydrogen sulphide, which can be toxic at high concentrations
and pose risks to workers and nearby residents. While these cases are
uncommon, all blowouts waste valuable resources and can damage
the environment.
Clays can collapse into the wellbore or swell if water-based drilling Blowouts can be difficult and expensive to bring under control.
fluids are used. Underbalanced drilling minimizes the seepage of the Sometimes a second well has to be drilled to relieve the pressure on
drilling fluid into the reservoir and allows crude oil and natural gas the damaged well. Rig crews are trained to use blowout preventers
to be produced more effectively. and drilling fluid to reduce the frequency and severity of blowouts.
A disadvantage of underbalanced drilling is that some natural gas The drill bit may be several kilometres deep by the time high-pressure
may be released while drilling. In the past, this gas would have been hydrocarbon deposits are reached. Adding heavy minerals such as
burned in a flare or incinerator at the well-site. Today, companies, barite (barium sulphate) to the mixture can increase the weight of the
government regulators and nearby residents want to minimize drilling fluid. Drillers adjust the weight so the mud is heavy enough to
prolonged flaring. If possible, the natural gas is shipped by pipeline hold back formation fluids from entering the hole, but not so heavy
to a processing plant or is reinjected into the reservoir. that the mud will penetrate into the reservoir and damage it.
If the formation pressure is higher than the pressure exerted by the
mud column, fluid from the hydrocarbon formation may enter the
wellbore. This is known as a ‘kick’ and must be controlled to prevent a
WELL COMPLETION blowout. Kicks are detected by sensitive instruments that monitor the
mud flow and composition and the mud tank levels. Drillers control
Once the drilling has reached the resource and the company is confident most kicks simply by managing the mud flow and increasing the
that there are sufficient quantities of oil or gas, the next step is to weight of the mud.
prepare the well for production, through a process called ‘completion.’
Most wells in Canada go through the following steps during completion:
1. installing production casing – Tubular steel pipe connected
by threads and couplings lines the total length of the wellbore BLOWOUT PREVENTER (BOP)
to ensure safe control of production, to prevent water entering
the wellbore and to keep rock formations from sloughing into BOPs are large valves that
the wellbore. Production casing is set in place by pumping a help control the pressure of
cement mixture into the casing and forcing the cement back up a well. The device is typically
the annulus (the space between the casing and wellbore). The installed on the top of the
casing, below the rig floor.
task must be done quickly but carefully – a poor cement job can There are different types of
adversely affect the producing formation. BOPs.
Some can seal off the well if
2. employing a service rig – Once the cement has set, the drilling the drill pipe is still in the
rig is usually moved from a land-based well-site and a smaller, hole, or if it has been
truck-mounted service rig is brought in to complete the well. removed. Others can shear
(For offshore wells, the completion is done from the drilling off the drill pipe and seal the
entire well.
rig.) Service rigs also return to wells periodically to perform Illustration courtesy
maintenance, replace equipment or enhance production. Precision Drilling Corporation.
3. installing production tubing – Steel pipe smaller in diameter than

the production casing is lowered into the casing and held in place
by packers that also isolate the producing zones. The tubing hangs
from a surface installation called the wellhead. The wellhead
includes valves, chokes and pressure gauges that make it possible
to regulate production from the well.

41
2011 WELLS DRILLED IN CANADA

Source: Canadian Association of Oilwell Drilling Contractors
25,000
20,000
15,000
10,000
5,000
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Service 186 308 265 201 255 330 167 159 450 336 563 1,226
Dry 1,903 1,759 1,289 1,233 1,266 1,414 1,072 935 1,689 756 625 374
Natural Gas 8,934 11,177 9,073 13,944 15,645 15,359 15,289 12,621 12,326 5,060 5,856 4,449
Oil 5,462 4,689 3,832 4,473 4,427 4,822 5,599 5,429 6,214 3,190 6,522 10,022
2011 CANADIAN DRILLING RIG UTILIZATION RATES (percentage)

100
80
60
40
20
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Idle Rigs 219 247 364 263 274 216 302 497 458 617 434 355
Active Rigs 383 391 298 422 437 534 511 375 405 238 376 455
Both the number of wells drilled and rig utilization rates usually parallel commodity prices: when prices rise, so does drilling activity. Until 2008, most
drilling in Canada was gas-focused, but as the price of natural gas fell due to increasing supply from shale gas, the number of gas wells being drilled fell
too, as did rig utilization. Utilization rates improved in 2010 and 2011 as oil prices rose and the number of oil wells being drilled increased.

42
A well that did produce for a time may be suspended for technical
EVALUATING THE RESOURCE reasons such as equipment problems or it may be suspended
Once a well has been drilled, companies are able to perform further because the price of the commodity has made it uneconomic.
tests to determine the characteristics of rock formations and the Companies continue to pay surface lease payments to the owner
potential volume of the well’s production. These measurements are of the surface rights and continue to pay property taxes to the local
conducted using logging information and drillstem testing. municipality on suspended wells. They do not pay royalties because
there is no production from the well.
Logging and coring Because a well may be capable of returning to production if
Logging operations obtain information about rock formations by economics improve, companies prefer to suspend wells rather than
lowering a package of instruments, called wireline logging tools, into the abandon them.
wellbore. The instruments record and transmit information about the In older producing areas of Western Canada, there are many
rock layers’ thickness, porosity and permeability and the composition of ‘orphan’ wells where the original owner has gone out of business or
fluids such as crude oil, natural gas or water within them. cannot be determined – there are about 500 such wells in Alberta,
A logging instrument can also be mounted on the string behind the British Columbia and Saskatchewan.3 Some of these wells were not
bit to send information continuously during drilling. It sends signals abandoned to today’s standards or developed leaks through the
to the surface by means of pulses, like sonar signals, in the mud. casing or cement.
Another instrument, the measurement-while-drilling (MWD) tool, can Operating companies now pay into a fund controlled by government
similarly measure the direction and precise location of the bit. MWD agencies that undertake the necessary repairs and cleanups.
is particularly useful while drilling horizontal wells. Government regulations and computerized records help to reduce
If more information is needed about the rocks, a special cylindrical bit the future likelihood of orphan wells. Some jurisdictions require a
may be used to cut a core sample for analysis by geologists and other reclamation bond be posted before an initial licence is granted.
specialists such as reservoir engineers, geochemists and palynologists. In offshore areas, an abandonment plan must be submitted and
approved along with the licence application. Regulations require that
Drillstem testing
abandonment take place without creating hazards to navigation or
A common way to determine potential crude oil or natural gas the environment.
production is the drillstem test, which uses a special tool in place
of the bit on the end of the string. The tool has valves and rubber
sleeves, called ‘packers,’ that can be controlled from the surface.
First, the packers are expanded to isolate the section of the hole to
OFFSHORE AND FRONTIER DRILLING
be tested. Next, valves on the tool are opened, allowing liquids or gas
from the formation to flow into the empty drill pipe. This gives a good While offshore and frontier drilling uses equipment that is similar
indication of the type and volume of the fluids in the formation, their to most onshore drilling rigs, the unique requirements of these
pressure and rate of flow. environments need additional procedures and technologies.
Offshore drilling
The actual drilling mechanism used offshore includes the same
ABANDONMENT AND RECLAMATION components as an onshore rig; however, there are several crucial
differences:
The cost of abandoning and reclaiming wells is a significant factor
in any company’s drilling program. Plans for decommissioning • An offshore rig needs a fixed or floating platform to support it.
and reclamation are developed in consultation with landowners, • There may be hundreds or thousands of metres of water between
regulatory bodies and other affected parties. the platform and the sea floor.
If a well does not encounter commercial quantities of oil or gas, it • In some offshore operations, it may be necessary to disconnect the
is usually abandoned shortly after being drilled. An abandoned well rig from the well during drilling, due to storms or icebergs.
is defined as one that has been permanently dismantled according
to government regulations and left in a safe and secure condition. A structure called a ‘template’ is cemented in place on the sea floor to
This generally entails plugging the wellbore with cement, removing establish a connection between the rig and the wellbore. The template
all surface equipment and facilities and restoring the surface to is basically an open steel box with multiple holes in it, depending on
its equivalent condition prior to drilling. Land restoration includes the number of wells to be drilled. It contains blowout preventers, so
planting native vegetation and may require contouring. The company the well can be sealed off if there are problems on the platform or the
then applies for a reclamation certificate indicating all regulatory rig has to be moved.
conditions for abandonment have been met. This may take several
Cables attach the template to floating platforms; the cables are used
years as the vegetation re-establishes itself. Once the reclamation
to position the drill pipe accurately in the template and wellbore while
certificate has been issued, surface lease obligations end.
allowing for some vertical and horizontal movement of the platform.
Abandoning a well that did produce is more complicated and the
method depends on a number of factors, including the type of well
being abandoned, its location and the nature and depth of producing
zones. After a well is abandoned and certified, the last company to own
the well remains liable for any leaks or other problems that may occur.

43
The moon pool is a walled, round hole or well in the hull of a semi-submersible rig (usually in the centre). The drilling assembly and other
assemblies pass through the moon pool while a well is being drilled, completed or abandoned from the rig. Photo courtesy Nexen Inc.

44
The type of platform depends mainly on water depth. If this development proves successful, shale gas may partially offset
long-term declines in conventional natural gas in the Western Canada
• shallow water – In relatively shallow water, the platform can rest
Sedimentary Basin.
its weight on the sea floor. Platforms with retractable legs, known
as ‘jack-up rigs,’ are used for exploration in waters up to 100 In 2010, the National Energy Board approved the Mackenzie Gas
metres deep such as those near Sable Island off Nova Scotia. Project, the biggest development ever proposed for Canada’s North.
The project would connect three gas fields via a 1,220-kilometre
• deep water – Semi-submersible rigs, raised and lowered by
natural gas pipeline along the Mackenzie Valley to northwest
flooding part of the structure, are kept in place by anchors.
Alberta. In addition to individual field development and the
Semi-submersible rigs are used for most exploration on the Grand
Mackenzie Valley pipeline, the project includes a pipeline gathering
Banks off Newfoundland and Labrador. Dynamically positioned
system, a gas processing plant and a natural gas liquids pipeline
drillships and most semi-submersible rigs use propellers and
to Norman Wells. Although approved, the project may not proceed
thrusters to maintain position. In 2010, Chevron Canada drilled
immediately because of current low gas prices and abundance of
an exploratory well in the Orphan Basin area off the coast of
shale gas resources.
Newfoundland. The well set a new Canadian record with its water
depth reaching 2,600 metres.4
Deepwater drilling is expected to be a significant factor in the future

of the oil and gas industry, in Canada and worldwide. Off Nova Scotia, DRILLING AND THE ENVIRONMENT
deepwater wells are aiming for natural gas reserves three times Drilling operators take extensive measures to protect the safety of the
larger than those discovered in shallower water on the Scotian Shelf. environment, surrounding communities and workers. These measures
Shell Canada is planning deepwater drilling off the Scotian Shelf that fall broadly under environmental regulation and industry practices.
could involve water depths ranging between 1,400 to 3,700 metres. Flaring and sour gas management are two examples of ways that the
industry is addressing the safety and environmental consequences of
Frontier drilling
drilling.
Arctic drilling, like offshore drilling, involves the same mechanical
components as conventional onshore drilling. Onshore arctic drilling Environmental regulation
generally takes place in winter when the soil above the permafrost To ensure safety and reduce environmental impacts, government
is frozen to provide a firm platform and so roads can be constructed authorities enforce strict environmental and equipment standards
of ice and snow. Frontier rigs require additional insulation for arctic and operating procedures on drilling rigs. These regulations include
operation and local hunters may be employed to protect crews from directives on:
polar bears.
• surface casing depth
One recent innovation is a special padding placed between the rig
and the ground to insulate the permafrost. Arctic offshore drilling • casing design
can be done from drillships or reinforced ice islands or, in shallower • cementing
waters, dredged artificial islands or steel structures filled with
dredged material. • blow out preventers
The combination of horizontal drilling and multi-stage hydraulic • drilling waste management and reporting
fracturing (a process that uses fluid to fracture the rock to create cracks • flaring, incinerating and venting
through which gas can flow) has opened up development of shale gas
• well testing, servicing and completion
in areas such as the Horn River Basin in northeastern British Columbia.
• hydraulic fracturing
• suspension
• abandonment
CURRENT FRONTIER DRILLING Government departments and agencies such as Alberta’s Energy
Resources Conservation Board provide surveillance of oil and gas
Drilling for crude oil continues around Norman Wells, which has
developments to ensure the projects are built as applied for and
been connected by pipeline to Alberta since 1985. The industry
meet ongoing regulations. In developing regulations, the government
has acquired offshore holdings in the Beaufort Sea in Canada’s
consults with industry bodies such as the Canadian Association
North and continues to collect seismic data in the region.
of Oilwell Drilling Contractors and the Canadian Association of
Although the economic and technical challenges to developing
Petroleum Producers.
oil from the Arctic remain high, some experts believe the region
offers a huge potential area of exploration opportunity. In addition, the Canadian Association of Petroleum Producers has
developed environmental operating practices for the upstream
In 2011, in response to public concerns about the BP
petroleum industry. The most recent of these is ‘Hydraulic Fracturing
Deepwater Horizon spill in the Gulf of Mexico, the National
Guiding Principles and Practices,’ which supports fracture fluid
Energy Board conducted an Arctic offshore review. The review
additive disclosure.
was intended to determine the terms and conditions required
for any further oil exploration and production in Canada’s
Arctic waters.

45
For offshore drilling, federal regulations govern releases of wastes In recent years, industry and government actions have reduced
into the marine environment. Frontier development is governed by the amount of flaring. Flaring not only wastes a valuable resource,
its own regulators, who are developing new rules for the disposal of it releases greenhouse gases into the atmosphere. Incomplete
drilling wastes to protect the delicate northern environment. combustion can release carbon monoxide, unburned hydrocarbons,
soot and toxic substances such as volatile organic compounds (VOCs).
Industry practices Types of VOCs include polycyclic aromatic hydrocarbons and various
The industry is continually addressing the environmental impacts of sulphur compounds. Flaring is also a common reason for public
drilling, notably through improved drilling fluids, directional drilling complaints about odours, smoke and noise.
and offshore practices. The petroleum industry is now required to reduce flaring and uses
Companies use new techniques to reduce the production of waste a variety of strategies to achieve this objective. Where volumes
fluids from drilling, to lessen the toxicity of drilling fluids and to are sufficient to recover natural gas economically, it is gathered
improve the disposal of waste fluids. For example, synthetic drilling and piped to processing facilities. Some companies reinject gas
fluids not only have the environmental benefits of water-based, underground or use small gas-fired generators to produce electricity
rather than oil-based, muds, they also generate less waste and from gas that would otherwise be flared.
are more easily recycled. Better planning also reduces the surface Changes in procedures and equipment in natural gas operations have
disturbance caused by drilling and new standards are in place for reduced the need for flaring during maintenance. Research is also
site reclamation. underway to develop more efficient flare and incinerator designs that
Directional drilling techniques have not only increased production, improve efficiency and reduce emissions in situations where flaring
but have also substantially decreased the footprints of modern cannot be avoided.
drilling operations.
Sour gas
In offshore drilling, rock cuttings from drilling with oil-based fluids
About one-third of the natural gas produced in Western Canada
are either reinjected into wells or are separated from the fluid before
they are disposed at sea. Other wastes are taken ashore by service contains enough hydrogen sulphide (H2S) to be considered ‘sour.’
vessels for disposal. Stricter requirements may be imposed in Most sour gas wells are located in the western half of Alberta and in
environmentally sensitive offshore areas. northeastern British Columbia. Special precautions are taken during
drilling critical sour gas wells. These include specific requirements for
Ensuring that groundwater sources aren’t contaminated by drilling drilling plans and procedures, well design, specialized worker training
operations is essential. Well casings and cementing programs are and supervision, safety specialists, detailed emergency response plans
designed to ensure that drilling fluids don’t leak into aquifers and and associated community consultation.
companies must adhere to government guidelines specifying the
distance they can drill from domestic wells. Drilling professionals Regulations also specify standards for equipment such as blowout
must also take extra precautions when operating near a body of water. preventers (BOPs), mud-gas separators, drill pipe and valves. When
the drill bit enters the critical zone in a well where sour gas is likely to
Flaring be encountered, additional precautions include providing continuous
gas ‘sniffing’ or testing, supplying breathing apparatuses for rig
Flaring, the burning of natural gas through a vertical stack, is an
personnel and notifying people living nearby.
important safety measure used during drilling, production and
processing operations. During and after some drilling and servicing Critical sour gas wells are wells with the potential for large H2S
operations, it is necessary to dispose of natural gas that has been releases or for any release that can affect population centres. Any
brought to the surface by drilling mud and fracturing fluids. Flaring well that can release gas containing more than two cubic metres per
also safely disposes of natural gas during equipment failures, power second of H2S during the drilling stage is a critical sour gas well. In
outages and other upsets in drilling operations. The natural gas designating critical sour gas wells, regulators also consider population
might otherwise pose hazards to workers, nearby residents and density, the environment, the sensitivity of the area and the expected
facility equipment. complexities of the drilling phase.
Flaring can be an important safety procedure for preventing the Companies and governments have developed computer models to
accumulation of dangerous concentrations of gases, especially at predict how sour gas would disperse in the event of a blowout or
facilities that handle sour gas. The hydrogen sulphide (H2S) in sour other accidental release. Emergency response planning for sour gas
gas must be flared because it is toxic and heavier than air. Flaring wells is based on the results of these models. Plans specify steps that
converts the H2S into sulphur dioxide (SO2) that is dispersed in the would be taken to protect people’s health and safety in the event of a
plume of hot gases from the flare. Flaring is done in compliance with release. The measures might include igniting the gas, which converts
government air quality objectives. The continuous small flame visible H2S into sulphur dioxide (SO2). Sulphur dioxide is also toxic but
at some oil and gas facilities is not a flare but a pilot light, fed by disperses more effectively because heat carries it upward, resulting in
sweet natural gas. It remains lit to ensure instantaneous combustion reduced concentrations at ground level.
of any gas release. One of the first activities initiated in a sour gas blowout is the
monitoring of air quality downwind from the well. Mobile equipment
is set up to track the plume and to identify concentrations of gas both
inside and outside the emergency planning zone. If the emergency
response team determines that there is a danger, residents are
evacuated or the well is ignited to protect the public.

46
A shift supervisor and a production and process operator inspect the pipes along wellpad 11 at Nexen’s Phase 1 SAGD plant. The facility is
located about 40 kilometres southeast of Fort McMurray. Photo courtesy Nexen Inc.
Chapter Three Production
Production is the process of extracting hydrocarbon resources from

geological formations. Crude oil and natural gas production employ
many of the same techniques, like horizontal drilling and multi-stage
hydraulic fracturing. But the unique characteristics of each hydrocarbon
reservoir require a range of technologies, especially as Canadian
production shifts toward unconventional resources like oil sands and
shale gas.

47
1.4 1.6
In this chapter, you’ll learn how different i i
resources – conventional crude oil, oil sands
and heavy oil, conventional natural gas,
unconventional natural gas and offshore
petroleum – are produced. You’ll also learn
how these production methods are improving
to meet demands for greater environmental
accountability while consumer demand Canada produced 1.4 million
barrels per day of conventional
Canada produced 1.6 million
barrels per day of bitumen
continues to increase. oil in 2011. and synthetic oil in 2011.
PRODUCING CRUDE OIL AND NATURAL GAS

Production is the process of bringing hydrocarbons to the surface Other types of pumps include the traditional ‘iron horse’ pumpjack,
where the crude oil or natural gas is prepared for processing. The submersible pumps and progressive cavity pumps.
steps involved vary with the resource.
Stimulation
Natural gas generally flows to the wellbore under its own pressure.
As a result, most natural gas wells are equipped only with chokes and In many crude oil and natural gas wells, one additional step is
valves to control the flow through the wellhead into a pipeline. When required – stimulating the formation by physical or chemical means
wellhead pressure is less than the pipeline pressure, a compressor is so that hydrocarbons can move more easily to the wellbore through
installed to boost the low-pressure natural gas into the pipeline. the pores or fractures in the reservoir. This is usually done before
installing a pump or when the pump is removed for maintenance.
Crude oil production is more complicated than natural gas
production. Crude oil has larger molecules and moves through rocks One form of stimulation is acidizing – injecting acids under
less easily. The percentage of the oil in the reservoir that can be pressure into the rock formation through the production tubing and
produced economically, called the recovery factor, is determined by perforations. Hydrochloric acid, for example, is particularly effective
a large number of variables. These include the weight of the oil, its in dissolving portions of limestone and dolomite formations. This
viscosity (how easily it flows), the porosity and permeability of the creates channels beyond the perforations for crude oil and natural
rock, the pressure in the oil reservoir and the pressure of other fluids gas to flow back to the well.
such as natural gas and water in the reservoir. Acidizing is often followed by hydraulic fracturing, another common
Production increases in crude oil and natural gas production from method of stimulation. Hydraulic fracturing is one of the most
the early 1990s have been largely due to increased exploration and essential operations of modern oil and natural gas production – a
development as well as improved technology such as horizontal technique that has allowed the industry to produce previously
drilling, multi-stage hydraulic fracturing and expanded oil sands uneconomical deposits of oil and gas.
mining and steam-injection projects.
Hydraulic fracturing
Hydraulic fracturing, also known as fracking, is a common method
of improving oil and gas flow to the wellbore. Typical fracture
CONVENTIONAL CRUDE OIL stimulations include four steps:
Conventional crude oil wells are those that can produce oil using 1. A fluid, most commonly water, is pumped down the well at
either the pressure of the reservoir itself or with the addition of a high enough pressure to create cracks, or fractures, in the
pumping. Unconventional oil, on the other hand, refers to production producing formation.
that requires techniques beyond natural pressure or pumping to 2. Once the fractures are opened, the pressure is increased to further
stimulate and recover the resource. open them as well as any existing natural fractures.
In primary recovery – the initial approach to producing oil – natural 3. Proppant, hard material such as sand, ceramic beads or resin-
reservoir pressure or simple mechanical pumps are used to raise oil to coated granules, is mixed with the fracture fluid to form a slurry
the surface. Most oil wells drilled in Canada today have to be pumped. and is pumped down the well.
If a well requires it, a pump is lowered down the tubing to the bottom 4. Once the proppant is in place, the pumps are shut off and the
of the well on a string of steel rods, referred to as the ‘rod string.’ fracture fluid flows back to the well while the proppant remains
The rod string is hung from the wellhead and connected to a drive in the fractures, propping them open and allowing the oil or gas
unit and motor on the surface. The rod string conveys power to the to be produced.
pump either by rotating or moving up and down, depending on the
type of pump employed.

48
2012 OIL SANDS PROJECTS

Sources: Alberta Energy, Government of Alberta, Alberta
Energy Resources Conservation Board, Alberta Geological
Survey, Canadian Energy Pipeline Association
ALBERTA
Fort Chipewyan
Athabasca
Deposit
Fort Mackay
Buffalo Head 1
Hills Deposit
2
3
Fort McMurray
Peace River 4
Peace River
Deposit
To West Coast,
U.S. markets
and potential new Wabasca
markets in Asia Grande Prairie
Deposit
Athabasca Cold Lake

Deposit
Cold Lake
Edmonton
Lloydminster
6
To West Coast
and U.S. markets
Hardisty
Red Deer
CANADA
To Eastern
Canada and
U.S. markets
Legend Upgraders Calgary

Oil Sands 1 CNRL Horizon
Oil Sands Area 2 Syncrude Mildred Lake
To U.S.
Surface Mineable Area 3 Suncor Base and Millennium markets
Medicine Hat
Carbonate Triangle 4 Nexen Long Lake
Producing Projects (99*) 5 Shell Scotford
Lethbridge
Projects Under Construction (14*) 6 Husky Lloydminster
Selected Major Pipelines
Proposed Pipelines
To U.S. markets
* as at July 2012

49
Most oil and gas reservoirs are deeper than 1,500 metres, while ‘Waterflooding’ is the most common method of EOR. Water maintains
potable water aquifers are generally less than 300 metres. As well, the the reservoir’s pressure and pushes the oil out of the surrounding
bore holes are cased and cemented to protect potable water aquifers. formation.
Fracturing fluid generally consists of 90 per cent water and 9.5 per Another method of improving oil recovery is called miscible flooding
cent sand. The remaining 0.5 per cent is made up of chemicals used – injecting a fluid that mixes with crude oil in a reservoir.
to reduce friction and protect the rock formation, making the process
Two common fluids used in miscible flooding include:
safer and more efficient. Other fracturing fluids less commonly used
include carbon dioxide, nitrogen and propane. Once recovered from • natural gas liquids – Natural gas liquids include ethane, propane
the well, the fracture fluid is treated and recycled or disposed of and butane. When dissolved, these liquids reduce the surface
according to regulations. tension and viscosity to help release the oil from the reservoir rock.
Hydraulic fracturing was first used in conventional shallow oil and gas • carbon dioxide – Carbon dioxide (CO2) has been used to a limited
extraction in the late 1940s in North America. In Alberta, it has been extent in Canada for miscible floods. It also has the advantage of
used for more than 60 years to fracture more than 171,000 wells.5 using a greenhouse gas that would otherwise be released into the
atmosphere.
Recently, hydraulic fracturing has been combined with horizontal
drilling to open up new resources, like tight oil and shale gas. The Two EOR projects using carbon dioxide are operating in Alberta and
reservoir is fractured in stages, with each stage isolated from the Saskatchewan and several more are in the planning stage. The most
rest of the well to create more effective fractures. This is known significant of these, operated in Weyburn, Saskatchewan by Cenovus
as multi-stage hydraulic fracturing. Computer programs are used and Apache, takes CO2 transported from a coal gasification plant in
to design fracture programs and to track the operations while in Beulah, North Dakota and then pumps the gas into the previously
progress so adjustments can be made if necessary. depleted Weyburn-Midale field. This enables the field to continue to
When combined with horizontal drilling, hydraulic fracturing allows produce oil while CO2 is captured and stored in the reservoir.
companies to isolate particularly promising formations and run a well However, some reservoirs are more suited to this technique
horizontally through a desired layer. And with multi-stage hydraulic than others. Research is continuing on the injection of CO2 into
fracturing, a producer can further isolate production to specific areas underground formations. Another possible use is to stimulate
within the larger formation. production of natural gas from coal deposits.
Hydraulic fracturing is a water-intensive activity. To manage water Even with all these techniques, the average recovery in conventional
use responsibly, the industry: oil fields is seldom more than 30 per cent of the original oil. The
• follows safe drilling practices to ensure wellbore integrity and remaining resource represents billions of cubic metres of oil that has
protect water resources been discovered in Canada but cannot be produced economically with
existing technology.
• recycles and reuses recovered water
• supports studies to better understand water resources in areas
of development
The industry also supports open disclosure of fracturing fluids used in CARBON CAPTURE AND STORAGE
operations. In 2011, the Canadian Association of Petroleum Producers In 2009, the Government of Alberta committed $2 billion to
(CAPP) issued new industry guiding principles for hydraulic fracturing. funding for carbon capture and storage (CCS) projects. So far,
These support responsible water management practices and improved their funded projects include:
reporting of hydraulic fluids for shale gas development in Canada.
Swan Hills Synfuels ($285 million)
Oil recovery methods
An in situ coal gasification (ISCG) project that will tap into
Primary recovery rates can range from 0.5 per cent to 60 per cent of a deep, un-mineable coalbed and turn coal into a synthetic
the resource in the reservoir, depending on the combination of crude gas (syngas) underground. The CO2 from this process will be
oil and rock characteristics. The average primary recovery rate is less captured and used for enhanced oil recovery. The syngas will
than 20 per cent. This means that a lot of oil would usually be left in be used to generate clean electricity.
the reservoir.
A number of methods can improve primary recovery. The most Alberta Carbon Trunk Line ($495 million)
common is infill drilling, which involves drilling more wells into the A 240-kilometre pipeline that will transport CO2 from a
same pool so the oil does not have to travel as far through the rock to fertilizer plant and an oil sands bitumen refinery in Alberta’s
reach a wellbore. Industrial Heartland to producing oil fields in central Alberta.
Enhanced oil recovery Shell Quest ($745 million)

Many of Western Canada’s active reservoirs are ‘mature,’ meaning that This project will capture and store more than a million tonnes
the reservoirs’ most accessible resources have already been extracted of CO2 annually from Shell’s Scotford oil sands upgrader and
through years of production. To continue to make these reservoirs expansion near Fort Saskatchewan. Funding of $120 million
viable, the industry must use enhanced oil recovery (EOR) techniques was also provided by the federal government.
to stimulate further production on less accessible resources.

50
Transportation
UNCONVENTIONAL OIL The oil sands are highly abrasive and very hard on machinery.
Unconventional oil refers to any oil that cannot be produced using Literally tonnes of steel are worn away from the equipment each year.
either the reservoir’s natural pressure or with the addition of As a result, the technologies used to transport mined oil sands ore
simple pumping. In Canada, the vast majority of unconventional oil have changed drastically over time.
production refers specifically to the oil sands, where bitumen must Bucket-wheels and draglines that fed long conveyors have been
be extracted and processed. replaced by truck and shovel operations and hydrotransport, which
uses pipelines to carry oil sands to the processing plant. The trucks
dump the sand into a machine that breaks up lumps and removes
rocks, then mixes the sand with warm water. The resulting slurry of oil
OIL SANDS sands and hot water is transported by pipeline to the extraction plant.
The viscous bitumen in Canada’s oil sands is one of the world’s As an added benefit, bitumen begins to separate from sand, water
largest known petroleum resources. However, bitumen is too and minerals as it travels from the mine to the plant.
thick to flow through oil sands, wellbores and pipelines. Many
technological and economic challenges have been overcome Mobile crushers, connected to a slurry pipeline, can be located next
to produce and transport bitumen and to refine it into products to a power shovel so that the ore can be dumped in directly. Trucks
such as gasoline and diesel fuel. are still needed to carry overburden and to reach less accessible
parts of the mines, but this system considerably reduces the trucking
Oil sands are recovered using two main methods: mining and drilling requirement and related air emissions.
(in situ). The method used depends on several factors, including
the characteristics of the oil, the properties of its reservoir and the Once the ore has been transported to a processing plant, its bitumen
reservoir’s depth. is extracted through a separation process.
• mining – Used for shallower bitumen deposits. Ore is mined and Separation
transported to a facility that separates the bitumen from the At the processing plant, the mixture of oil, sand, silt, clay and water
surrounding material. This method can recover about 90 per cent goes first to a large separation vessel. Tiny air bubbles, which are
of the bitumen ore.6 trapped in the bitumen as it separates from the solids, float the
• in situ – Used for deeper deposits. Bitumen is extracted from the bitumen to the surface where it forms a thick froth at the top of the
oil sands using heated steam or other fluids. This method can vessel. This froth is skimmed off, mixed with a solvent and spun in a
recover between 35 to 60 per cent of the bitumen in place, though centrifuge to remove remaining solids, water and dissolved salts from
its land footprint is much smaller than that of mining.7 the bitumen.
Once these solids, water and dissolved salts are removed, each
Mining remaining component is processed.
About 20 per cent of Alberta’s economically recoverable oil sands
bitumen reserves are close enough to the surface to make mining • The solvent is recycled.
feasible. These are all located in the Athabasca oil sands area north • The sand, silt, clay and water, known as tailings, fall to the bottom
of Fort McMurray. of the separation vessel. The sand is eventually sent back to the
In mining, nearly all of the bitumen is extracted from the ore, mine site to fill in mined-out areas.
while in situ methods leave a substantial amount of the resource • Water from the extraction process, containing sand, fine clay
underground. On the other hand, a great deal of earth and ore must particles and traces of bitumen, goes into settling or tailings
be moved, disturbing significant areas of landscape, all of which must ponds. Some bitumen may be skimmed off the ponds if it floats
be reclaimed. To achieve economies of scale, the projects are very to the surface.
large. Each of the operating mining projects also has an upgrader on
• The sand sinks to the bottom, leaving a mixture of clay, water and
site or is connected to an upgrader by pipeline.
residual bitumen, called mature fine tailings (MFT). Adding gypsum
Ore averages 10 to 12 per cent bitumen by weight.8 Thus, nearly two helps to speed the settling process and produces a slurry called
tonnes of oil sands are dug up, moved and processed to yield one consolidated tailings (CT) for disposal in mined-out areas.
159-litre barrel of upgraded crude oil. The processed sand is then
• Water is recycled back to the extraction plant for use in the
returned to the pit and the site reclaimed. It takes about six cubic
separation process.
metres of mined oil sands to produce a cubic metre of synthetic
crude oil. As mining operations move further away from the main upgrading
Clearing trees and brush from the site and removing the overburden plants, some companies have started building satellite extraction
– the topsoil, muskeg, sand, clay and gravel – that sits atop the oil facilities. The bitumen froth is then sent to the upgrader by pipeline.
sands deposit can amount to more than two tonnes of additional This reduces the round-trip distance for moving sand between the
material that needs to be moved in the course of producing one mine pit and the extraction equipment.
barrel of upgraded crude oil. The topsoil and muskeg are stockpiled so
they can be replaced as sections of the mined-out area are reclaimed.
The rest of the overburden is used to reconstruct the landscape.
Once the ore has been mined, it must be transported.

51
Oil sands mining operations require enormous pieces of equipment like trucks and power shovels (pictured) to extract and transport hundreds
of tonnes of bitumen ore. Photo courtesy Brian Harder Photography.
AT A GLANCE – TYPICAL OIL SANDS MINING OPERATION
The mining Preparing Extracting bitumen Tailings and

process for extraction from oil sands water recycling
Mining shovels dig into sand and Trucks take the oil sand to At the extraction plant, raw The tailings (water, clay, sand
load it into large trucks. The crushers where it is broken up and bitumen is extracted from the oil and residual bitumen) are
trucks can carry close to 400 prepared for extraction. Hot water sand in separation vessels. pumped to a settling pond where
tonnes per load. Topsoil, gravel is added to the oil sand and sent they are treated. Most of the
and other materials are stockpiled by a hydrotransport pipeline to the water is recycled.
and used in reclamation of the extraction plant.
mined land.

52
In situ STEAM-ASSISTED GRAVITY DRAINAGE (SAGD)

‘In situ,’ from the Latin for ‘in place,’ refers to oil production that Oil production Steam injection
uses heat or solvents to decrease the viscosity of the bitumen in a
reservoir, making it possible to pump the oil to the surface.
More than 80 per cent of the economically recoverable oil sands
bitumen is buried too deeply for surface mining. Most of this cannot be
produced from a well unless it is heated or diluted. In situ projects use
steam to heat and dilute the bitumen, although several other methods
are being tested or deployed. Reservoir Steam chamber
Current in situ production technologies recover between 35 and

60 per cent of the bitumen in the reservoir. This is a higher recovery
rate than most conventional light crude oil wells experience.
Research to improve in situ recovery rates continues.
Excluding the use of diesel in mining equipment and trucks, in
situ operations generally use more energy and water per barrel of
production. However, these operations use substantially less surface
area, its land is reclaimed faster and requires less reclamation
after operations cease. Research and pilot operations are currently
underway to dramatically reduce the energy and water consumption Producing
formation
for in situ oil sands development. There are two principal in situ
steam injection methods used in Canada today. The choice between 1
them depends on the characteristics of the reservoir.
Steam-assisted gravity drainage (SAGD)

Most in situ projects, particularly in Canada’s oil sands, use steam-
Steam
assisted gravity drainage (SAGD). Given the viscous nature of the
1 Steam is injected into
oil sands’ bitumen, the development of SAGD represents one of the oil-producing reservoir
2
most important steps in making the resource economically viable. 2 As the steam permeates
In SAGD, pairs of horizontal wells, one above the other, are drilled the sand, the oil is heated
3 and becomes less viscous
into an oil sands formation and steam is injected continuously
3 The oil flows more freely
into the upper well. As the steam heats the oil sands formation, through the slotted liner
the bitumen softens and drains into the lower well. Pumps then and is pumped to the
bring the bitumen to the surface. Oil Slotted
liner
surface
Steam-assisted gravity drainage (SAGD)
Steam-assisted gravity drainage As the steam heats the formation, Until the 2000s, the oil sands 1960s
(SAGD) is a form of in situ oil the bitumen softens and is industry was primarily a mining Imperial Oil discovered a large
production that involves drilling gradually drained by gravity into business, excavating and bitumen deposit at Cold Lake,
pairs of horizontal wells to depths the lower well (production well). processing bitumen ore found Alberta, but had no economic
of 90 to 600 metres. One well Pumps then bring the bitumen within 75 metres of the surface. method to produce the viscous oil.
is drilled near the top of the oil to the surface. SAGD operations But about 80 per cent of the Then Dr. Roger Butler, one of the
reservoir, while the other is drilled are able to recover up to 60 per resource was too deeply buried company’s researchers, came up
near its bottom. cent of bitumen in place. Today, to be mined – a limitation that with a solution: by injecting steam
more than 100 billion barrels provided an opening for SAGD underground, he could soften the
Steam is injected into the top of oil in the Athabasca oil sands technology.
well (injection well) into the oil and enable it to flow to a well
are accessible for development for recovery. Butler wrote a patent
underground oil formation. because of SAGD. for his invention in 1969.

53
Imperial Oil’s Cold Lake operation is the largest thermal in situ heavy oil operation in the world. The bitumen is located more than 400 metres
below the surface and is extracted by injecting steam into the oil sands to thin the heavy bitumen and enable it to flow to the surface through
wellbores. To reduce the surface footprint of the operation, Imperial developed an approach whereby multiple wells are drilled from a single
surface location or well pad, enabling more efficient resource recovery and reduced development costs. Photo courtesy Imperial Oil Limited.
1970s From these early beginnings, Compared to mining operations, • injecting hydrocarbon solvents,
After developing the idea further, SAGD took shape, assisted by SAGD plants offer a number such as propane, with steam,
Butler helped Imperial Oil pilot the the development of improved of benefits: plants are smaller, to reduce the need for large
technology in 1978 at Cold Lake, horizontal well techniques. require less capital and labour, amounts of steam
pairing the world’s first horizontal and can be built with shorter lead
times. They also disturb less land • increasing water recycling
oil well with vertical injector wells. 2000s
Government supported SAGD as a In 2001, the world’s first and cover a smaller land area. • using brackish (salty) water
promising innovation. commercial SAGD project began Because water is required to to help minimize the need for
operation for Alberta Energy generate steam, companies freshwater
1980s Company at Foster Creek. have taken measures to reduce • inserting electric wires into
In 1984, the Alberta Oil Sands Since then, SAGD has become their water use. Some of these the well to heat the reservoir,
Technology and Research Authority a technology of choice for oil measures include: avoiding the need for steam
(AOSTRA) built an underground sands developers, with a growing
facility near Fort McMurray to test number of companies investing
a twin horizontal SAGD well. significantly in the use of SAGD.
SECTION 2 INSIdE ThE INduSTry

54
Dr. Roger Butler was an instrumental figure in the development of

SAGD, devising and then later testing the concept at Imperial Oil’s
Cold Lake, Alberta operation in 1978. The technology’s development
3
into a viable commercial reality was the result of $300 million
in investment by the Alberta Oil Sands Technology and Research
Authority (AOSTRA) and industry.
2
Cyclic steam stimulation
In cyclic steam stimulation, high-pressure steam is injected into the
oil sands formation for several weeks. The heat softens the bitumen,
while the water helps to dilute and separate the bitumen from the 1
sand grains. The pressure also creates channels and cracks through
which the bitumen can flow to the well.
When a portion of the reservoir is thoroughly saturated, the steam
injection ceases and the reservoir ‘soaks’ for several weeks. This is
followed by the production phase, when the bitumen is pumped up
the same wells to the surface. When production rates decline, another
cycle of steam injection begins. This process uses vertical, deviated
and horizontal wells and is sometimes called ‘huff-and-puff’ recovery.
Alternative production
While steam-assisted gravity drainage and cyclic steam stimulation
are the two primary in situ production methods used in Canada’s
oil sands, there are other technologies currently in use or being
tested in pilot projects. These primarily involve viscosity reduction
using alternative heat sources such as fire floods, electric currents,
microwaves and ultrasound. Others involve chemically reducing the
viscosity through the use of solvents with or without heat.
CYCLIC STEAM STIMULATION
STAGE 1 STEAM INJECTION: Steam is injected into the reservoir 1

STAGE 2 SOAK PHASE: Steam and condensed water heat the viscous oil 2
STAGE 3 PRODUCTION: Heated oil and water are pumped to the surface 3
Generating steam
Existing in situ projects use natural This represents 13.2 per cent of Technologies have been developed are many commercially available
gas-fired boilers to generate total Canadian marketed natural to use crude bitumen as a fuel for pollution control technologies
steam, consuming between 1,000 gas production. This gas use steam generation. Additionally, that would be used to meet
and 1,200 cubic feet of natural gas includes natural gas required for some projects are using byproducts environmental requirements.
to produce each barrel of bitumen. electricity generation. However, of bitumen upgrading, such as
This is about twice as much as in situ developments do not asphaltenes and carbon residue, While nuclear energy has been
mining projects use to produce a require the use of diesel fuel to or ‘coke.’ Most of these methods proposed as a means of generating
barrel of synthetic crude oil. run equipment in their operations would increase emissions of air steam in the oil sands, technology
as typical mining developments contaminants, such as particulates, development would be necessary
In 2011, oil sands producers do, and therefore do not have oxides of sulphur and nitrogen to manage any associated risks.
consumed 713.8 billion cubic feet that energy requirement or the and greenhouse gases compared Nuclear energy could mitigate the
of natural gas, a slight increase associated emissions. to natural gas. Where bitumen is carbon emissions involved in oil
over 2009.9 being considered as a fuel, there sands production.

55
Aerial view of SAGD well pads and flow lines at Nexen’s Long Lake Phase I SAGD oil sands processing facility. Photo courtesy Nexen Inc.

56
Operators within the oil sands sector have also formed several
WATER QUALITY organizations to address their environmental impacts. The Canadian
While both mining and in situ bitumen operations use large Oil Sands Network for Research and Development (CONRAD), created
quantities of water, most of that water is recycled. The impact that in 1994, includes oil sands developers, service companies, universities
oil sands mine tailings have on water quality does not lend itself to and government agencies working to facilitate research in oil sands
simple solutions. science and technology. Recent industry collaborations include:
• Oil Sands Leadership Initiative (OSLI) – Formed in 2010 as an alliance
Tailings of seven companies, OSLI collaborates in the areas of environmental
Once bitumen is extracted, the remaining material, called ‘tailings,’ sustainability, social well-being and economic viability.
consists of water, sand, silt, clay, residual bitumen, salts, soluble • Oil Sands Tailings Consortium (OSTC) – Formed in 2010 as a
organic compounds and solvents from the extraction process. To partnership between six oil sands mining companies, OSTC shares
recycle the water from tailings, the suspended material must settle experience, research and technology to improve tailings management.
out in tailings ponds.
• Canada’s Oil Sands Innovation Alliance (COSIA) – Formed in 2012
Because of the large amounts of water they contain, tailings ponds by 12 companies, COSIA’s initial areas of focus are tailings, water,
can contaminate both groundwater and surface water. Consequently, land and greenhouse gases.
they are constructed not only to contain water, but to monitor and
capture any seepage over their many years of operational life. Water use
• Containment dykes are constructed of overburden and the area In situ drilling uses water to create steam that heats the bitumen to a
surrounded by the dykes is lined with coarse tailings sand. point where it can flow. This water is withdrawn from surface bodies
• As the tailings are added, the sand compacts, lining the bottom of water or underground sources, treated and then boiled into steam.
and sides of the pond and creating a barrier. In situ projects have made a continuing effort to reduce water use
• Seepage collection ditches surround the entire structure and through increased recycling. Recycle rates are usually between 80
monitoring equipment is installed outside the perimeter. and 95 per cent.
• Pumps return seepage water from the ditches and unconsolidated Developers have also been devising methods of using saline (salty)
sediments that have absorbed tailings water. water from underground aquifers to meet part of their water needs.
In 2010, 51 per cent of the water used by in situ oil sands was saline
Once the coarse-grained sediments have settled, the mature fine water from deep underground zones, which is not suitable for human
tailings (MFT) take much longer to settle, sometimes more than 30 consumption or agricultural use.
years. Consequently, as more bitumen production takes place and Wastewater that can’t be recycled is either injected into approved
more tailings are created, more and more land is required for tailings deep disposal zones or transported to waste handling facilities.
ponds and more and more water is unavailable for recycling. As well,
the water in tailings ponds can be toxic to wildlife, presenting a risk Casing failures
of groundwater contamination. Another issue for in situ operations is the possibility that casing
In February 2009, Alberta’s Energy Resources Conservation Board failures in steaming operations could contaminate drinking water
issued Directive 074, which specifies performance criteria for supplies in underground aquifers. In the Cold Lake area, investigations
reducing the accumulation of fluid tailings by levying fines. of the impacts of casing failures on groundwater quality found the
effects were restricted to the immediate vicinity of a casing failure.
Oil sands companies are exploring multiple approaches to reducing
Produced fluids released into an aquifer from a casing failure are
the environmental impacts of tailings ponds by reducing their settling
recovered by pumping back the released fluids.
and drying time. These include:
A number of improvements have also been made to the design
• polymer flocculent – Suncor and Shell are exploring a method
and operation of in situ oil well casings. These improvements are
that involves adding a substance called polymer flocculent, which
intended to reduce the number of future casing failures and minimize
causes clay particles to adhere to one another. With the clay
their consequences. For example, by detecting breaks earlier, when
separated from the water, water flows freely back into the pond.
they are the size of pinholes, the amount of fluid that may be
The time frame is reduced to a few weeks instead of 30 years.
released into a groundwater aquifer is significantly reduced.
• altering tailings pH – Canadian Natural Resources Limited (CNRL)
uses CO2 to alter the pH of the tailings, which causes the tailings to
settle faster.
• cyclones – CNRL is also looking into a method that involves using
cyclones to separate the water from coarse sand and thickeners to
remove water from the fine material.
• waterless extraction – Some companies are in the early stages
of investigating waterless extraction using solvents and thermal
technologies.

57
TAILINGS POND CROSS-SECTION Curtain Outer

Illustration courtesy Government of Alberta. wall recovery trench
Seepage return pipeline Alternative seepage
mitigation methods
Tailings
discharge Recyclable water Internal dam Seepage
pipe Original Original drainage pipes monitoring
overburden Tailings overburden
dyke sands *MFT dyke Interceptor
recovery well
Quaternary sediments
Seepage River
collection ditch
McMurray formation
Recyclable water intake pipe

Devonian limestone
*MFT – mature fine tailings

Mitigation Seepage Water in Water in Saturated Unsaturated
wetlands collection limestone pore space zone zone
ditch
fractures (water in (air in
pore space) pore space)
Tailings
discharge Tailings
pipe
River
TAILINGS POND OVERHEAD VIEW

Seepage Illustration courtesy Government of Alberta.
return
pipeline Seepage
collection Quarternary sediments Limestone aquifer
pond
groundwater monitoring well monitoring well
100 - 250 metres apart McMurray aquifer Interceptor recovery well
monitoring well
Shell Canada has implemented an advanced radar-based deterrent system, which includes sensory devices to deter birds away from its tailings facility.
Photo courtesy Shell Canada.

58
When several wells are needed to maximize production, they are often
CONVENTIONAL NATURAL GAS drilled from the same well pad to minimize the environmental footprint.
As outlined in the previous chapter, a completed natural gas well Shale gas production has rapidly increased as a source of natural
includes casing to protect the surrounding area and the wellbore gas in the United States, notably in the Marcellus Shale, but has not
itself. Because conventional natural gas does not require additional reached large-scale production in Canada.
pumping, production essentially involves allowing the resource to
flow to the surface. Producing shale gas
The flow of natural gas from the well is regulated by an assembly of Shale gas reservoirs have long been identified, but until recently
valves and fittings called a ‘Christmas tree.’ The Christmas tree sits at have been uneconomic to produce because of their low permeability.
the top of tubing strings and casing, reducing pressure and controlling Today, however, operators can produce affordable, reliable quantities
the well’s production rate. As in oil production, some natural gas of natural gas from shale resources by combining hydraulic fracturing
reservoirs require stimulation, such as hydraulic fracturing. with horizontal drilling.
Horizontal drilling uses a flexible drilling pipe that starts vertically
and is gradually angled so that it can run horizontally in parallel
with the shale formation. Horizontal wells can extend more than two
UNCONVENTIONAL NATURAL GAS kilometres, exposing the wellbore to a larger part of the reservoir. In
Reservoirs that are especially difficult to access, and therefore addition, multiple horizontal wells can be drilled from a single pad,
more expensive to produce, require unconventional production which reduces disturbance to the land.
methods. Unconventional natural gas is defined by the type of Shale gas reservoirs must also be fractured to access and produce
reservoir, and includes shale gas, natural gas from tight sands, the gas. Fracturing involves pumping fluids such as water or carbon
gas hydrates and coalbed methane. Production methods vary dioxide into the reservoir under high pressure to cause the rock to
depending on the source. crack or fracture. Once fractured, proppant – a material such as sand
or small ceramic beads – is pumped into the fractures to hold the
fractures open, enabling the gas to escape from the formation and
flow more easily to a well. Fracturing may be needed a number of
SHALE GAS times during the productive life of the well.
Shale gas is natural gas found in fine-grained rock called shale, Fracturing fluids typically are made up of about 99.5 per cent water
composed of clay-sized particles. Canada’s shale gas reservoirs are and proppant. The remainder is made up of chemicals used to reduce
estimated to hold more than 1,000 trillion cubic feet of natural friction and protect the production pipe casing from corrosion.
gas, although only 20 per cent of that can be recovered with
current technologies.10
Shale gas is usually produced using horizontal wells up to 2,500
metres in length. Because of their poor porosity and permeability, the
wells are fractured in a series of stages, each isolated from the others,
to optimize the effectiveness of the fracture. The process is known as
horizontal, multi-stage hydraulic fracturing.
Shale gas development in Canada
The development of shale Shale gas development offers an in that country may reverse the Today, most of Canada’s shale
gas could revolutionize the opportunity to grow natural gas current trend. As well, expanding gas development is concentrated
Canadian natural gas industry. supply in a time of rising demand economies in the Pacific Rim in northeast British Columbia,
Production of conventional and decreasing conventional that have little or no natural where a number of companies are
natural gas in Canada peaked production. It could also increase gas resources are potential new working to develop plays in the
in 2001 and has been slowly resource trade in existing and markets for Canadian natural gas. Montney and Horn River basins.
declining ever since. In response, new markets. While development in Western
the industry is shifting its In 2011, shale gas development Canada continues to grow, shale
exploration and production focus Natural gas exports to the United provided five per cent of Canada’s gas activity is less advanced
to unconventional sources like States, Canada’s primary export natural gas production. It is elsewhere. Exploration of shale
shale gas. market, have decreased. However, expected to account for up to 24 gas in New Brunswick and Nova
the anticipated shift toward per cent of the country’s total Scotia is in early stages.
gas-fired electricity generation production in 2035.

59
HORIZONTAL DRILLING HORN RIVER BASIN

Illustration courtesy Nexen Inc. Illustration courtesy Nexen Inc.
Wellhead Aquifer
1 350 m from
surface
Debolt Formation
non-potable
water 600 to 700 m
2400 m
Steel casing
Cement
Fort Simpson
frac barrier
Shale gas,
200 m thick 200 m
1 The horizontal well is drilled into a

rock formation containing gas.
2 The multi-well pad disturbs less area
than many vertical well developments. Distance of fracture
is 100 to 200 m
Horizontal drilling uses a flexible drilling pipe that bends horizontally until Nexen’s production operation in the Horn River Basin illustrates the
it is parallel to the formation. In this way, multiple wells can be drilled technologies required to produce shale gas.
from a single location, each bending into a different horizontal position. A horizontal well has been drilled 2,600 metres below the surface,
Vertical wells, on the other hand, require a separate well site for each through multiple rock layers, and into the basin’s shale. Fractures
wellbore, taking up a larger area on the surface while simultaneously extending up to 200 metres from the wellbore are created, allowing the
accessing a smaller area within the formation. gas to be released into the well.
In Quebec, public concern about • water use – Shale gas Regulations and practices • drilling practices – All wells
the potential impacts of hydraulic development requires large In response to these concerns, drilled in Canada are encased
fracturing has led to a suspension volumes of freshwater for Environment Canada and in multiple layers of steel
of shale gas exploration until hydraulic fracturing, especially Natural Resources Canada are and cement to prevent fluids
public consultation is completed. during initial stages of reviewing regulations regarding from escaping. The industry
fracturing. shale gas production, including also adheres to government
Shale gas and the environment requirements for the storage regulations on the minimum
• groundwater protection – depth for fracking. Freshwater
There are multiple environmental Surrounding communities are and disposal of wastewater. The
concerns related to shale gas industry is also carrying out a aquifers tend to be shallow,
often concerned about the while shale gas reservoirs are
production, particularly those possibility of fracturing fluids number of precautions to ensure
relating to associated water use safe, responsible shale gas deeper, typically two or more
contaminating surface and kilometres deep.
and groundwater protection. groundwater sources. development. These cover:

60
Crews change one of the bits leading into a well where fracking continues at Nexen’s nine-well-pad site at Dilly Creek in the Horn River Basin area of
northeastern British Columbia. Fracking started on the nine wells in early July, 2011. Photo courtesy Nexen Inc.
• disposal of fracturing fluids – • water recycling – Companies Association of Petroleum • hydraulic fracturing disclosure
Fracturing fluids are recovered continue to explore ways to Producers introduced new – The industry has also
from the well once the gas increase water recycling for industry guiding principles and supported the efforts of
begins to flow. Because these fracturing, using undrinkable operating practices for hydraulic regulators in British Columbia
fluids contain chemicals and brackish (salty) water to offset fracturing. These are intended to to create a publicly accessible
often saltwater from the the demand for freshwater. guide the industry in protecting database of information on
reservoir, they are injected into the quality and quantity of hydraulic fracturing activities.
deep saline formations via • industry principles for surface and groundwater,
disposal wells. fracturing – The petroleum measuring and reporting water
industry actively supports use, and advancing technologies
disclosing the content of and best practices to reduce
fracturing fluids in operations. potential risks.
In 2011, the Canadian

61
Canadian resources Coalbed methane

Canada’s largest concentration of shale gas occurs in the Western Coalbed methane is produced and contained in coal seams. It can
Canada Sedimentary Basin, which stretches from northeast British occur as a ‘dry’ gas or be associated with saltwater or freshwater.
Columbia to southwest Manitoba. Because the natural gas has become attached to the coal, a process
To date, significant discoveries of shale gas have been made in the called adsorption, its reservoirs have very low permeability. As a
following areas: result, like shale gas, its reservoirs require hydraulic fracturing in
order to make production viable. If the gas is dry, however, it can be
• Horn River, Cordova and Montney basins in northeast British
Columbia produced conventionally.
If the gas is associated with water, the wells initially remove water
• Colorado Shale in Alberta and Saskatchewan
from the coal, but eventually methane is freed from the coal as the
• Utica Shale in the St. Lawrence River region of Quebec pressure and surface tension are lowered.
• Horton Bluff Shale in New Brunswick and Nova Scotia The disadvantage is the long time period before significant gas
production begins and the need to dispose of the water, usually by
Altogether, Canada has about 98 trillion cubic feet of remaining injection into deep wells beneath existing groundwater aquifers.
marketable shale gas resources, using existing technology under Researchers are investigating other means of freeing the methane
current market conditions. And estimates suggest the resource from the coal, including the injection of carbon dioxide, which could
potential could be even greater – with more than 1,100 trillion also provide a way to reduce greenhouse gas emissions.
cubic feet of shale gas in place.
Natural gas from tight sands

Tight gas is defined by the low permeability of its reservoir. Poor OFFSHORE PETROLEUM
permeability is primarily due to fine-grained nature of the sediments,
compaction or infilling of pore spaces by carbonate or silicate The oil and gas industry has been exploring East Coast Canadian
cements from water within the reservoir. offshore areas for more than 40 years. This has resulted in six
projects being developed and another two projects expected to
Most of Canada’s tight gas reservoirs are found within the Western be operational this decade. Currently, five projects are producing;
Canada Sedimentary Basin. These reservoirs require stimulation Hibernia, Terra Nova, White Rose and North Amethyst (tie-in field
treatments and special recovery processes and technologies. These to White Rose) oil fields offshore Newfoundland and Labrador,
technologies include: and the Sable gas project (Tier I and II) offshore Nova Scotia. The
• horizontal and directional drilling Deep Panuke gas project offshore Nova Scotia and the Hebron oil
project offshore Newfoundland and Labrador are expected to be
• underbalanced drilling
operational by mid-2013 and 2017, respectively.
• directional fracturing and carbon dioxide injection
In 2011, offshore fields generated approximately nine per cent of all
• nitrogen fracturing fluids Canadian crude oil production, and close to two per cent of all natural
gas produced in Canada.
Gas hydrates
Offshore production facilities require special production techniques
Researchers in Canada, Japan and elsewhere are testing possible
to meet the demands of their environment. The following are three
methods to recover methane from hydrates – crystals of water and
examples of Canada’s offshore projects, and the technologies that
methane molecules – found in vast quantities on ocean floors and
make their production possible.
in the Arctic. According to the U.S. Geological Survey, the worldwide
amounts of carbon bound in gas hydrates is conservatively estimated Hibernia – Newfoundland and Labrador
to total twice the amount of carbon to be found in all known fossil
Hibernia is located on the Grand Banks, 315 kilometres east-
fuels on Earth. However, no economical method has yet been found
southeast of St. John’s, Newfoundland and Labrador. Production
to produce natural gas from hydrates.
in 2011 averaged 154,383 barrels (24,545 cubic metres) per day.11
Since 1998, industry and government scientists have been
Oil is produced and stored in a massive, gravity-based concrete
assessing gas hydrates in the Canadian Arctic. A $27-million
structure that sits on the seabed in 80 metres of water. The
research program in 2002 and 2003 involved three wells at a
structure is 224 metres tall and weighs 1.2 million tonnes. This
depth of 1,150 metres in the Mackenzie Delta, 120 kilometres
type of structure was selected because it can handle extreme storm
north of Inuvik. The experiments generated gas flows using three
conditions, sea ice and icebergs.
production methods: heating the hydrates, lowering pressures in
the formations and injecting substances such as methanol. The The Hibernia platform is designed to withstand the impact of a six-
scientists noted that much more research and development will million-tonne iceberg, which, on a statistical basis, is considered to be
be needed before natural gas production from hydrates can be the largest iceberg that could potentially threaten the platform at this
considered practical and economical on a commercial scale. water depth. The odds of such an iceberg reaching the platform over
the life of the field are estimated at about one in 10,000. To date, any
iceberg that has approached the platform has been diverted through
towing by powerful standby vessels.

62
2011 CANADIAN CRUDE OIL AND EQUIVALENT PRODUCTION (million barrels per day)
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2011
NGLs 0.000 0.004 0.012 0.047 0.096 0.162 0.229 0.247 0.301 0.427 0.486 0.496 0.435 0.448
Oil Sands 0.000 0.000 0.000 0.000 0.033 0.047 0.138 0.217 0.344 0.428 0.608 0.971 1.451 1.595
Conventional Liquids 0.080 0.357 0.532 0.876 1.360 1.534 1.402 1.355 1.323 1.553 1.600 1.549 1.396 1.426
2011 CANADIAN MARKETED NATURAL GAS PRODUCTION (million cubic feet per day)
20,000
15,000
10,000
5,000
0
1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2011
Natural Gas 163 337 1,227 2,833 5,193 6,919 6,952 8,030 9,842 14,683 17,042 17,071 14,625 14,318
Since 2000, conventional oil production has declined due to the difficulty in finding new conventional reserves. However, oil sands production has increased
rapidly to accommodate increasing demand for petroleum products. 2010 was the first year in which oil sands production exceeded conventional production.
Natural gas production has been declining due to shale gas production in the United States diminishing the need for Canadian natural gas imports.

63
The 36 oil-producing wells extend up to nine kilometres diagonally

and horizontally from the platform. Nineteen additional wells are
used to inject seawater and eight to reinject produced natural gas TERRA NOVA Shuttle tanker to
transshipment
into the reservoir formations to maintain reservoir pressure and facility or to market
conserve the natural gas for future production.
Floating
Terra Nova – Newfoundland and Labrador production
storage and
Located 350 kilometres east-southeast of St. John’s, Newfoundland offloading
and Labrador, the Terra Nova field averaged 43,119 barrels (6,855 vessel (FPSO)
cubic metres) per day in 2011.12
A floating production, storage and offloading (FPSO) vessel is used
to produce crude oil from the field. This vessel, the Nova FPSO, is a Support vessels
292.2 metre long production platform with integrated oil storage from
which oil is offloaded to a shuttle tanker. The vessel can store 152,600
cubic metres of crude oil and accommodate up to 120 personnel. Semisubmersible
drill rig
Oil production wells are pre-drilled by a semi-submersible drilling
platform. The wellheads and production manifolds are placed in
excavations in the sea floor that protect the equipment from scouring
icebergs. A network of more than 40 kilometres of flexible flowline
is used to convey hydrocarbons to and from the wells. Produced
Risers
gases are separated from the oil and reinjected into the reservoir for
possible future extraction. Currently, there are 15 producing oil wells,
nine water injection wells and three gas injection wells at Terra Nova.
The connection between the FPSO and the subsea flowlines is the
spider buoy that is also the mooring point for the FPSO, and the
pathway for oil and fluids that flow between the FPSO and reservoir.
The spider buoy has a quick-disconnect feature that allows the
FPSO to quickly leave the area in an emergency situation such as
the approach of an iceberg that cannot be diverted. Double-hulled
shuttle tankers carry crude oil from Terra Nova directly to market or
to the same shipment terminal at Whiffen Head on the south coast of
Newfoundland that receives the Hibernia crude. Oil flow
Sable Offshore Energy Project – Nova Scotia Flexible flowlines
The Sable Offshore Energy Project, which is made up of offshore

and onshore facilities that produce and process natural gas and
liquids, is located near Sable Island, 200 kilometres east of the Nova Glory hole
Scotia coast. Currently, 21 wells tap the natural gas fields, which
are estimated to contain more than 2.3 trillion cubic feet (65 billion Subsea
cubic metres) of natural gas. In 2011, natural gas production at Sable wellhead
averaged 275 million cubic feet a day.13
Wellhead platforms located in relatively shallow water at the Copyright 2012 Canadian Centre for Energy Information Reservoir
project’s five fields are connected by subsea gathering lines that lead
to the Thebaud complex. Facilities at Thebaud include a wellhead
platform, a central processing facility, an accommodations unit and
Terra Nova, North Amethyst and Hebron
a compression deck.
The $2.8 billion Terra Nova project began producing in 2002 at an
Natural gas and liquids produced at the Sable fields are transported average rate of 105,444 barrels per day.
from Thebaud by subsea pipeline to an onshore gas plant located In May 2010, the North Amethyst field, the first subsea tie-back project
in Goldboro, New Brunswick. After processing in Goldboro, the in Canada as well as the first satellite field development at the White
Rose project, was brought into production. This satellite field produced
natural gas is transported by pipeline to markets in Nova Scotia, an average 34,207 barrels per day in 2011.
New Brunswick and the northeast United States. Meanwhile, the
Partners reached agreement with the Newfoundland and Labrador
natural gas liquids are separated and transported by pipeline to the government in 2008 to proceed with development of the Hebron heavy
Point Tupper fractionation plant in Nova Scotia. There, the liquids oil field and received approval of the Hebron Development Plan
are processed into products such as propane and butane and then Application from the Canada-Newfoundland and Labrador Offshore
Petroleum Board in May 2012. The first production is expected
delivered to markets by truck and rail. between 2016 and 2018.
Production is expected to continue for up to 20 years as additional
fields are developed in the area.

64
Syncrude Sweet Blend is a high-quality, light, sweet crude oil. Syncrude is one of the largest producers of crude oil from Canada’s oil sands.
It operates a large oil sands mine, utilities plant, bitumen extraction plant and upgrading facility that processes bitumen and produces light,
sweet crude oil for domestic consumption and export. Photo courtesy Syncrude Canada Ltd.
Chapter Four Processing
Before petroleum resources can be transported to refineries, where

they are turned into the hydrocarbon products we use, they must be
processed. Processing involves separating the usable commodities
from the unique mixture of hydrocarbons and other substances found
in a petroleum reservoir. Processing facilities vary in complexity, from
settling tanks for removing sand and water to multi-billion-dollar
plants treating large volumes of sour gas or bitumen.14

65
In this chapter, you’ll learn how crude oil and In offshore operations, natural gas that is produced with crude oil
production is often reinjected into the reservoir and the remainder
natural gas are processed into more usable flared.
commodities, from upgrading oil to removing The natural gas, known as associated gas or solution gas, is
hydrogen sulphide from sour gas. directed to processing plants if possible. Otherwise, the gas is flared or
incinerated if quantities are too small to justify recovery. Incineration
is combustion in a closed vessel under controlled conditions.
Since 2000, there has been a 56 per cent reduction in the amount of
solution gas flared.15 This reduction conserves valuable product and
PROCESSING CRUDE OIL AND NATURAL GAS reduces air emissions.
Most crude oil and natural gas production requires some processing Heavy oil and bitumen
to remove undesirable components before the commodity goes to Because most refineries in Canada were designed to process
market. Processing facilities separate the raw petroleum into major conventional light crude oils, some heavy oil and about half the
products such as: bitumen produced are upgraded to create synthetic crude oil (a
• crude oil mixture of hydrocarbons similar to a light crude oil).16 Synthetic crude
oil is usually low in sulphur and contains no residue or very heavy
• natural gas
components. Upgrading can occur at or near the producing area or
• natural gas liquids (NGLs), the heavier gaseous hydrocarbons, the refinery.
including ethane, propane and butane
Bitumen and some heavy oils are too viscous to flow through
• condensate, which consists of pentanes and heavier liquid pipelines. Pipeline operators mandate the viscosity of the products
hydrocarbons obtained from processing natural gas for market they carry; users of the pipelines must ensure their product meets
• sulphur, obtained from processing natural gas and transported by these specifications, if necessary, by diluting the product with
truck or train as liquid, pellets or slabs condensate or other natural gas liquid.
The locations of upgrading facilities have been determined in part by
About two-thirds of Canada’s conventional petroleum production the cost and availability of condensates. Recently, however, shippers
does not require extensive processing before being shipped by have found that synthetic crude oil can be used as an effective
pipeline. Simple field facilities remove sand and water from the diluent, and conventional light crude oil or refined petroleum
petroleum stream and separate it into crude oil, natural gas and products can also be used for this purpose.
NGLs. This field processing is a major part of production operations.
Thousands of Canadians work in gas processing facilities and in Upgrading
plants that purify raw natural gas and upgrade heavy oil and oil Upgrading uses temperature, pressure and catalysts to crack the big
sands bitumen. The facilities are located as close as possible to molecules into smaller ones. Adding hydrogen or removing carbon
production sites and generate considerable economic activity in many creates hydrocarbon molecules like those in lighter oil. The product
areas of Western Canada. Offshore production facilities also include of upgrading, known as synthetic crude oil or upgraded crude oil, is a
processing equipment to remove water and NGLs from natural gas blend of naphtha and distillates that can be used by many refineries
streams and to separate water and natural gas from crude oil. as a replacement for conventional light crude oil to make gasoline,
diesel, jet fuel and heating oil. Most synthetic crude oils are ‘sweet’
(low in sulphur).
Upgrading is usually a two-stage process:
CRUDE OIL
1. coking or hydrocracking – Coking or hydrocracking is used to
Removing impurities and other undesired substances is an essential break up the molecules. The coking process removes carbon,
operation before any type of crude oil reaches a refinery. The methods while hydrocracking adds hydrogen.
used to process crude oil depend on whether the oil is conventional
2. hydrotreating – A process called hydrotreating is used to
or unconventional.
stabilize the products and remove impurities such as sulphur.
Conventional crude oil The hydrogen used for hydrocracking and hydrotreating is
manufactured from natural gas and steam. The byproduct of the
In some older oil fields, more than 20 litres of saltwater are produced
coking process is carbon (coke), which may be sold separately or
for every litre of crude oil. This saltwater is separated from the oil at
stockpiled. Coke is also used as fuel and in the manufacture of
processing facilities and reinjected underground into the oil-producing
steel, cement and electrodes.
formation. Where companies draw from local water resources they
must obtain licences for water use.
Conventional crude oil is initially processed at field facilities called
‘batteries.’ A battery’s main component comprises one or more KEY DEFINITION ASSOCIATED GAS, SOLUTION GAS
tanks in which saltwater and sand sink to the bottom and natural Associated gas is produced from the same reservoir along with crude oil,
gas bubbles off the top. Clean oil collects in the middle. The water either as free gas or in solution. Solution gas is natural gas dissolved in
is reinjected into the producing formation to help maintain reservoir crude oil in the reservoir.
pressure and sand is collected for disposal in an approved landfill.

66
CRUDE OIL BATTERY

Processing at a crude oil battery consists primarily of Gas gathering system Flare Automatic
separating natural gas, crude oil and water by gravity settling. stack igniter or
pilot light
Compressor
Solution gas line
Fuel gas
Flowlines Pilot
from gas
wells
Emulsion Clean oil Knockout Detonation

drum arrester
Free water Treater

knockout
Tank vapours line
Blanket Knockout
gas drum
Blower

Water storage
Oil storage
AT A GLANCE – BITUMEN UPGRADING
Removing carbon, Stabilizing The utilities Recovering Making

adding hydrogen hydrocarbons plant sulphur products
If the upgrading process Hydrocarbons are The utilities plant provides Sulphur can be recovered A range of products,
includes coking, the coke stabilized by adding steam, water and electric to be used in fertilizer and including light sweet and
is removed from the hydrogen in the presence power to the rest of the other products. sour crude oils and diesel
bitumen and used for of catalysts. After plant. products, are blended and
industrial applications. stabilization, the shipped to markets.
Another upgrading process hydrocarbons are
adds hydrogen to the separated into naphtha,
bitumen – a process called kerosene and gas oil.
hydrocracking.
Making Products Recovering Sulphur

Upgrading heavy oil and bitumen produces three Elemental sulphur is almost
main products – naphtha, kerosene and gas oil. pure sulphur that has been
Naphtha is a light petroleum component used mainly removed from sour gas or
to make gasoline. Kerosene, also called paraffin, sour oil. Canada is the
is a heating oil used occasionally in cooking and world’s largest producer
transportation. Gas oil is a type of fuel oil, somewhat and exporter of elemental
heavier than kerosene. sulphur, which is used for
making pharmaceuticals,
These products can be blended together into a
fertilizers and other
custom-made crude oil equivalent, or they can be
products. The sulphur is
sold or used separately. Some projects, such as
typically stored in blocks
Syncrude’s and Suncor’s oil sands operations, use
and shipped in pellet form.
some of their production to fuel diesel engines in
trucks and other equipment. Photo courtesy Shell Canada.

67
Facilities
Some U.S. refineries have added upgrading facilities to handle NATURAL GAS
Canadian heavy oil directly. This is a practical option if there The natural gas purchased by consumers consists almost entirely
is an adequate supply of condensate for diluting the oil, and of methane, the simplest hydrocarbon. In gas reservoirs, however,
pipeline capacity to bring the oil to the refineries. Some Eastern methane is typically found in mixtures with natural gas liquids – such
Canadian refineries can also process shipments of heavy oil, as ethane, propane, butane and pentanes – as well as water vapour,
usually delivered by tanker from abroad. The NewGrade Energy hydrogen sulphide (H2S), carbon dioxide, nitrogen and other gases.
Upgrader facility in Regina, which began upgrading heavy oil in Natural gas that contains hydrogen sulphide is referred to as ‘sour
1990, sends most of its synthetic crude to an adjacent refinery. gas,’ while natural gas without hydrogen sulphide is called ‘sweet gas.’
The other alternative is to upgrade the crude oil where it is produced. The natural gas liquids and other substances are removed from the
Both the Syncrude Canada and Suncor Energy oil sands projects have gas stream at processing plants located near production areas or at
large upgraders to convert bitumen into high-quality, low-sulphur ‘straddle plants’ located on major pipeline systems.
synthetic crude. The Suncor plant also produces other products
such as diesel fuel. The Husky Energy Lloydminster Upgrader in Facilities
Saskatchewan began processing Alberta and Saskatchewan bitumen Of the more than 650 natural gas processing plants in Alberta, more
and heavy oil in 1992. than 50 are large facilities that produce sulphur as a byproduct of the
As of July 2012, there were eight upgraders operating in Canada, one hydrogen sulphide in sour gas.18 The others handle small volumes
under construction and seven in various stages of planning or review.17 of hydrogen sulphide or sweet gas. Hydrogen sulphide is flared,
incinerated or reinjected back into a reservoir. There are about 18,000
kilometres of gathering pipelines in Alberta carrying sour gas from
Upgraders – Operating roughly 6,000 producing sour gas wells.19
Capacity Throughput The British Columbia sour gas industry includes three large sulphur-
Facility Location (bbl/d) (bbl/d) recovery plants, six smaller field plants and more than 12,000
CNRL Horizon Fort McMurray 110,000 40,275 kilometres of sour gas gathering pipelines.20 In addition, smaller
volumes of sour gas are produced and processed in the Northwest
Husky Lloydminster n/a n/a
Territories, Saskatchewan, Manitoba and Ontario. The Deep Panuke
NewGrade Regina 55,000 n/a discovery off Nova Scotia also contains hydrogen sulphide, which will
Nexen Long Lake Fort McMurray 72,000 30,206 be removed from the gas stream and injected into a deep geological
Shell Scotford Fort 255,000 212,074
formation. Gas reinjection is also being examined in other areas as
Saskatchewan a means of meeting air quality objectives and reducing greenhouse
gas emissions.
Suncor Fort McMurray 350,000 288,219
Upgraders 1 and 2
Removing liquids and sulphur
Syncrude Fort McMurray 300,000 291,995 The raw natural gas from wellheads may pass through compressors
Mildred Lake
to maintain or increase pressure and may be heated to prevent
Alberta Total 1,142,000 862,769 freezing and condensation. Glycol dehydrators are typically used
2011 throughput can vary due to maintenance programs, operating issues or supply issues. to remove water from natural gas streams, although the industry
has been developing alternative technologies to reduce emissions.
Industry associations have developed guidelines to reduce emissions
Upgraders – Under construction and planned from glycol dehydrators in Canada, and as a result benzene emissions
Capacity from glycol dehydrators were reduced by about 59 per cent between
Upgrader Location (bbl/d) Status 1995 and 2010.21
Suncor Fort McMurray 200,000 under In processing plants, gas is chilled to separate the natural gas liquids
Voyageur construction from methane. Then hydrogen sulphide is removed by a chemical
BA Energy Fort 260,000 approved reaction in the presence of catalysts. The natural gas emerging from
Heartland Saskatchewan the plants meets pipeline specifications for dry gas, but may still
Ivanhoe Tamarack Fort McMurray n/a under review contain natural gas liquids, which are removed at straddle plants on
main transmission pipelines.
Sturgeon Refinery Fort 150,000 under review
Saskatchewan Natural gas liquids are sold separately and used for enhanced oil
Suncor Fort n/a approved
recovery, as raw materials for oil refineries or petrochemical plants
Fort Hills Saskatchewan or as fuels.
Suncor Fort n/a approved,
Strathcona Saskatchewan on hold
Value Creation Fort McMurray n/a proposed KEY DEFINITION STRADDLE PLANTS
Terre de Grace
Straddle plants are natural gas processing plants that remove natural
Value Creation Fort McMurray n/a proposed gas liquids from the gas and return the dry gas to the line. They are called
Tristar straddle plants because they are located on or near gas transmission line.
Source: Alberta Energy, Government of Alberta

68
The Hanlan Robb Gas Plant, situated between Edson and Hinton, Alberta, is one of Suncor Energy’s larger company-operated sour gas
processing facilities. Both sour and sweet gases are processed at the plant. Photo courtesy Suncor Energy Inc.

69
Condensate is used to reduce the viscosity of heavy oil and bitumen remove oil contamination from soil. In other instances, the soil is
so they can be shipped through pipelines. Refineries then recycle and excavated and trucked to an approved industrial landfill site lined
reuse the condensate or use it as feedstock along with the bitumen or with plastic or clay. A new technology, currently being developed
heavy oil. and tested, uses underground pipes and barriers to direct
Most of the hydrogen sulphide recovered at gas plants is converted underground water flows into channels where bacteria degrade
into elemental sulphur, which can be used to create fertilizer and the hydrocarbons.
construction materials. Offshore operators maintain adsorbent booms and skimmers
Acidic water runoff from sulphur stockpiles is neutralized in holding on offshore platforms while larger and more sophisticated
ponds and must meet government standards before being released equipment is available at onshore locations. Additionally, there
into the environment. Sulphur storage facilities are lined and are international resources that can be deployed in the event of a
enclosed by barriers to prevent acidic water from leaching heavy major spill. Dispersants, chemicals used to disperse oil spills, can
metals out of soil and contaminating groundwater. also be used in the event of high winds and rough seas. All tankers
are double hulled and the cargo holds are divided to minimize spills
Oil sands processing is expected to increase the amount of sulphur should a rupture occur.
recovered in the future.
Emissions
Managing the emissions created by processing petroleum resources
is an essential task for processors. As demand for oil and natural
PROCESSING AND THE ENVIRONMENT gas continues to increase, the importance of reducing the emission
Two of the most important environmental issues, respectively, for intensity of these activities becomes more pressing.
crude oil and natural gas processing are managing spills and sulphur
dioxide emissions. Crude oil and natural gas processing each require
Carbon dioxide
unique steps to address their environmental effects. Carbon dioxide (CO2) emissions from oil and gas processing
primarily result from burning fossil fuels to generate power
Spills and process heat, and from flaring. Emissions from oil batteries,
The oil and gas industry focuses on preventing spills through upgrading and natural gas processing in 2010 amounted to
facility and well design, automated and manual monitoring almost 40 megatonnes, or about 25 per cent of oil and gas
systems, control and shutdown equipment and backup systems. industry-related CO2 emissions. Efforts by industry to reduce
Operators also develop comprehensive spill response plans. these emissions include switching to cleaner fuels such as
However, spills do still occur. natural gas or to alternate energy sources such as biomass and
geothermal.
Corrosion in oil field pipelines carrying mixtures of crude oil and
saltwater is one of the most common reasons for spills. Internal Sulphur dioxide
corrosion of pipelines only occurs when acid and sulphur in the fluid Since the 1950s, the possible environmental and health effects of
rise to higher temperatures than the operating temperatures of the sulphur dioxide (SO2) emissions have been a source of concern. These
pipeline. emissions, which contribute to acid rain or snow, are produced by
The industry addresses this problem by stepping up inspection coal-fired power plants, oil sands upgrading and other industrial
and maintenance of facilities, installing new computer technology processes as well as by sour gas processing and sour gas flaring. Oil
to detect leaks and replacing or relining sections of pipeline. The sands production has the highest emissions per barrel of production,
Alberta Energy Resources Conservation Board, which regulates due to bitumen’s high sulphur content. Governments regulate sulphur
more than 80 per cent of Canadian crude oil and natural gas dioxide emissions through plant licensing specifications and ambient
production, has identified spill prevention as a major target for air quality objectives.
enforcement efforts. Facilities that fail to meet standards are shut Natural gas processing contributes almost half the sulphur dioxide
down. Other jurisdictions have adopted similar regulations. emissions in Alberta. Oil sands facilities and power plants are also
When a spill threatens streams, rivers or lakes, industry crews are major sources, as are oil refineries, pulp and paper mills and fertilizer
dispatched to halt the leakage and prevent the contamination from plants. The upstream oil and gas industry has reduced sulphur dioxide
spreading. Industry co-operatives in each producing area maintain emissions by 26 per cent, from 386,000 tonnes in 2000 to 268,000
stockpiles of absorbent booms, temporary dams, special boats and tonnes in 2010, despite increasing synthetic crude oil production.22
equipment for this purpose. They conduct regular training exercises to Enhanced operating practices and the use of sulphur recovery
practice skills and test equipment. Industry and government officials technology at new facilities contributed to this improvement.
test water quality downstream from spills to make sure that water Sour gas processing and bitumen upgrading account for a substantial
meets federal and provincial standards. After the initial cleanup, crews portion of Alberta’s relatively high per capita emissions of sulphur
remove contaminated soil and vegetation from the banks for disposal dioxide. Improved processes reduce the emissions from the use of
by incineration or landfilling. Reclamation of the site then begins. petroleum in consuming areas and remove toxic hydrogen sulphide
A large portion of oil spilled on land will eventually evaporate from the natural gas going to market. Refining low-sulphur synthetic
or be consumed by natural microbial action, a process that can crude oil results in less air pollution around oil refineries and reduces
be speeded up by tilling and fertilizing the soil. The oil industry sulphur emissions from gasoline and diesel engines. Switching to
traditionally has used this method of ‘land farming’ on the natural gas reduces the acid rain effects from coal-fired energy use
majority of spills. High-temperature kilns are sometimes used to across North America.

70
Pipeline systems are the safest method of transporting hydrocarbon products. Photo courtesy Alliance Pipeline.
Chapter Five Transportation
Canada’s crude oil and natural gas resources are found in some of the
most remote locations in the country. To connect these hydrocarbon
resources to the country’s refineries and customers, the petroleum
industry employs a network of pipelines: the safest and most efficient
means of transporting crude oil and natural gas. Together with rail,
truck and ocean tanker transportation, these pipelines are the pathways
between millions of homes and Canada’s producing oil and gas fields.

71
In this chapter, you’ll learn how Canada’s As with other industrial land use, pipeline projects require public
consultation, landowner negotiations and environmental assessment.
extensive pipeline system (and trucks and Prior to construction, pipeline companies survey proposed routes to
railways) transports crude oil and natural gas determine soil characteristics, plant and animal types, archeological
resources and current land uses.
from the field to consumers. Pipeline companies work with stakeholders and regulators to make
sure routes minimize impacts on the land and populated areas.
Several pipelines may run parallel on some routes. Laying them
together in a single corridor reduces land use.
TYPES OF PIPELINES During construction or maintenance, layers of topsoil and subsoil

are removed, stored separately and later replaced over the pipeline.
Pipelines fall into four categories: Companies choose methods to reduce impacts on plants and
• gathering lines – These pipelines travel short distances, gathering animals. Work may be rescheduled, for example, to avoid mating,
products from wells and moving them to oil batteries or natural nesting or migration seasons for wildlife species, and all sites require
gas processing facilities. environmental screening and inspections before any work begins.
• feeder lines – These pipelines transport crude oil and other Following construction, the disturbed soil is usually revegetated
products such as natural gas liquids from batteries, processing using native plant species. The land may also be returned to tilled
facilities and storage tanks in the field to the long-distance haulers agriculture or cattle grazing. In the event of a spill, contaminated
of the pipelines industry: the transmission pipelines. soil may be moved to a landfill or cleaned by incineration or by a
combination of evaporation and bacterial action.
• transmission pipelines – These pipelines are the energy equivalent
of highways, transporting oil and natural gas within a province and
across provincial or international boundaries.
• distribution pipelines – Local distribution companies or provincial OIL PIPELINES
co-operatives operate natural gas distribution lines that deliver
Oil pipelines transport crude oil from producing fields to refineries,
natural gas to homes, businesses and some industries.
where it is turned into a range of petroleum products. These
Pipeline construction pipelines, referred to in the industry as ‘liquids’ pipelines, are also
used to transport petroleum products from refineries to terminals and
Small pipelines used for natural gas distribution can often be
distribution centres before they are routed to consumers.
inserted underground with little surface disturbance. Larger pipelines
– ranging from 100 millimetres to more than a metre in diameter – Powerful electric motors drive the centrifugal pumps on most
require careful planning before construction to make sure they can Canadian crude oil pipelines, although diesel engines are used in a
operate safely and reliably, with minimal risk of leaks or spills. After few remote locations. Oil travels through the pipes at four to eight
construction, the surface landscape is restored as nearly as possible kilometres per hour.
to its previous state. Unlike natural gas transmission pipelines, which primarily carry
Avoiding disturbances to streams and rivers is an essential part methane, liquids transmission lines, also known as ‘main lines,’
of selecting a pipeline’s route. During construction, pipelines are may carry different types of crude oil, natural gas liquids and refined
generally lowered into a trench excavated in the bottom of the products. These different commodities travel through the pipe in
waterway. New technologies use directional or horizontal drilling batches that can be many kilometres long. Because every batch in a
methods to bore under rivers. The pipe is then pulled through the pipeline is traveling at the same speed, it is not necessary to separate
borehole with minimal disturbance to the banks or the stream. them. Simple hydraulics prevent batches from mixing. If batches come
Construction schedules also avoid times when fish or waterfowl in contact with each other, these small volumes are reprocessed.
are vulnerable.
AT A GLANCE – TYPICAL PIPELINE CONSTRUCTION STAGES
Preparing Digging Bending and Positioning the pipeline,

the site the trench joining the pipe backfilling the trench
Before construction begins, the A trench is surveyed and dug. A hydraulic bending machine is Bulldozers outfitted with special
approved route is surveyed and Individual lengths of pipe are used to bend the pipe to fit the cranes called ‘sidebooms’ lower
right-of-way established. The delivered to the construction site terrain. Pipe is welded together the welded pipeline into the
right-of-way is cleared, leveled and set out along the right-of-way, (this can be a manual or trench. Once positioned in the
and graded for construction ready to be assembled. The pipes automated process) and the welds trench, valves and other fittings
equipment and the topsoil is are coated both inside and out to are inspected and certified. are installed. The pipeline is then
removed and stockpiled for use prevent corrosion and arrive on Welded joints are coated on site. buried and the land is leveled and
in reclamation. site pre-coated. prepared for reclamation.

72
Complex networks of valves and storage tanks are used to make Other proposed projects include reversing the flow of Enbridge’s
sure the batches get to the correct destinations. The batches move Line 9, which would transport crude oil from Sarnia, Ontario to
through the system like trains on railways. Occasionally, metal or Montreal, and the Rainbow Pipeline II, a Plains Midstream pipeline
plastic ‘pigs,’ which are otherwise used for inspection, are used to that would supply condensate and butane to heavy oil production
separate the batches. areas near Nipisi, Alberta.
Canada’s oil pipelines

Transmission pipeline systems operated by Enbridge, Kinder Morgan
and other companies transport synthetic crude oil, heavy oil and TRUCK AND RAIL TRANSPORT
bitumen to refineries and marketing terminals in Alberta. The Cochin
Though pipelines are the safest and most efficient method of
pipeline carries natural gas liquids and petrochemicals from Alberta
transporting petroleum products, some locations are not connected
to Sarnia, and the Trans-Northern pipeline supplies refined petroleum
by pipeline and must be connected by truck or rail transport. These
products in southern Ontario and Quebec.
methods allow petroleum products to reach smaller locations that
A network of gathering lines in the producing areas delivers crude oil already have transportation infrastructure, but would not necessarily
to storage tanks along the main pipelines. If a well is not connected benefit from a pipeline.
to a pipeline, the crude oil can be trucked to the nearest delivery
Tanker trucks can carry up to 32,000 litres in a single load, which
point. Canada’s crude oil imports arrive by tankers at East Coast ports
would be enough to fill 800 cars. It would take 4,200 rail cars to
or at Portland, Maine, for shipment by pipeline to Montreal. There has
transport the volume of crude oil transported daily by pipelines.26
also been some tanker transport of oil products on the Great Lakes.
Enbridge Pipelines Inc. (formerly Interprovincial Pipe Line Inc.) has
one of the world’s largest petroleum pipeline systems. Its 24,613
kilometres of pipeline stretch from Norman Wells in the Northwest NATURAL GAS PIPELINES
Territories to northern Alberta and from Edmonton eastward to
Sarnia, Toronto, Montreal and south into the central United States.23 Natural gas pipelines transport natural gas from gas wells to
processing plants, and finally to the distribution systems that connect
The leg between Sarnia and Montreal (Line 9), originally built to Canadian homes. Unlike refined crude oil products, natural gas is
carry Western Canada crude oil eastward, was reversed in 1999 to delivered directly to homes and businesses.
bring imported and offshore Canadian oil production westward to
Ontario refineries. However, in 2011 Enbridge applied to reverse the Gas turbines – similar to the engines of jet airliners, but burning
flow of part of the line to deliver western crude to the Nanticoke, natural gas as fuel – spin the centrifugal pumps that compress
Ontario refinery. Later it applied to reverse Line 9 in its entirety. natural gas in major transmission lines. Compressed up to 100 times
Every day, the pipeline carries an average of 2.2 million barrels of the pressure of the atmosphere, the gas moves up to 40 kilometres
crude oil and liquids.24 per hour.27
The 1,150-kilometre-long Trans Mountain system, owned by Kinder Canada’s natural gas pipelines
Morgan Canada Inc., carries crude oil and refined products westward Natural gas pipelines connect producing areas in British Columbia,
from Edmonton to Vancouver and into Washington State.25 Kinder Alberta and Saskatchewan to distribution pipeline systems
Morgan also operates the Express pipeline, which carries crude oil throughout Canada. Over six million customers are supplied by
from Hardisty, Alberta, to Wyoming where it joins another Kinder Canada’s natural gas distribution companies, whose pipeline grids are
Morgan pipeline, the Platte, to supply markets in the Midwestern increasingly interconnected across cities.28
United States.
Major natural gas pipelines include those owned by TransCanada,
The Enbridge Mainline and the TransCanada Keystone pipelines Spectra Energy, TransGas Limited and TransCanada PipeLines, as well
carry crude oil from Hardisty, Alberta to terminals and other as the Maritimes and Northeast Pipeline and Alliance Pipeline.
pipelines in the United States, such as Cushing, Oklahoma and
Wood River, Illinois. Total capacity of the three systems is 2.3 million The Alberta Gas Transmission division of TransCanada PipeLines
barrels per day. Limited (TCPL) carries the greatest volume of natural gas in Canada.
The Alberta system carries gas from producing areas around the
In 2012, TransCanada filed a second application to build the province to distribution systems, industrial customers and other
Keystone XL pipeline, this time from Hardisty to Steele City, Nebraska. transmission systems serving markets in Canada and the United States.
The planned capacity of the new line is 830,000 barrels per day.
TCPL also owns the main interprovincial natural gas pipeline in
As of the end of 2012, two other projects have been proposed to export Canada. It is one of the world’s longest natural gas transmission
oil from ports in British Columbia to Asian markets. Kinder Morgan has lines, extending from the eastern Alberta border into Quebec with
applied to twin its Trans Mountain pipeline and Enbridge submitted numerous connections to the United States.
an application to build the 525,000 barrel per day Northern Gateway
pipeline from Edmonton to Kitimat, British Columbia. In British Columbia, Spectra Energy operates gathering lines and gas
processing plants as well as the main natural gas transmission system.
TransGas Limited operates the transmission and storage system in
Saskatchewan.

73
The Alliance Pipeline system transports liquids-rich natural gas from northeastern British Columbia and northwestern Alberta through
Saskatchewan, North Dakota, Minnesota and Iowa to its terminus in Illinois. The system is remotely operated and monitored from a central site.
Photocourtesy
Photo Caption. Photo
Alliance courtesy
Pipeline.
In-line inspections
In-line inspection devices, or ‘pigs,’ such as magnetic field recorders or The analysis can often detect them to inspect relatively small
have been used for decades in the X-rays are known as ‘smart pigs.’ corrosion, cracks or small defects, pipelines, 20 centimetres or less
pipeline industry. Originally, they As technology has advanced, it and it provides guidance for in diameter.
were used for scraping off wax has become possible to measure companies in planning their
built up on the inside of the pipe and record many characteristics of maintenance programs. External ‘Caliper pigs’ test for deformities in
and were called pigs because they pipeline integrity. anomalies can be examined the pipe by gauging variations in
squealed as they moved through visually. the internal diameter. Caliper pigs
the line. Today, they are propelled Smart pigs record the existence, are sometimes used to ensure that
through the pipeline with the gas location and relative severity Smart pigs were initially used only a valuable smart pig will be able
or liquid cargo to detect various of anomalies. The data is on large-diameter transmission to pass through the line without
kinds of defects. Pigs using downloaded for analysis by pipelines, but recent innovations getting stuck or damaged.
sophisticated instrumentation technicians and engineers. have made it possible to use

74
2012 LIQUIDS PIPELINES

MAJOR
Source: CanadianSEDIMENTARY BASINS
Energy Pipeline Association
BEAUFORT
SEA
ALASKA
YUKON
YUKON NORTHWEST
TERRITORIES NUNAVUT
BRITISH
NORTHWEST
COLUMBIA NUNAVUT
TERRITORIES
ALBERTA
NEWFOUNDLAND AND LABRADOR

SASKATCHEWAN
MANITOBA
ALBERTA

EDWARD
ISLAND AND LABRADOR
NEWFOUNDLAND
BRITISH SASKATCHEWAN
COLUMBIA
MANITOBA
NEW NOVA
BRUNSWICK SCOTIA
EDWARD
ISLAND
PACIFIC ATLANTIC
OCEAN OCEAN
NEW NOVA
BRUNSWICK SCOTIA
UNITED STATES OF AMERICA
Legend


LegendThe Atlantic Margin extends along the East Coast, from U.S. Proposed pipelines
Intermontane sedimentary rocks occur in British Columbia and
Access Portland
waters to Baffin Island. This area is the siteMontreal
of major offshore Enbridge Line 9between
the Yukon Reversalthe Canadian Rockies
Kinder Morgan
and theTMX
West Coast
crude oil and natural gas deposits Spectra
Enbridge discovered since the 1960s. Reversing
mountainthe ranges.
pipeline’sThere
flow tohas been Full
some twinning
oil andofgas
Trans
exploration
start in Sarnia and end in Montreal Mountain pipeline
Inter Pipeline Suncor in Intermontane areas but, to date, no production.
Arctic Cratonic Arctic Margin Enbridge Northern Gateway Plains Midstream Rainbow II
Kinder Morgan TransCanada
Connecting Edmonton area Connecting Edmonton, Alberta
Substantial crude oil and natural gas
Pembina resources have been
Trans-Northern Pacific Margin
to Kitimat, BC to the Nipisi Terminal
identified in the Arctic Islands, Beaufort
Plains Midstream
Sea and Mackenzie
Other Pipelines
The Pacific Margin off the B.C. coast is estimated to contain 9.8
Enbridge Light Oil Market TransCanada Keystone XL
Delta. Development has been slow due to the remote location, billion barrels of oil and 43.4 trillion cubic feet of natural gas, but
Access Program Connecting Hardisty, Alberta
production costs, a lengthy regulatory process, the absence of there has been no
Connecting Beaver Lodge,
exploration since 1972. In 1972, the federal and
and Nederland, Texas
pipeline systems and low natural gas prices. provincial
North governments
Dakota to the Superior,imposed moratoria on offshore drilling in
Access North East Expansion
the areaTerminal;
Wisconsin to prevent oil spills from drilling, production and shipping.
southern
Connecting Conklin, Alberta to
access extension pipeline from
Redwater, Alberta
Flanagan to Patoka

75
MAJOR
2012 NATURAL
SEDIMENTARY
GAS PIPELINES,
BASINS LNG TERMINALS
Source: Natural
Source: Resources
Canadian Canada
Energy Pipeline Association
BEAUFORT
SEA
ALASKA
YUKON
YUKON NORTHWEST
TERRITORIES NUNAVUT
BRITISH
NORTHWEST
COLUMBIA NUNAVUT
TERRITORIES
ALBERTA

SASKATCHEWAN
MANITOBA
ALBERTA

EDWARD
ISLAND
BRITISH SASKATCHEWAN
COLUMBIA
MANITOBA 1
Saint John
NEW NOVA
BRUNSWICK SCOTIA
EDWARD
ISLAND
PACIFIC ATLANTIC
OCEAN OCEAN
NEW NOVA
BRUNSWICK SCOTIA
Legend


Legend
The Atlantic Margin extends along the LNG terminals
East Coast, from U.S. Proposed pipelines
Intermontane sedimentary rocks occur in British Columbia and
Alliance 1 Canaport LNG terminal
waters to Baffin Island. This area is the site of major offshore Mackenzie Gas Project's
the Yukon between the Canadian Rockies TransCanada Prince
and the West Rupert
Coast
Saint John, New Brunswick Mackenzie Valley Pipeline Gas Transmission
crude
ATCO oil and natural gas deposits discovered since the 1960s. mountain ranges. There has been some oil and gas exploration
Proposed LNG terminal Connecting northern onshore Connecting Fort St. John, BC
Emera Brunswick Kitimat, British Columbia in Intermontane areas but, to date, no production.
gas fields to northern Alberta to Prince Rupert, BC
Arctic Cratonic
Enbridge Arctic Margin
TransCanada Coastal Gaslink Spectra BC Natural Gas
Substantial
FortisBC crude oil and natural gas resources have been Pacific Margin Transportation
Connecting Dawson Creek, BC
identified in the Arctic Islands, Beaufort Sea and Mackenzie
Maritimes & Northeast
ThetoPacific
Kitimat,Margin
BC off the B.C. coast is estimated
ConnectingtoCypress,
containBC
9.8to
Delta. Development has been slow due to the remote location, billion barrels of oil and 43.4 trillion cubic feet of
Prince natural
Rupert, BC gas, but
Spectra
production costs, a lengthy regulatory process, the absence of there has been no exploration since 1972. In 1972, the federal and
Suncor
pipeline systems and low natural gas prices. provincial governments imposed moratoria on offshore drilling in
TransCanada the area to prevent oil spills from drilling, production and shipping.
TransGas
Trans Quebec & Maritimes
Other Pipelines
SECTION 2 INSIDE THE INDUSTRy

76
The Maritimes and Northeast Pipeline main pipeline was built in Crude oil
1999. The pipeline was designed to bring natural gas to markets in Transportation costs are the main reason why crude oil prices vary
the Maritimes and northeastern United States from the six developed from place to place. If the price offered by buyers in one market
natural gas fields of the Sable Offshore Energy Project, 160 kilometres is too low, then sellers will ship their oil to another market – if
offshore Nova Scotia. The natural gas is delivered to shore by a they can afford the transportation cost and there is available
pipeline laid in a trench on the sea floor. The Canadian portion of transportation capacity.
the onshore main line stretches 568 kilometres from Goldboro, Nova
Scotia to St. Stephen, New Brunswick.29 Refining light crude oil typically produces a higher proportion of
desirable products, such as gasoline and diesel fuel and requires
The pipeline will also be used to transport natural gas from the Deep less intensive refining than heavy oil. Therefore, heavier crude oil
Panuke project in Nova Scotia’s offshore. sells for less.
The Alliance Pipeline, which began operation in late 2000, stretches In addition, pipeline tariffs for heavy oils are higher because more
from northeastern British Columbia to the Chicago area and carries energy is required to move them through the pipeline, and because
both natural gas and natural gas liquids. they move more slowly through the pipeline system, restricting the
Other significant transmission systems include Trans Quebec and amount of crude oil that can be shipped. The price also depends on
Maritimes Pipeline Inc. in Quebec and FortisBC, which operates a the sulphur content: high-sulphur sour crude sells for a lower price
natural gas pipeline to Vancouver Island. than sweet crude because more processing is required.
Prices are referenced based on so-called benchmark crudes, a
crude oil with which others are compared to determine their price.
North America’s two most referenced benchmark crudes are West
STORAGE Texas Intermediate (WTI) and Brent Blend. Canada’s major crude
The transportation sector includes large storage facilities for crude oil benchmarks are Edmonton Par (Western Canadian light oil) and
oil, refined oil products, natural gas and natural gas liquids. These Western Canadian Select (heavy oil).
facilities enable transmission companies to manage the flow through
Natural gas
their pipelines, meet demand in the winter heating season and
provide orderly delivery of commodities to customers. Natural gas pricing is very competitive and fluctuates according to
many factors, such as North America’s current and expected supply
Crude oil and demand and the amount of pipeline capacity to deliver natural
Crude oil and refined oil products are usually stored in large above- gas. Additional factors include the costs of natural gas transportation,
ground tanks. The tanks may have floating roofs or geodesic domes storage and distribution and prices of competing energy supplies
to prevent evaporation and the buildup of gases in the tanks. Barriers such as crude oil, coal, nuclear power and hydroelectricity.
lined with low-permeability materials such as clay, plastic, asphalt or Residential natural gas customers served by local distribution
concrete surround liquid storage facilities to contain any spills or leaks. companies use the gas mostly for home heating during winter
During offshore production, crude oil is stored in a fixed platform or months. By contrast, large industrial customers generally consume
on a floating production, storage and offloading vessel. The crude oil natural gas throughout the year.
is then transferred to double-hulled tankers for shipment to terminals Some large industrial customers that are able to use alternate fuels
in Canada and abroad. The terminals have storage tanks and pipeline such as heavy fuel oil may sign ‘interruptible’ natural gas contracts to
connections to refineries. negotiate lower prices for natural gas. Those customers would have
their natural gas supply shut off during infrequent periods of very
Natural gas high natural gas demand, which usually occurs during extremely cold
Natural gas is stored in underground salt caverns or depleted natural weather. The cost of serving industrial customers is often less than
gas fields. Natural gas liquids can be stored in cylindrical or spherical that of residential customers because of the larger volume consumed
tanks, but larger volumes are also stored in underground salt caverns. and the nature of the interruptible service.
There are over 400 natural gas storage sites in North America.30 Canadian liquefied natural gas (LNG) imports in 2011 amounted to
2.2 per cent of marketed production, much of which was exported
to New England.31 In the United States, LNG imports totaled 10.1 per
cent of total natural gas imports and 1.4 per cent of consumption.32
CRUDE OIL AND NATURAL GAS SALES
Crude oil and natural gas are sold by the supply or marketing Natural gas distribution
departments of production companies, by groups of producers and Natural gas is delivered to Canadian consumers by provincially
by independent marketers. The buyers include oil refineries, regulated local distribution companies. These companies generally
petrochemical companies, industrial and commercial customers, buy natural gas from producers or marketers and then resell it to their
electric power producers and local gas distribution companies. In customers. However, some consumers can buy natural gas directly
some cases, even individual customers such as schools and hospitals from suppliers and pay distribution companies for the delivery.
can buy directly from producers or marketers.

77
Canaport LNG, Canada’s first liquefied natural gas (LNG) terminal, is located in Saint John, New Brunswick. Canaport LNG is a partnership
between Repsol (75 per cent) and Irving Oil (25 per cent). Canaport LNG is the owner and operator of the terminal. Liquefied natural gas arrives
by ship to Saint John in specially designed LNG tankers and is offloaded by being pumped through pipes into LNG storage tanks at the terminal.
The LNG is then restored to its original gaseous form through a process called regasification. The natural gas is distributed via the Brunswick
Photo Caption.
Pipeline to markets
Photoin Canada and the United States. Photo courtesy Canaport LNG.
courtesy
Liquefied natural gas
Liquefied natural gas (LNG) is In the early and mid-2000s, The terminal, which can send out To date, LNG shipments have had
natural gas in its liquid state, because of declining production a maximum of 28 million cubic little impact on North American
which makes it feasible and in both Canada and the United metres (1.2 billion cubic feet) natural gas prices. Currently,
economical to transport over States, nine LNG import terminals per day, receives shipments from the Kitimat LNG project, with
long distances. were proposed for Canada. Later, Trinidad and Tobago, Algeria, a planned capacity of about
commercial shale gas production Indonesia, Malaysia and Qatar. 6.9 billion cubic metres (243.5
eliminated the need for imported These shipments are stored in billion cubic feet) a year, is the
gas and only one terminal, the three, 160,000-m3 LNG storage only proposed LNG terminal with
Canaport LNG Terminal in Saint tanks. The terminal received its government approval.
John, New Brunswick, was built. first shipment in 2009.

78
Local distribution companies operate about 450,000 kilometres of CEPA member pipeline integrity performance35
pipelines in Canada.33 These pipelines range from high-pressure
main distribution lines up to 61 centimetres in diameter to low- Performance criterion 2010 2011
pressure, 2.5-centimetre steel or plastic tubing used in residential Number of failure incidents 0.156 0.175
service lines. (per 1,000 kilometres)
Natural gas and propane are about the only petroleum commodities Liquid released (m3) 250.6 4,923
that can be used by the end consumer in almost the same form they Gas released (106 m ) 3
0.02 2.82
leave the upstream producing area. A chemical compound called Number of significant failure incidents 0.019 0.055
mercaptan is usually added to the naturally odourless gases as a (per 1,000 kilometres)
safety warning before they are sent on to the end user. Mercaptan
gives the gas a pungent smell to help people detect leaks. However, Failure incident: Any unplanned release of product due to a failure
the majority of petroleum hydrocarbons require further processing of a pipe.
and manufacturing.
Significant failure incident: A failure incident that includes one or
more of the following:
• caused a serious injury or fatality
TRANSPORTATION AND THE ENVIRONMENT • caused a liquid release of greater than 8 m3 (50 U.S. barrels)
Every day, Canada’s pipelines move about 14.8 billion cubic feet of • produced an unintentional ignition or fire
natural gas and three million barrels of crude oil. This much crude oil
would require the equivalent of 15,000 tanker truck loads or 4,200 • occurred as a rupture
rail cars – each of which would multiply the risk of transportation
and increase greenhouse gas emissions. According to Canada’s According to the Canadian Energy Pipeline Association (CEPA), the
Transportation Safety Board, the number of accidents and incidents Canadian oil and gas industry spent $621 million on maintaining and
on federally regulated pipelines is low, especially compared to other monitoring pipelines in 2011.36
types of transportation.
Pipeline integrity
However, with pipelines crossing thousands of kilometres of land and
Pipeline leaks and ruptures caused by dents, cracks or corrosion can
surface water, the potential for spills and leaks presents a pressing
result in oil and natural gas being released. As a result, maintaining
concern for Canada’s natural environment. That’s why operating
pipeline integrity is an essential part of pipeline operations.
practices that protect the environment are a top priority for the
pipeline industry. Design and construction decisions are guided by CSA International (a
division of the Canadian Standards Association), as well as by federal,
There are approximately 825,000 kilometres of pipelines in Canada,
provincial, territorial and, in some cases, municipal regulations.
almost half of which are in Alberta. The Alberta Energy Resources
These standards and regulations set out design criteria and operating
Conservation Board (ERCB) annual survey of provincially regulated
pressures, how deeply pipes are laid in the ground and the thickness
pipeline performance reported that in 2010 there were 687 pipeline
of pipe walls.
incidents in Alberta, or 1.6 incidents per 1,000 kilometres of pipeline,
the lowest ever.34 Companies are required to report all spills, even very
small ones, and all ‘hits’ in which equipment contacts the pipeline.
Safety and integrity: tools and practices
Pipeline companies employ a Fusion bond epoxy coating FBE is a powder that is sprayed This is called cathodic protection
number of technologies and Steel pipelines that are left onto the pipe surface after it has and is accomplished in two ways –
practices designed to protect and unprotected, exposed to air, been cleaned and heated to more by sacrificial or impressed current.
monitor pipelines throughout their moisture and other natural than 230 degrees Celsius. The
operation. epoxy powder melts onto the steel • Sacrificial protection involves
elements, will weaken and rust. burying a piece of metal with a
To prevent this natural corrosion, surface and fuses to the pipe,
creating a protective barrier. higher electrochemical potential
pipeline operators apply special than iron (often magnesium)
external coatings to pipelines, the Cathodic protection in selected locations along the
most common of which is known pipeline route. Electrons then
as fusion bond epoxy (FBE). Another alternative to ward off
corrosion is to control the flow of flow from this piece of metal to
electrons from the buried pipe. the pipe, preventing corrosion.

79
Safety and integrity are also considered when selecting the material One common cause of accidents is damage from agricultural or
for the pipes and coatings. Different materials are used depending on construction activity near pipelines. Companies mark pipeline
the type of line and the products being transported. Although steel is routes clearly and participate in various ‘Call Before You Dig’
most commonly used in transmission pipelines, distribution pipelines programs to reduce this hazard. Aircraft are often used to patrol
often use a type of plastic. pipeline routes to look for this kind of activity and to detect natural
hazards such as erosion. Monitoring on the ground complements
The outside of steel or aluminum pipelines is coated with epoxy
aerial surveillance.
during manufacture to seal the surface of the pipe. Other case-specific
coatings may be applied at the pipeline construction site. If an oil spill occurs, company crews and those from regional spill
cleanup co-operatives are dispatched to contain the oil and remove
Internal corrosion of pipelines is rare because the fluids in the pipe
contamination. Vacuum trucks recover the majority of oil spilled
are constantly flowing. Although there may be acid and sulphur in
on land, which is sent for recycling. Cleanup techniques are similar
the fluids, they only become corrosive at temperatures higher than
to those used in the upstream petroleum industry. Contaminated
the operating temperatures of pipelines. This is true for natural gas,
soil may be moved to a landfill, cleaned by incineration or cleaned
conventional crude oil and bitumen pipelines.
through a combination of evaporation and bacterial action.
Larger diameter steel pipeline sections are typically welded together
using an automated process that is monitored by experienced Efficiency and emissions
technicians. Throughout pipeline construction, examinations are Pipelines currently account for less than one per cent of Canada’s
carried out to ensure that pipe joints are welded to demanding human-caused greenhouse gas emissions despite carrying about 78
specifications. These include the use of ultrasonics (an ultrasound- per cent of Canada’s primary energy supply. Emissions from pipelines
based imaging technique) and radiography (a process similar to have fallen about 49 per cent since 2000.37
X-raying). These technologies greatly enhance the industry’s ability to
identify imperfections in the welded joints of pipe so that they can be Most of the industry’s direct greenhouse gas emissions are carbon
repaired immediately. dioxide (CO2) and are produced by the combustion of natural gas in
turbines and reciprocating engines that power compressors to drive
Pipelines are then pressure-tested for strength and integrity, usually natural gas through pipelines. Methane is also released through
by filling the pipe with water and compressing it to a pressure greater pipeline maintenance and small unintended leaks from pipelines
than the normal operating pressure. During construction, workers also and facilities.
install cathodic protection systems (low-voltage current) on the pipe
to prevent electrochemical reactions that can cause steel to corrode. While the pipeline industry’s overall contribution to total emissions
is relatively small, it is committed to addressing climate change.
Spill prevention and response Many companies are managing emissions through changes in
their operating practices or through investments in energy-efficient
Pipeline companies use sophisticated systems to constantly monitor
equipment. Actions include installing high-efficiency gas turbines
and control their lines, helping to avoid leaks and spills that might
or variable speed motors, incorporating design improvements such
contaminate soil or freshwater supplies. The computerized control
as internally coated pipes, and using pull-down compressors to
systems that help operate pipelines are designed to detect pressure
capture natural gas that might otherwise be vented during planned
drops and quickly isolate sections of pipeline that might be leaking.
maintenance activities. Companies also use leak detection and repair
Smart pigs are sent through pipelines regularly to conduct internal
programs to reduce fugitive methane emissions – small leaks that
inspections for corrosion or other defects that might lead to leaks
occur throughout a pipeline system.
or ruptures.
• Impressed current involves Pigging Aerial surveys

connecting a rectifier (a Travelling through the pipe, in-line Pipeline operators routinely
transformer that converts inspection tools, or ‘pigs,’ employ inspect their lines from the
alternating current to direct various technologies to look for air to monitor their integrity.
current) to the line. The rectifier potential problems such as metal Surveys can range from the most
impresses current onto the loss, wall deformations and cracks. basic, with pilots relying on the
pipeline, causing electrons to Research and development aimed recognition of dead vegetation
flow towards the pipe rather at improving these tools is driving to identify a leak source, to more
than away from it, protecting technological advancements, advanced leak detection methods
the pipe from corrosion. such as the miniaturization of the utilizing infrared and ultraviolet
technology to fit into narrower lines. technologies.

80
2011 CRUDE OIL AND EQUIVALENT PRODUCTION,

SUPPLY AND DISTRIBUTION (Mbbl/d)
Source: National Energy Board
BEAUFORT
SEA
PADD 5
West Coast, AK, HI
10.5
YUKON
NORTHWEST
TERRITORIES NUNAVUT
37.0 2,231.1
434.1
BRITISH
COLUMBIA ALBERTA MANITOBA NEWFOUNDLAND AND LABRADOR
22.8
40.6
SASKATCHEWAN EAST COAST
EXPORTS
1.4
PRINCE
EDWARD 266.6
11.9 ISLAND
ONTARIO QUEBEC EAST COAST
WEST COAST IMPORTS
EXPORTS
NEW NOVA
BRUNSWICK SCOTIA
280.8
173.7
PACIFIC ATLANTIC
OCEAN OCEAN
PADD 4 PADD 2
Rocky Mountain Midwest
PADD 5 1,535.0
West Coast,
AK, HI 179.5
PADD 1
East Coast
PADD 3
15.7 Gulf Coast
Legend Canada’s oil exports amount to about 73 per cent of its production.
Production of crude oil About 99 per cent of these oil exports go to the United States, primarily
and equivalent the Midwest, which has 29 refineries and the Cushing Oil Hub.
Exports of crude oil
and equivalent

81
2011 NATURAL GAS PRODUCTION AND DISTRIBUTION (Bcf/d)

Source: National Energy Board
BEAUFORT
SEA
ALASKA
YUKON
0.01 NORTHWEST NUNAVUT

TERRITORIES
3.52
10.15
0.35
BRITISH
COLUMBIA ALBERTA MANITOBA NEWFOUNDLAND AND LABRADOR
0.62
SASKATCHEWAN
0.01
PRINCE
EDWARD
0.53 ISLAND
3.09 ONTARIO QUEBEC 0.19
0.56 0.20
NEW 0.26
7 BRUNSWICK 8
1 2 3 4 5
0.09 NOVA
0.32 SCOTIA
0.79 6 2
0.63
1.64
PACIFIC ATLANTIC
OCEAN 1 2.70 OCEAN
1.81 0.09
1.51
1.55
Legend Canada’s natural gas exports amounted to about 61 per cent of its
Production of natural gas production in 2011, all of which went to the United States. About
57 per cent was exported to the Midwest. Exports to the United
Major Export Points Major Import Points States are in decline due to shale gas development there. Canada
also imported 2.70 billion cubic feet of natural gas per day, mostly into
1 Huntingdon 0.79 1 Southern
Ontario 2.70 southern Ontario via pipeline from the United States. Canada also
2 Kingsgate 1.55
2 Saint John,
imported about 0.32 billion cubic feet of liquefied natural gas per day,
3 Monchy 1.81 primarily from Qatar and Trinidad and Tobago, through Saint John,
New Brunswick 0.32
4 Elmore 1.51 New Brunswick.
5 Emmerson 1.64
6 Niagara Falls 0.09
7 Iroquois 0.63
8 St. Stephen 0.09
Other 0.64

82
Suncor Energy’s Montreal Refinery produces gasoline, distillates, asphalts, heavy fuel oil, petrochemicals, solvents and feedstock for lubricants.
Photo courtesy Suncor Energy Inc.
Chapter Six Refining
Refining transforms crude oil into the products that will ultimately
make their way to consumers. Though Canada’s 19 refineries primarily
produce transportation fuels, they also produce products like asphalt,
lubricants and feedstocks for petrochemical plants. Petrochemical
plants, meanwhile, use natural gas and oil refining byproducts to
create single chemicals or chemical compounds that are used in
a variety of other industrial processes.

83
In this chapter, you’ll learn how distillation Bubbling cools the vapour enough for it to shed the heaviest fraction,
which condenses onto the tray. The remaining vapour repeats
and other refining techniques transform this process as it continues upward; as each fraction reaches the
crude oil into a variety of hydrocarbon tray where the temperature is just below its own boiling point, it
condenses, liquefies and is drawn off the tray by pipes. A number of
products. The chapter will also address the trays are needed to collect the liquids from each fraction.
petrochemical industry, which creates a Other refining processes
range of useful chemicals from natural gas Following distillation, many of the separated streams undergo further
and oil refining byproducts. chemical processing or purification before they can be blended into
marketable commodities.
If the refinery operator aims to get a higher yield of transportation
fuels, the heavier fractions recovered from distillation undergo
cracking processes similar to those employed in the upgrading of
OIL REFINERIES heavy oil and bitumen. Cracking breaks large molecules into smaller
ones. This is done by various combinations of heat, pressure and
An oil refinery is a manufacturing facility that uses crude oil as a
catalysts. Most processes either add hydrogen (hydrotreating or
raw material and produces a mix of products. The mix can be varied
hydrocracking) or remove carbon (coking) during the process.
by changing the types of processing units or the process conditions
or by using different crude oil feedstocks. In summer, for example, Other refining processes rearrange or rebuild the hydrocarbon
Canadian refineries increase their output of gasoline for motorists and molecules. These processes include:
their production of asphalt for road paving. In winter, they refine more • alkylation – A process that uses an acid catalyst to combine light
home heating and diesel fuels. molecules, such as propylene and butylene, with isobutane. This
All refineries are different. Some can process heavy crude oils or produces larger, branched-chain molecules (isoparaffins) called
synthetic crudes, while others only process conventional light alkylate, a valuable, high-octane gasoline blending component.
sweet crude oil. The degree of flexibility is a key factor in refinery • isomerization – A chemical process that rearranges straight-chain
competitiveness. hydrocarbons (paraffins) into branched-chain hydrocarbons called
There are three main refinery configurations: isoparaffins (isomerate, another high-octane gasoline blending
component). Isomerization is used to produce isobutane for
• Topping plants process condensate or light, sweet crude using
alkylation and to convert pentanes and hexanes into higher-octane
distillation units and catalytic reformers.
compounds (isomers) for use in blending gasoline.
• Cracking plants produce gasoline and other distillates using
• catalytic reforming – A process that uses catalysts to upgrade
catalysts and high temperature and pressure.
naphtha into high-octane gasoline and petrochemical feedstocks
• Coking refineries thermally crack the heaviest crudes into lighter such as benzene and toluene. Naphthas are low-boiling point
products using cokers and hydrocrackers. hydrocarbon mixtures containing many paraffins (chain molecules)
and some naphthenes (ring molecules).
Distillation
As a raw product, crude oil is of limited use. Refineries must separate
and process the mix of hydrocarbons that make up crude oil before
they can be transformed into hundreds of useful products such as PRODUCTS FROM REFINING
gasoline, diesel and jet fuel.
About three-quarters of the volume of crude oil processed at
The first and most critical step in processing crude oil is to separate Canadian refineries is converted into transportation fuels – gasoline,
it into various components, or ‘fractions,’ through a continuous diesel fuel, aviation jet fuel and fuel oil for locomotives and ships.38
process of distillation that begins by heating crude oil in a furnace Increased demand for transportation fuels has been offset in the past
until it turns into a vapour. This occurs in a ‘fractionating column,’ quarter-century by a decrease in the use of heating oil, which has
also known as an atmospheric distillation tower – a tall steel tower been replaced in many areas by natural gas.
layered with perforated trays. Since each fraction has a different
The other products obtained from crude oil refining include:
boiling range, a distillation tower is able to separate the various
fractions using heat and cooling. • asphalt
Heavier hydrocarbons boil at much higher temperatures than their • lubricants
lighter counterparts. They tend to settle in trays at the bottom of the • waxes
tower closest to the furnace while lighter fractions tend to collect
at the top. The vapour rises through perforations in the trays that • raw materials for petrochemicals
are fitted with bubble caps. These caps force the vapour to bubble • fuel oil burned to generate electricity
through a previously liquefied fraction in the tray.
The refining process itself consumes about five per cent of the crude
oil, or an equivalent amount of energy from other sources such as
natural gas.

84
SIMPLIFIED CROSS-SECTION OF A DISTILLATION TOWER
Gases
1 (up to 32°C)*
Fuel refinery
furnaces
Rising vapours
Light gasoline
Detail of Perforating Tray (32-104°C)*
Routed to
blending
Liquid Naphtha
(104-157°C)*
Overflow Made into
Vapour gasoline and
2 petrochemicals
Kerosene
Bubble cap (157-232°C)*
Made into
Liquid fraction jet fuel and
drawn out of stove oil
tray by pipe
Liquid
Light gas oils
(232-343°C)*
Made into jet,

diesel and
3 furnace fuels
Heavy gas oils

(343-426°C)*
Further
Heated processed
crude oil to make
naphtha and
other products
Vapours Liquids
Residue
4
Crude For further

oil processing
into refinery
fuels, heavy
fuel oil, and
Furnace possibly waxes,
greases and
asphalt
Atmospheric Distillation
1 Gases and light gasoline. The gases (methane, ethane, propane and 3 Middle distillates (light and heavy gas oils). Light gas oils are made into
butane) are commonly used to fuel refinery furnaces while the light jet, diesel and furnace fuels. Heavy gas oils undergo further chemical
gasoline is routed to gasoline blending. processing such as cracking to produce naphtha and other products.
2 Light distillates (naphtha, kerosene). Naphtha is used in the production of 4 Residual products are further processed to produce refinery fuels, heavy
gasoline and petrochemicals. Kerosene was originally used as a lamp oil; fuel oil (bunker oil), waxes, greases and asphalt.
today it is primarily used as a jet fuel and stove oil. * Temperatures indicate approximate boiling point of each hydrocarbon
fraction

85
PETROCHEMICAL PLANTS CANADA’S REFINERIES

Petrochemicals are manufactured from natural gas (methane), Canada currently has 19 operating refineries, with one in every
natural gas liquids (ethane, propane, butane and condensates) and province except Manitoba and Prince Edward Island and the remainder
from byproducts of oil refining such as naphtha. Ethane, for example, in three main operating refining centres.39 Of these 19 facilities:
is used as a feedstock to produce ethylene, which in turn is used • fifteen manufacture a full range of petroleum products
to manufacture polyethylene for cord, rope and flexible packaging
material. Nylon and detergents are other examples of materials made • two are primarily asphalt plants, producing small amounts of other
from petrochemicals. products
Petrochemical plants produce single chemicals, or a small number • two are petrochemical plants
of chemical compounds, for subsequent processing into finished
products by other industries. The major petrochemical building blocks These 19 facilities represent a significant reduction from the 44
produced in Canada are methanol, ethylene, propylene, styrene, refineries that existed in the early 1970s. However, improvements in
butadiene, butylene, benzene, toluene and xylene. efficiency and facility expansions mean that these 19 facilities have a
combined output greater than their 44 predecessors.40
These compounds are then further manufactured into products as
varied as synthetic rubber, plastic bags, polyvinyl chloride (PVC) pipe, During the 1980s, consumption of refined petroleum products in
insulation and pesticides. Canada declined about 20 per cent to a total of about 80 billion litres
per year. Consumption dropped because of more efficient vehicles,
Propane is often used as both a feedstock and a fuel for slower economic growth and a shift from oil products to natural gas
petrochemical plants. Products manufactured from propane include for heating and some industrial processes.
both car antifreeze and the plastic container in which it is sold. Other
products include polyester clothing, plastic auto parts and children’s In the 1990s, use of petroleum products increased to about 85 billion
toys, polypropylene rope, synthetic carpets, soap and the solvents litres per year due to population growth, economic recovery and the
used by dry cleaners. popularity of light trucks, vans and sport utility vehicles. Almost all of
the increased demand was for transportation fuels.
Between 2000 and 2011, Canadian petroleum product demand
increased further to average 99.8 billion litres per year.
FUEL REFORMULATION In 2011, Canadian consumption totaled more than 105.5 billion
New engine designs and environmental regulations have litres, including almost 44.3 billion litres of motor gasoline, 30 billion
required changes in the way transportation fuels are refined litres of diesel fuel, 4.8 billion litres of heavy fuel oil and 26.3 million
and blended. For example, lead was eliminated from gasoline litres of aviation turbo fuel, light fuel oil and other products.41
between 1973 and 1990.
New ways of boosting a fuel’s octane number, a measure of the
speed and evenness of combustion, are still being explored. In
CANADA’S PETROCHEMICAL INDUSTRY
general, there are two ways to match the octane of unleaded
gasoline to the needs of engines: more intense refining at a Canada’s petrochemical facilities produce chemical petroleum
higher cost or reformulating the gasoline with various additives products including plastics, synthetic fibres, rubber products and
or blend stocks. For example, gasoline can be altered by fertilizers. These petrochemicals are used in diverse industrial sectors
adding high-octane ethanol (ethyl alcohol). Refiners assess such as forestry, textiles, construction and mining.
product marketability and the impact on both vehicles and the Canada’s petrochemical plants are concentrated in Quebec, Ontario
environment as they seek the most cost-effective solutions. and Alberta. Alberta’s plants are based almost entirely on natural gas
As a measure to reduce greenhouse gas emissions from feedstocks (methane and ethane), with new technologies allowing
vehicle exhaust, on December 15, 2010, federal government plants to extract ethane from bitumen. Ethylene is produced in
regulations requiring a minimum five per cent renewable fuel Alberta, Ontario and Quebec, and used at nearby plants to make
content in motor gasoline came into effect. Similar measures derivatives including ethylene oxide, ethylene glycol, ethylene
for a minimum two per cent renewable fuel content in diesel dichloride and vinyl chloride monomer. It is also polymerized
fuel came into effect July 1, 2011. to synthetic resins including polyethylene, polyvinyl chloride,
polystyrene and synthetic rubber.
Federal regulations enacted in 2001 cut the maximum sulphur
content by over 95 per cent in gasoline by 2005, and in diesel The three largest volumes of petrochemical production by Canadian
fuel by 2006. The sulphur content of gasoline is restricted to plants are:42
an average of 30 parts per million with an absolute maximum • ethylene – 51.6 per cent
of 80 parts per million. The average sulphur content of diesel
is restricted to 15 parts per million. Prior to the legislation, • styrene – 9.5 per cent
sulphur content of gasoline averaged 350 parts per million, and • propylene – 6.4 per cent
in some regions exceeded 2,500 parts per million in diesel fuel.
In 2010, the Canadian petrochemical industry shipped products
In response, the refining industry invested $5.4 billion between
worth $6.2 billion, and employed more than 1,000 people at 16
2002 and 2007 to reduce the sulphur content of fuels.
manufacturing sites.43

86
Beginning with the 1998 model year, all vehicles sold in Canada have
REFINING AND THE ENVIRONMENT been equipped with large onboard canisters containing absorbent
From 1990 to 2009, Canadian refineries increased their energy carbon to capture and recycle vapour during refueling.
efficiency by 11 per cent, investing $8 billion in total environmental In addition, refiners reduce the volatility of gasolines produced in
expenditures in the last decade.44 Greater energy efficiency brought a summer months across Canada, which reduces vapour emissions
comparable reduction in refineries’ greenhouse gas emissions. during the critical period for smog formation. However, volatility
The refining industry has also responded to the need to protect air cannot be reduced too much because this would cause start-up and
quality by investing in fuel reformulation, adding new emission driveability problems for some vehicles.
controls and contributing to the development of a comprehensive
national framework to improve air emissions. The National
Benzene
Framework for Petroleum Refinery Emissions provides principles and One of the VOCs is benzene, which has been identified as a cancer-
methods to improve air quality while protecting human health and causing compound. Benzene occurs naturally in petroleum and is
the environment through verifiable emission reductions. also produced by some refining processes and by combustion of
fuels in engines.
New technologies have improved other aspects of environmental
performance. Refineries, for example, have installed new waste By 2002, refinery emissions of benzene were reduced by 50 per cent
treatment systems, odour scrubbers, noise suppressants and water from 1995 levels to 0.2 kilotonnes and have remained at that level
purification facilities. These modifications are the result of industry since. In 1999, legislation took effect limiting the benzene content of
initiatives that addressed occupational health and safety requirements, gasoline to no more than one per cent.
community concerns, municipal bylaws and provincial regulations.
In Ontario, for example, refiners spent $350 million over two decades
to eliminate 99 per cent of the trace contaminants in their waste
water. Since 2005, Canadian refiners have reduced their water use
by 13 per cent and discharge water at two to 33 per cent of federally
regulated levels.45
Refineries use large volumes of water for heating, cooling and
cleaning processes. Recycling and water conservation measures have
substantially reduced this water use. Improved wastewater treatment
makes sure that releases meet federal water quality standards.
Petroleum products manufacturers provide spill containment
equipment and training to avoid spills that might contaminate water
supplies. Companies work with government environmental protection
officials to prevent contaminants from reaching water resources
when spills occur.
Smog
Ground-level ozone, the major component of smog, is a concern in
some regions. It is formed when volatile organic compounds (VOCs)
and nitrogen oxides react in the presence of sunlight. Although
man made VOCs only account for about eight per cent of total
VOC emissions in Canada they are more likely to form smog than
natural VOCs.
Man-made VOCs are carbon-containing gases and vapours such as
gasoline fumes and solvents. They primarily result from combustion
and evaporation associated with industrial processes, transportation
and paint and solvent use. The oil and gas industry emitted the
highest proportion of VOCs in 2010, representing 32 per cent (583
kilotonnes) of national emissions. The use of paints and solvents was
second at 18 per cent, followed by off-road vehicles at 15 per cent.46
The petroleum industry is participating in programs to reduce VOC
emissions. Recovery systems recycle the vapours normally displaced
into the atmosphere during truck loading and delivery by directing
the vapours back into the truck tank or storage tank. Vapour recovery
equipment installed at industry bulk transfer facilities in southern
Ontario and the B.C. Lower Mainland has helped to reduce smog in
these areas.

87
2012 CANADIAN REFINERIES Legend

Sources: Natural Resources Canada, 1 Chevron Canada, Burnaby 5 Imperial Oil, Strathcona
Canadian Fuels Association
2 Husky, Prince George 6 Husky, Lloydminster
3 Suncor, Edmonton 7 Gibson Energy, Moose Jaw
4 Shell Canada, Scotford 8 Consumer’s Co-op, Regina
9 Imperial Oil, Sarnia
10 Suncor, Sarnia
11 Shell Canada, Corunna
12 Nova Chemicals, Corunna
13 Imperial Oil, Nanticoke
14 Suncor, Mississauga
15 Suncor, Montreal
YUKON 16 Ultramar, Levis
17 Irving Oil, Saint John
18 Imperial Oil, Dartmouth
NORTHWEST NUNAVUT
TERRITORIES 19 North Atlantic Refining,
Come-by-Chance
ALBERTA
BRITISH
COLUMBIA
SASKATCHEWAN NEWFOUNDLAND AND LABRADOR

2
4 MANITOBA
5 19
3
6
1 EDWARD
ISLAND
7 8
16 18
17
15 NEW NOVA
Sedimentary Basin
14
9
10
11
2011 PETROLEUM PRODUCT CONSUMPTION (million litres) 12 13
50,000
40,000
30,000
20,000
10,000
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Gasoline 38,338.0 38,811.5 39,599.6 40,228.8 40,993.0 40,839.3 40,932.6 42,195.6 41,766.6 42,319.4 43,771.3 44,291.7
Diesel 23,380.3 22,689.9 22,542.9 23,711.6 25,153.2 26,289.0 26,385.5 27,733.2 28,247.7 26,010.2 28,368.1 30,002.1
Other Products 13,993.2 13,506.8 14,334.7 14,673.3 16,088.2 14,793.9 16,705.8 15,967.1 15,981.9 14,064.2 16,966.6 17,020.7
Aviation Turbo Fuel 6,307.3 5,752.1 6,005.1 5,948.7 6,581.8 6,855.2 6,758.0 6,861.7 6,858.3 5,920.8 6,089.2 5,935.4
Light Fuel Oil 5,106.8 4,886.0 4,997.5 5,280.6 5,144.2 4,586.6 4,098.0 4,400.6 3,803.6 3,414.9 3,403.9 3,365.8
Heavy Fuel Oil 7,633.0 8,156.9 6,610.9 8,789.3 8,553.2 8,099.6 6,171.3 6,092.2 6,396.4 4,813.3 5,268.6 4,840.1

88
Petro-Canada is a retail and wholesale marketing brand of Suncor Energy. Through its outlets across Canada, Suncor offers customers a wide
variety of fuel and services. Photo courtesy Suncor Energy Inc.
Chapter Seven Marketing
Marketing is the final step in the process that connects national and
international consumers to the hydrocarbon resources found in some
of Canada’s most remote regions. Refined transportation fuels created
from crude oil and the natural gas that serves as a heating fuel for
millions of Canadian homes are sold to consumers through gas stations
and local natural gas distribution networks.

89
In this chapter, you’ll learn about the final Prices vary considerably from day to day and city to city for a variety
of reasons. Competition among stations is the dominant reason for
steps required to sell refined oil and natural local price changes. Other factors include:
gas products to consumers. • supply and demand
• taxation
• cost of crude oil
• wholesale price
CUSTOMERS • average sales volumes
The marketing sector of the oil and gas industry has many functions
beyond retailing. Marketing companies purchase fuels from other Numerous government studies of gasoline pricing over the past 25
suppliers, as well as their own refineries, and store, blend and deliver years have concluded that the retail market in Canada is competitive.
fuels to meet their dealers’ and customers’ needs. There are just over 12,700 gasoline stations operating in Canada,
A variety of professionals and processes are required to prepare these about one for every 2,050 registered vehicles in Canada.48, 49 Since
materials for consumption. Experts manage the health, safety and 1989, the number of retail sites has declined by about 38 per cent
environmental aspects of fuel handling. Sales representatives work with from 20,360, but average output has increased.50
fleet operators to meet their special needs and deal with specialized Non-fuel goods and services, such as convenience stores, food outlets
markets such as fishing, forestry and mining. Lubricants, antifreeze and and car washes, are also now an important part of retail gasoline
other products must be developed, packaged and marketed. marketing in Canada.
CANADIAN AVERAGE GASOLINE PRICE COMPONENTS
(based on $1.00 per litre) And while most consumers assume that the major brand owners
Source: Kent Marketing Services
control the retail outlets, only 26 per cent of all gas stations are
controlled by one of Canada’s nine refiner-marketers.51
D PETROLEUM PRODUCTS
Petroleum
C products are used primarily as transportation fuels, but Diesel, light fuel oil and kerosene
also as heating fuels and for generating electricity. Natural gas is Diesel is the second most popular transportation fuel in Canada.
used primarily as a heating fuel, but also to generate electricity and Freight transportation accounts for 72.3 per cent of diesel
less commonly as transportation fuel. consumption, and passenger transportation 27.7 per cent.52 Diesel
transportation fuel is available at about 57 per cent of Canada’s
Gasoline
B A service stations.53 Historically, diesel has cost less than gasoline
Gasoline in Canada is used almost exclusively as a transportation despite the fact that it contains more energy.54
fuel. About 81.7 per cent is consumed in passenger transportation Diesel, light fuel oil and kerosene have other uses besides
and 18.3 per cent in freight transportation.47 transportation. Diesel is used as a heating fuel in homes, industry,
Retailers must find a balance between a price that is high enough to %
businesses and institutions in Canada as well as fuel for electricity
cover
A all theirOil
Crude business
Costs operating costs yet is low enough to attract
47.1
generation. Consumers receive delivery by tanker truck.
customers. Prices move in reaction to local competition. Consumers
B Taxes 33.0
choose the station that offers the best combination of price, Heavy fuel oil
C Marketing Operating Margin 13.3
convenience and service. Heavy fuel oil is primarily used as a heating fuel by industry,
D Refining Operating Margin 6.6
businesses and institutions in Canada, as well as a fuel for electricity
Total 100.0
generation and as marine fuel.
2011 CANADIAN AVERAGE GASOLINE PRICE COMPONENTS 2009 DIESEL USE BY SECTOR (per cent)
Source: Kent Marketing Services Source: Natural Resources Canada
% E %
D D
A Crude Oil Costs 47.1 A Freight Transportation 56.8
C
B Taxes 33.0 C F B Passenger Transportation 21.8
C Marketing Operating Margin 13.3 C Industrial 11.2
D Refining Operating Margin 6.6 D Commercial/Institutional 5.2
B A A
Total 100.0 B E Residential 4.7
F Electricity Generation 0.3
Total 100.0

90
2009 ENERGY USE BY FUEL (petajoules)

D
Petajoules
C A Natural Gas 2,695.1
B Gasoline 1,404.1
A
C Diesel/Light Fuel Oil 1,351.2
D Heavy Fuel Oil 233.5
B Total 5,683.9
2011 TAXES ON GASOLINE WHEN THE PUMP PRICE IS ONE DOLLAR PER LITRE (cents per litre)
TOTAL
0.441 Vancouver
0.437 Montreal
0.405 Halifax
0.395 St. John’s
0.377 Toronto
0.366 Saint John
0.308 Charlottetown
0.300 Regina
0.265 Winnipeg
0.257 Yellowknife
0.257 Iqaluit
0.240 Calgary
0.212 Whitehorse
Excise Tax GST HST PST Provincial Tax Municipal Tax Carbon Tax
2012 INTERNATIONAL RETAIL GASOLINE PRICES ($ Cdn per litre, average price March 2012)
Source: International Energy Agency
TAXES *OTHER TOTAL
1.3308 1.0307 2.3615 Italy
1.2086 0.9969 2.2055 Germany
1.2702 0.8995 2.1697 UK
1.1519 0.9840 2.1359 France
0.8806 1.0307 1.9113 Spain
0.7643 1.0973 1.8616 Japan
0.3886 0.9223 1.3109 CANADA
0.1083 0.9035 1.0118 United States
* Other includes crude oil, marketing and refining costs.

91
NATURAL GAS MARKETING AND THE ENVIRONMENT

Natural gas is used in all sectors, primarily as a heating fuel. It is When retail outlets, refineries and other downstream facilities are
delivered to Canadian residential consumers by provincially regulated closed, sites are tested for possible contamination. The procedures
utilities called local distribution companies. These companies for cleaning up contaminated sites are similar to those used in the
generally buy natural gas from producers or marketers and then resell upstream petroleum industry. Cleanup continues until the site meets
it to their customers. However, larger consumers can buy natural the standards established for commercial, industrial, residential or
gas directly from suppliers and pay distribution companies for the recreational uses. In 2009 and 2010, more than 300 sites across
delivery service they provide. Canada were remediated and a further 128 sites were made available
for safe use until remediation takes place.59
Local distribution companies operate about 450,000 kilometres of
pipelines in Canada. These pipelines range from high-pressure main Used motor oil, filters and containers are recycled in most provinces.
distribution lines up to 61 centimetres in diameter to low-pressure, Provincial oil recycling associations in British Columbia, Alberta,
2.5-centimetre steel or plastic tubing used in residential service lines. Saskatchewan, Manitoba and Quebec have formed the National Used
Oil Material Advisory Council (NUOMAC) to coordinate Canada-wide
About 0.07 per cent of natural gas use in Canada is for transportation.55
There are less than 10,000 natural gas vehicles (NGVs) in Canada, most used oil recycling effort and standards. Their results for 2011 are
shown in the following table.60
of which have been converted from conventional gasoline or diesel-
powered vehicles using aftermarket equipment.56 Most are in corporate 2011 Used oil recycling programs in Canada
or municipal fleets and range from light-duty pickup trucks to shuttle
Per cent recycled
buses to municipal buses to transport tractors. Most fleets have their
own private refuelling facilities. There are about 80 public natural gas Province Oil Filters Containers
refuelling stations in Canada.57 British Columbia 79.3 85.6 88.3
About 40,000 vehicles have been converted to run on propane, Alberta 86.6 88.7 87.0
a natural gas liquid extracted from natural gas. There are more than Saskatchewan 75.0 79.0 68.0
2,000 propane refuelling stations in Canada.58
Manitoba 75.0 69.0 29.0
The advantages of natural gas and propane vehicles include reduced
Quebec 95.3 88.2 90.1
emissions of greenhouse gases and other pollutants. NGV use has
Source: National Used Oil Material Advisory Council
been encouraged by the availability of government subsidies for
conversion and tax relief on the fuel price. While the other provinces have or are setting up similar programs,
Disadvantages include the fact that natural gas and propane contain their results are not available.
less energy than gasoline or diesel, requiring a greater volume of fuel;
the cost of converting vehicles; the cost of compressors for fuelling;
the space needed in vehicles for gas cylinders; the weight of the
cylinders; the low number of refuelling stations and the relatively
short driving distance between refuellings.

92
Footnotes
1 Fisheries and Oceans Canada http://www.dfo-mpo.gc.ca/oceans/management-gestion/ 32 U.S. Energy Information Administration, Imports
integratedmanagement-gestionintegree/seismic-sismique/statement-enonce-eng.asp http://www.eia.gov/dnav/ng/ng_move_impc_s1_a.htm
2 Nova Scotia Energy http://novascotiaoffshore.ca/documents/Report_NS_Drilling_ U.S. Energy Information Administration, Consumption
Performance_Review_26Jul11_Part1.pdf http://www.eia.gov/cfapps/ipdbproject/IEDIndex3.cfm?tid=3&pid=26&aid=2
3 Orphan Well Association http://www.orphanwell.ca/List%20of%20Orphan%20Wells%20 33 Canadian Energy Pipeline Association
to%20be%20Abandoned.pdf http://www.cepa.com/about-pipelines/types-of-pipelines
Orphan Well Association 34 Energy Resources Conservation Board http://www.ercb.ca/sts/ST57-2011.pdf
http://www.orphanwell.ca/List%20of%20Orphan%20Sites%20Under%20Reclamation.pdf
35 Canadian Energy Pipeline Association
B.C. Oil and Gas Commission http://www.cepa.com/library/cepa-member-pipeline-integrity-performance
http://www.bcogc.ca/document.aspx?documentID=1247&type=.pdf
36 Canadian Energy Pipeline Association
Saskatchewan – Ministry of the Economy http://www.economy.gov.sk.ca/adx/aspx/ http://www.cepa.com/industry-info/cepa-member-statistics
adxGetMedia.aspx?DocID=10830,10418,3680,3384,5460,2936,Documents&MediaID
37 Environment Canada http://unfccc.int/national_reports/annex_i_ghg_inventories/
=d24f42c3-887d-4f38-8fb1-2caff9b4ba17&Filename=Orphan+Well+List.pdf
national_inventories_submissions/items/6598.php
4 Chevron Corporation http://www.chevron.com/countries/canada/businessportfolio/
38 Statistics Canada http://www.statcan.gc.ca/pub/57-601-x/2012001/t066-eng.htm
5 Alberta Energy http://www.energy.alberta.ca/NaturalGas/944.asp
39 Canadian Fuels Association http://canadianfuels.ca/index_e.php?p=65
6 Alberta Energy http://www.energy.alberta.ca/OilSands/1715.asp
7 Alberta Energy http://www.energy.alberta.ca/OilSands/1715.asp http://membernet.capp.ca/SHB/Sheet.asp?SectionID=7&SheetID=107
8 Oil Sands Developers Group 41 Statistics Canada http://www.statcan.gc.ca/pub/57-601-x/2012001/t066-eng.htm
http://www.oilsandsdevelopers.ca/index.php/oil-sands-information/
42 Statistics Canada
9 Energy Resources Conservation Board http://www.ercb.ca/sts/ST98/ST98-2012.pdf http://www.ic.gc.ca/eic/site/chemicals-chimiques.nsf/eng/bt01242.html#figure1
10 National Energy Board http://www.neb.gc.ca/clf-nsi/rnrgynfmtn/nrgyrprt/ntrlgs/ 43 Statistics Canada http://www.ic.gc.ca/eic/site/chemicals-chimiques.nsf/eng/bt01204.html
prmrndrstndngshlgs2009/prmrndrstndngshlgs2009nrgbrf-eng.html
44 Canadian Fuels Association
11 Canada – Newfoundland and Labrador Offshore Petroleum Board http://canadianfuels.ca/assets/uploads/canadian_fuels_2012_sector_report/e/
http://www.cnlopb.nl.ca/pdfs/2011tpro.pdf
45 Canadian Fuels Association http://canadianfuels.ca/assets/uploads/canadian_
12 Canada – Newfoundland and Labrador Offshore Petroleum Board fuels_2012_sector_report/e/#/14/
http://www.cnlopb.nl.ca/pdfs/2011hpro.pdf
46 Environment Canada http://www.ec.gc.ca/indicateurs-indicators/default.
13 Canada – Newfoundland and Labrador Offshore Petroleum Board asp?lang=en&n=64B9E95D-1
http://www.cnsopb.ns.ca/offshore-activity/production-data
47 Natural Resources Canada, Energy Use Data Handbook
14 Alberta Enterprise http://oee.nrcan.gc.ca/corporate/statistics/neud/dpa/handbook_tran_ca.cfm?attr=0
http://albertacanada.com/business/statistics/inventory-of-major-projects.aspx
15 Canadian Association of Petroleum Producers http://www.capp.ca/
49 Transport Canada http://www.tc.gc.ca/eng/road-menu.htm
ENVIRONMENTCOMMUNITY/AIRCLIMATECHANGE/Pages/FlaringVenting.aspx
50 Canadian Fuels Association http://canadianfuels.ca/userfiles/file/2010%20National%20
16 Energy Resources Conservation Board http://www.ercb.ca/sts/ST98/ST98-2012.pdf
Retail%20Petroleum%20Site%20Census%20(revised).pdf
17 Alberta Energy http://www.energy.gov.ab.ca/landaccess/pdfs/oilsands_projects.pdf
University of Regina http://esask.uregina.ca/entry/heavy_oil_upgraders.html
52 Natural Resources Canada, Energy Use Data Handbook
18 Alberta Energy http://www.energy.gov.ab.ca/NaturalGas/742.asp http://oee.nrcan.gc.ca/corporate/statistics/neud/dpa/handbook_tran_ca.cfm?attr=0
19 Alberta Energy http://www.energy.gov.ab.ca/NaturalGas/742.asp 53 Canadian Fuels Association http://canadianfuels.ca/userfiles/file/2010%20National%20
Retail%20Petroleum%20Site%20Census%20(revised).pdf
20 B.C. Oil and Gas Commission, Pipeline Performance Report
http://www.bcogc.ca/public-zone/reports 54 The Kent Group http://www.kentmarketingservices.com/dnn/PetroleumPriceData.aspx
21 Environment Canada http://www.ec.gc.ca/lcpe-cepa/default.asp?lang=En&n=B8B0457A-1 55 Natural Resources Canada, Energy Use Data Handbook
http://oee.nrcan.gc.ca/corporate/statistics/neud/dpa/handbook_tran_ca.cfm?attr=0
22 Environment Canada http://www.ec.gc.ca/pdb/websol/emissions/ap/ap_result_e.
cfm?year=1985-2007&substance=sox&location=CA&sector=&submit=Search 56 Natural Gas Vehicle Alliance Energy
http://www.cngva.org/media/4326/roundtable-why_transportation-march_2010.pdf
23 Enbridge Inc. http://www.enbridge.com/DeliveringEnergy/OurPipelines.aspx
57 Natural Gas Vehicle Alliance Energy
24 Enbridge Inc. http://www.enbridge.com/DeliveringEnergy/OurPipelines.aspx
http://www.cngva.org/media/4326/roundtable-why_transportation-march_2010.pdf
25 Kinder Morgan http://www.kindermorgan.com/business/canada/transmountain.cfm
58 Canadian Propane Association http://www.propane.ca/sites/default/files/files/
26 Canadian Energy Pipeline Association http://www.cepa.com/industry-info/factoids LetterMinAmbroseCarsLtTrucks102012.pdf
27 Canadian Gas Association http://www.cga.ca/wp-content/uploads/2011/02/Industry-at-a- 59 Canadian Fuels Association http://canadianfuels.ca/assets/uploads/canadian_

glance-info-sheet-July-20122.pdf fuels_2012_sector_report/e/#/14/
28 Spectra Energy http://www.spectraenergy.com/Operations/North-America-Transmission/ 60 B.C. http://usedoilrecycling.com/resources/file/BC/BCUOMA_AR_2011.pdf

Assets/Maritimes-Northeast-Pipeline/
Alberta http://usedoilrecyclingab.com/webcura/files/259140_2011-auoma-annual-
29 Canadian Energy Pipeline Association http://www.cepa.com/about-pipelines/why-pipelines report.pdf
30 U.S. Energy Information Administration http://www.eia.gov/pub/oil_gas/natural_gas/ Saskatchewan

analysis_publications/storagebasics/storagebasics.html http://usedoilrecyclingsk.com/webcura/files/257415_sarrc-2011-annual-report.pdf
31 National Energy Board, LNG Imports Manitoba http://usedoilrecycling.com/en/mb

http://www.neb-one.gc.ca/CommodityStatistics/Statistics.aspx?language=english
Quebec
Canadian Association of Petroleum Producers, Marketed Production http://www.soghu.com/uploads/12.06.21%20rapport%20annuel%202011%20(EN).pdf

93
Looking from the ground up at a strand of Aspen trees near Nexen’s Dilly Camp. Nexen is actively drilling for shale gas in the Horn River Basin
in northeastern British Columbia. Photo courtesy Nexen Inc.
As global populations and economies grow, so does the need for

energy. This means that the oil and gas industry must increase
03In this section, you will
learn about the concept of
sustainability and its practice in
production in a responsible manner that meets the public and social Canada’s oil and gas industry.
interest of stakeholders, nearby communities, the environment and
the economy.
Sustainable
Development
SECTION 3 SUSTAINABLE DEVELOPMENT
94
Shell Canada is continuing to explore opportunities to use more brackish (salty) groundwater at its operations and increase water recycling to
further reduce its need for river water, particularly during low-flow periods. Photo courtesy Shell Canada.
Chapter One Sustainability
The concept of sustainable development, generally referred to simply

as sustainability, guides how industry and society should carry out
their activities. It emphasizes three dimensions of performance –
environmental, economic and social.

95
In this chapter you will learn about the ABOUT SUSTAINABILITY

concept of sustainability, its origins and Sustainability includes three dimensions of performance: economic,
how oil and gas companies are taking action environmental and social. It calls on companies to not only focus on
financial performance but to also consider environmental protection
to improve their environmental, social and and their impacts on people and communities.
economic performance. In the past, some companies believed that becoming more
environmentally responsible would merely add costs and erode their
competitiveness. Today, that thinking has changed. Many companies
have found that public distrust of their activities and criticism of
their social and environmental practices can hurt their reputation
INTRODUCTION and financial bottom line. They have realized that, if they do not
The world’s energy demand is expected to increase by 47 per cent respond to stakeholder concerns, unresolved environmental or social
by 2035.1 Most of this increase will be driven by population growth, challenges can significantly delay project plans and can cause them
economic development and industrialization, especially in developing to lose their ability to access resources.
countries like China and India. Meeting this demand will require a Companies now recognize they must continually earn local support
diverse mix of energy supplies including alternative and renewable from communities, their ‘social licence to operate,’ through their
energy and petroleum resources. actions. These pressures are challenging companies to adapt and
Oil and natural gas will remain the world’s dominant sources improve their environmental and social performance. Companies are
of primary energy due to their abundance, versatility, ease of increasingly employing sustainability strategies to:
transportation and energy density, which is a resource’s amount • anticipate and respond to regulations
of stored energy. But producing Canada’s oil and gas resources is
• manage potential environmental, social and economic risks
challenging for a number of reasons. Unconventional fuel sources,
such as oil sands and shale gas, are playing a greater role in our • build public trust and strengthen their relationships with
country’s energy mix. Developing these resources involves significant communities
environmental impacts, including carbon emissions and water use.
Oil and gas development also involves a range of social issues.
These include protecting the safety of workers, building community
relations and contributing to regional development. The public,
communities and other stakeholders must be consulted about THE THREE DIMENSIONS OF SUSTAINABILITY
industry activities and project plans that affect them. Companies that adopt sustainability strategies are viewed as more responsible,
more productive, more competitive and better able to respond to change.
Oil and gas companies must carry out energy development in ways These strategies simultaneously address environmental protection, social
that meet consumer demand while addressing environmental and well-being and economic development.
social issues. How are oil and gas companies responding to this
challenge? Increasingly, they are integrating the concept of
sustainable development into their business activities.
Environment
Sustainability
Society Economy
KEY DEFINITION STAKEHOLDERS

Anyone who is affected by or has an interest in a company’s actions
including residents, employees, investors, customers, governments,
non-governmental organizations, academic institutions and communities.
KEY DEFINITION SUSTAINABLE DEVELOPMENT KEY DEFINITION SOCIAL LICENCE TO OPERATE

The 1987 publication of the United Nations report ‘Our Common Future’ The approval or acceptance that companies must continually obtain
defines sustainable development as ‘development that meets the needs of from local communities and landowners for their operations or project
the present without compromising the ability of future generations to meet plans. This concept argues that companies are accountable to different
their own needs.’ This concept calls on companies to address the long-term stakeholders and that they can lose their ability to operate if they do not
environmental, economic and social aspects of their development activities. respond to key stakeholder concerns and priorities.

96
Sustainability allows companies to do more than address their • access to information – Today’s interconnected world allows
obligations. In fact, sustainability practices provide multiple, anyone to publish and access information, resulting in immediate
interconnected benefits: and increased scrutiny of the oil and gas industry’s environmental,
social and economic performance. Companies that can
• By improving their environmental and social performance,
demonstrate a strong record of sustainability performance are
companies maintain their social licence to operate and develop
more likely to maintain their social licence to operate.
efficient processes.
• shareholder and investor expectations – Investors and
• By building local support for their projects and activities,
shareholders are increasingly aware of the risks that climate
companies increase opportunities to grow and prosper.
change, water management and other environmental and social
• By improving their financial performance, companies generate issues present to the bottom lines of oil and gas companies.
revenue that can be spent on environmental improvements and Companies hoping to attract investor capital must not only
community investments. demonstrate a solid rate of return but also a strong and improving
environmental and social record. Sustainability-based stock
indexes, such as the Dow Jones Sustainability Indexes (DJSI),
compare corporate sustainability performance, providing an
KEY FORCES additional incentive for businesses to meet expectations.
Multiple forces drive sustainability within the oil and gas industry. • non-governmental organizations (NGOs) – NGOs include
These include: environmental groups, human rights advocacy organizations,
social change agencies and development organizations. Many
• finite hydrocarbon resources – Because oil and gas resources are
NGOs focus on the environment and other issues related to
nonrenewable, companies must either move into undeveloped,
sustainability and actively use a range of media to comment on
remote regions or expand their operations in areas where there are
industry performance. They use legal actions, public campaigns,
competing demands on land and water. The environmental and
social media and, in some cases, collaborate with industry to
social challenges of searching for remaining hydrocarbon resources
advance environmental and social agendas.
require businesses to conduct their activities in more efficient,
sustainable ways. • employee expectations – Employees and future job candidates
increasingly want to work for companies that share their
• regulations – Oil and gas facilities must comply with licences,
environmental and social values.
permits, regulatory approvals and legislated requirements.
Compliance is a minimum expectation for a business’s • community expectations – Community interest groups are
environmental and social performance. increasingly aware of industry activities in their backyard and are
prepared to intervene to make their views heard. Their actions can
• high-profile incidents – Incidents such as the 2010 Deepwater
help or hinder a company’s operations and project plans.
Horizon oil rig spill in the Gulf of Mexico have increased public
concerns about the environmental and safety risks of oil and • consumer expectations – Consumers can significantly influence
gas development. While Canada’s oil and gas industry has been a company’s reputation by their purchasing choices and
working on spill prevention and response for many years, these brand loyalty. They expect energy products that are seen as
high-profile incidents have caused many companies to pay environmentally responsible.
additional attention to their operating procedures and become
even more vigilant in carrying out safe, responsible oil and gas
development both offshore and onshore.
AT A GLANCE – KEY FORCES DRIVING SUSTAINABILITY IN INDUSTRY

What Who
Finite resources
Shareholders and investors
Regulations
NGOs
Social licence to operate
Governments
Continuous improvement
Why interest in
sustainability is
growing in industry
Employees
High-profile incidents
Communities
Access to information
Consumers

97
In 1983, the United Nations (UN) World Commission on Environment

SUSTAINABILITY’S HISTORY and Development was formed under the leadership of Norwegian
How did the concept of sustainability originate? It took shape as a result prime minister Gro Harlem Brundtland. The commission’s task was
of multiple, overlapping waves of change over the last five decades. to prepare a report on social, economic and environmental issues.
In 1987, it released Our Common Future, a report that articulated
WAVE ONE widespread concerns about the environment and poverty in many
The environmental movement grows parts of the world.
1960s to 1970s The report accomplished a number of outcomes:
The environmental movement of the 1960s was an important • It popularized the term ‘sustainable development,’ defining it
precursor to the development of sustainability. The movement as ‘development that meets the needs of the present without
focused on one aspect of sustainable development: the importance compromising the ability of future generations to meet their
of environmental protection. own needs.’
Many people credit the publication of Rachel Carson’s book, Silent • It made it clear that our aspirations as a society for a strong
Spring, for launching the environmental movement. Published economy, healthy environment and social well-being depend
in 1962, the book focused on the need for environmental on everyone.
conservation, especially to address environmental problems
caused by man-made pesticides. • It emphasized the importance of the future – that we must
consider the impacts of today’s actions on future generations.
From this start, the 1960s and 1970s grew into a watershed
period for environmentalism. The first Earth Day was held in the • It recognized that industry, as the main engine of economic activity,
United States in 1970, attracting millions of people and raising has a significant role to play in achieving sustainable development.
environmental awareness globally. Governments responded to
World attention to this new concept grew through a number of
growing public concern about the environment by creating new
international meetings, notably at the 1992 UN Conference on
departments and enacting environmental legislation. Canada, for
Environment and Development in Rio de Janeiro, also known as
example, created a federal Department of the Environment in 1971.
the Earth Summit. Here, Canada and other members of the United
In the same year, Alberta became the first province in the country to
Nations endorsed the principle of sustainable development.
establish a Ministry of Environment.
Before this period, interest in sustainability had already been spurred
WAVE TWO by growing environmentalism that responded to a series of incidents.
Sustainable development gets worldwide attention These included the chemical leak at Bhopal, India in 1984, the
1980s to early 1990s Chernobyl nuclear explosion in 1986 in Ukraine and the Exxon Valdez
In the 1980s, the sustainability concept as we know it began to oil spill off the coast of Alaska in 1989.
emerge as part of an effort to bridge the gap between environmental Starting in the mid-1980s and continuing into the 1990s, the oil
and social concerns about human activities. This would be the and gas industry started to realize a need to change course. The
start of a new philosophy that would transform the involvement of petroleum industry became an early advocate for voluntary action
companies in environmental and social activities from merely an on environmental issues.
obligation to a core strategy.
Environmental movement grows Sustainable development gets worldwide attention
1970 1984 1986 1987

First Earth Day Chemical Chernobyl nuclear Sustainable
in United States incident in explosion, Ukraine Development
Bhopal, India Brundtland Report
1972 1986
First UN Conference Canada establishes
on Human National Task Force
1962 Environment, 1983 1985 on Environment and 1989
Silent Spring Stockholm, Sweden UN World Commission Responsible Care Economy Exxon Valdez
published on Environment and established by oil spill off
1973 Development formed Canadian Chemical coast of Alaska
OPEC oil crisis Producers’ Association
1960s 1970s 1980s
WAVE ONE WAVE TWO

98
In 1985, the Canadian Chemical Producers’ Association (now In Alberta, the Clean Air Strategic Alliance (CASA) was formed in 1994
the Chemistry Industry Association of Canada) established the as a new way to manage air quality issues in the province. It involved
Responsible Care program, a code of environmental conduct for a consensus-based association of representatives from industry,
chemical and petrochemical producers. In the mid-1990s, the government, and health and environment groups. Together, members
Canadian Gas Association (CGA) and the Canadian Association of worked to establish a comprehensive air quality management system
Petroleum Producers (CAPP), among other groups, publicly endorsed for the province. Through CASA, the industry actively participated in
Canada’s Voluntary Challenge and Registry, a federal government a number of improvements, including reducing emissions from the
program to encourage voluntary actions by private and public flaring and venting of natural gas.
organizations to reduce greenhouse gas emissions. These and other achievements showed that sustainability could be a
Business also began to speak out on the importance of powerful force for change in industry and society.
sustainable development.
Environmental movement WAVE THREE
In 1992, the World Business Councilgrows
for Sustainable Development Sustainable development gets worldwide attention
Sustainability becomes mainstream
(WBCSD) was founded to provide a voice for business at the Rio Earth
Summit. It was created by Swiss entrepreneur Stephan Schmidheiny, Late 1990s and 2000s
1970 1984 In the late 1990s and 1986
2000s, sustainable development 1987 thinking
who believed that business had an
First Earth Day essential role to play in sustainable
Chemical Chernobyl nuclear Sustainable
development. The mission of the
in United organization would later become
States ‘to in began to move
incident from
explosion, the fringe to the mainstream,
Ukraine with important
Development
Bhopal, India consequences. Companies began to integrate sustainability into their
Brundtland Report
provide business leadership1972 as a catalyst for sustainable development 1986
and to support the businessFirstlicence to operate, innovate and grow in a
UN Conference business processes in a number of ways,
Canada establishesincluding:
world increasingly shaped by on Human
sustainable development issues.’2 National Task Force
1962 Environment, 1983 • establishing1985
executive and on board-level commitments to 1989
Environment and
Silent
In Canada, Spring
the Business Stockholm,
Council on Sweden
National UN
IssuesWorld
(now Commission
the sustainability
Responsible Care Economy Exxon Valdez
published on Environment and established by oil spill off
Canadian Council of Chief Executives) 1973 publishedDevelopment
a landmarkformedpaper in Canadian Chemical
• developing new tools, such as management systems coast of
andAlaska
life
1992, ‘Towards a Sustainable and OPEC oil crisis
Competitive Future,’ saying: ‘The Producers’ Association
cycle assessment methodologies, to support more sustainable
world’s economy and the Earth’s ecology are one and indivisible. business decisions
1960s 1970s 1980s
To ignore one is to jeopardize the other. This is the new reality of
sustainable development.’3 • pursuing new energy and resource efficiencies
WAVE ONE WAVE TWO
But businesses had not been the only organizations to implement • investing in technology development to improve operations,
sustainable development practices. During this period, governments reduce environmental impacts and produce cleaner products
were also actively involved in promoting sustainable practices. • exploring new green market opportunities
In 1986, for example, the Canadian government established the • expanding supplier selection processes to include environment,
National Task Force on Environment and Economy. Tasked with health and safety criteria
reviewing the Brundtland report to create a Canadian perspective,
• developing new processes for community and stakeholder
it outlined many recommendations, including the establishment
engagement
of federal, provincial and territorial Round Tables on Environment
and Economy. By the mid-1990s, most provinces had environment • reporting publicly on their environmental, economic and social
and economy round tables. These forums brought together different performance
government, industry and NGO leaders to work together on social,
economic, cultural and environmental issues.
Sustainable development gets worldwide attention Sustainability becomes mainstream
1992 1995 1999 2002

World Business CAPP and other industry CAPP launches its Environment, Federal government
Council for associations support Health and Safety Stewardship ratifies Kyoto Protocol
Sustainable voluntary action to reduce program for oil and gas companies on climate change
Development greenhouse gas emissions
founded
1992 1994 1995 1999 2002

UN Earth Clean Air ‘Triple bottom line’ Launch of Dow Global Reporting Initiative
Summit, Strategic coined by British Jones Sustainability issues sustainability
Rio de Janeiro Alliance starts thinker John Elkington Indexes for business reporting guidelines
in Alberta for business
1990s 2000s
WAVE TWO WAVE THREE

99
Within the oil and gas industry, the motivation to pursue SUSTAINABILITY – THE WAY INDUSTRY DOES BUSINESS
sustainability opportunities was further intensified by growing public
concern about climate change.
The Intergovernmental Panel on Climate Change (IPCC), a UN agency
composed of hundreds of scientists from around the world, had been Value
studying the effects of human-caused greenhouse gas emissions creation
since 1988. In a series of reports, scientists concluded that the
warming of the global climate system was unequivocal. Based on a
growing body of science, a number of countries, including Canada,
decided that the risks of climate change were too serious to ignore.
Efficiency
In 2002, Canada ratified the Kyoto Protocol. In adopting Kyoto,
the federal government pledged that Canada would reduce its
greenhouse gas emissions to six per cent below 1990 levels by 2012.
Canada’s 2002 climate change plan committed the country to reduce
greenhouse gas emissions by 240 million tonnes a year by the end of Compliance
2012. And in 2003, the federal government committed $1.7 billion
towards a climate change action package.
In 2011, the Canadian government announced its intention to
formally withdraw from the Kyoto Protocol.
The Kyoto Protocol and other developments have increased public By adopting sustainability as a business principle, oil and gas
companies commit to improve their environmental, economic and
awareness about climate change, including industry’s emissions.
social performance. As a starting point, they focus on compliance,
As an industry, the petroleum sector accounts for 23 per cent of meeting or exceeding laws and regulations.
Canada’s greenhouse gas emissions.4 Companies apply new ideas and approaches to create operating and
environmental efficiencies. Sustainability also stimulates innovative
Canadians expect the oil and gas industry to do its part to help thinking that can lead to new products and services, which is a
address climate change. Oil and gas companies have responded by competitive advantage.
taking action on a number of fronts: increasing energy efficiency,
reducing emissions, investing in innovative technology and
supporting opportunities for renewable and alternative energy.
Still, the industry faces a major challenge in decreasing greenhouse
gas emissions while meeting growing energy demand in Canada and
elsewhere. In the future, unconventional fuel sources such as the oil
sands will play a greater role in our overall energy mix. These are more
carbon intensive, requiring more energy to produce, and will drive the
industry to continue to look for innovative ways to manage emissions.
WAVE FOUR
Sustainability – today’s challenge
Despite the oil and gas industry’s past successes, today’s energy
debate has become increasingly polarized between those arguing for
resource development and those calling for an end to energy projects.
The oil sands are a major target of environmental activism in Canada
and in the United States. Canadian energy companies face opposition
to pipeline projects that would secure existing U.S. markets and
open up new overseas markets. Other industry activities, such as
shale gas development, are fueling tension between environmental
protectionism and economic interests.
At the same time, environmental issues have become more complex.
Global issues like climate change continue to affect our energy
choices across regional and national borders. Even economic crises
have failed to silence environmental concerns – stakeholders are no
longer content to exclusively discuss the financial implications of oil
and gas production.
SUSTAINABILITY – CHANGING THE WAY INDUSTRY DOES BUSINESS
A renewed focus on sustainability approaches will continue to be a
strategic opportunity for building consensus across many different
groups on energy, environmental, social and economic issues. By adopting sustainab
Value commit to improve the
creation a starting point, they f
regulations. Companie
ideas and approaches
Efficiency Sustainability also stim
SECTION 3 SUSTAINABLE DEVELOPMENT lead to new products a
Compliance
100
A Nexen site services coordinator reviews the company’s ‘Life Saving Rules’ brochure with Aboriginal workers from Center Fire. Center Fire is
one of several local Aboriginal contractors that Nexen uses at the Long Lake SAGD oils sands facility. Photo courtesy Nexen Inc.
Chapter Two Sustainability in Action
Oil and gas companies are putting the concept of sustainable

development into action as they respond to investor pressures, cost
management, technological innovation, regulatory scrutiny and public
awareness of environmental and social issues.

101
In this chapter, you will learn about the ways INVESTING IN RESEARCH AND DEVELOPMENT
in which Canada’s oil and gas industry is Research and development have been a key part of the evolution of the
employing sustainable development practices. oil and gas industry for decades. Innovations have included directional
drilling that lightens the industry’s footprint, energy systems that
identify energy efficiencies and in situ recovery techniques that make
the economical recovery of underground bitumen possible.
The oil and gas industry is approaching sustainability in a variety Oil sands
of ways. While individual sustainability actions range from To date, the Alberta government and industry have each invested
participating in land management forums to applying emission- more than $1 billion in oil sands research.5
reducing technologies to their facilities, there are a number of
common approaches that encapsulate the industry’s actions in Currently, oil sands mining research is focusing on advances in heat
sustainable development. integration, lower temperature processing and dry tailings technologies
that use little or no water for extraction. In situ advances include
solvent recovery, blowdown boilers, electrical heating technology
and in situ combustion (injecting air into the formation to ignite the
IMPROVING GOVERNANCE reservoir and reduce the viscosity of the oil). These technologies are
expected to reduce greenhouse gas emissions, lower the land footprint
In the 1990s, sustainability issues were largely seen as the and increase water recycling.
responsibility of technical experts in environment and health
and safety departments. This has changed in the last decade as Research partners from industry, the academic community and
companies and their leaders have come to recognize the significance government coordinate their efforts through technical and scientific
of different risks – including climate change, regulation and social institutions, including the Petroleum Technology Alliance Canada
issues – to their business activities. (PTAC), Alberta Innovates, Canadian Oil Sands Network for Research
and Development (CONRAD) and the Petroleum Technology Research
Today, many oil and gas companies have strengthened board- Centre in Regina.
level oversight for sustainability issues. Environmental and social
issues and trends are regularly discussed at the board and senior The oil sands industry is also creating new collaborations to
management levels. Board members receive updates on a variety of accelerate the pace of environmental improvement. A recent example
risks – including financial, safety, social and environmental – and the is Canada’s Oil Sands Innovation Alliance (COSIA), formed in 2012 by
company’s mitigation strategies. Senior leadership teams and board- 12 companies. Through COSIA, participating companies will capture,
level committees are often tasked with overseeing their company’s develop and share the most innovative approaches to improve
sustainability strategy. This ensures that sustainability is incorporated environmental performance, initially focusing on tailings, water, land
into decision-making at the highest level of the organization. and greenhouse gases.
JOINING SOCIALLY RESPONSIBLE INVESTOR INDEXES i CASE STUDY

Investing in environmental technologies
Investors are increasingly integrating environmental and social issues
into their investment decisions. They are part of a wave of socially Cenovus Energy’s Environmental Opportunity Fund invests
responsible investing (SRI) that, since the 1990s, has considered both in entrepreneurs who are in the early stages of developing
financial return and social good. technologies that could improve the company’s environmental
performance and provide access to alternative energy sources.6
Socially responsible investing has led to the emergence of SRI indexes Cenovus has committed more than $20 million to the fund
that rank and select companies each year based on their economic, since 2003.
social and environmental performance. The Dow Jones Sustainability
Indexes (DJSI), for example, track the financial performance of leading In 2011, the Environmental Opportunity Fund invested $6.5
sustainability-driven companies worldwide. In Canada, the Jantzi million in two Canadian companies. General Fusion Inc. is
Social Index consists of a select number of companies that meet a developing a fusion technology based on “magnetized target
set of environmental, social and governance criteria. A number of fusion” that can produce energy without greenhouse gas
Canadian oil and gas companies are on the DJSI and Jantzi indexes. emissions or radioactive waste. Saltworks Technologies Inc.
has developed ElectroChem, a desalination technology that
Participating in investor assessments allows companies to can be powered by either solar or industrial waste heat.
benchmark their performance against industry peers and identify
areas where they can improve. As well, studies of different SRI funds
and indexes have found that sustainability practices can lead to
positive share performance for companies.

102
Natural gas
The Canadian Gas Association, which represents gas distribution and DEVELOPING CLEANER PRODUCTS
transmission companies, has launched a new research initiative, called The petroleum industry is constantly improving the environmental
Energy Technology and Innovation Canada (ETIC). As a ‘virtual fund,’ quality of its products. In Canada, examples include advanced motor oils
ETIC will broker investment in innovation, facilitate collaboration and and lubricants that improve vehicle performance and energy efficiency.
expertise, and work to remove barriers to deploying technologies.
The industry also regularly evaluates and improves fuel formulations
Initially, ETIC will focus on projects in renewable natural gas,
to meet changing regulations and provide products that meet the
transportation, industrial processes and integrated energy systems.7
needs of consumers and the environment. To meet federal regulations
designed to reduce sulphur in fuels, Canada’s refineries now supply
Pipelines
diesel with less than 15 parts per million (ppm) of sulphur and
Pipeline companies also support industry research through global gasoline with less than 30 ppm. Low-sulphur fuels allow cars and
consortiums such as the Pipeline Research Council International trucks to use advanced emission control devices that can substantially
(PRCI). Canadian pipeline companies have contributed funding to reduce tailpipe emissions of sulphur and other air pollutants.
support a range of PRCI studies to improve pipeline integrity and
explore the use of higher strength steel for pipe.
Carbon management
IMPROVING EFFICIENCY
Dedicated research programs are being conducted at Alberta’s
two largest universities. The federal government, together with Companies that manage their resources efficiently can gain
provincial and industry partners, established Carbon Management a competitive advantage while reducing their impacts on the
Canada at the University of Calgary. The national research network is environment. Increasing energy efficiency, for example, reduces
dedicated to conducting research into developing carbon capture and operating costs while lowering emissions. Common industry efforts
sequestration (CCS) technology. The Imperial Oil-Alberta Innovates to improve energy efficiency include:
Centre for Oil Sands Innovation, located at the University of Alberta, • energy management systems that help analyze and control energy
focuses on technological solutions for oil sands mining. consumption
• more efficient exploration through improved drilling practices and
advanced seismic surveying
MEETING AND EXCEEDING COMPLIANCE • reduced flaring and venting of natural gas through investments in
gas processing and pipelines
Oil and gas companies are subject to many different regulations,
covering worker safety, environmental protection, land access and • cogeneration facilities that produce heat and power from a single
other aspects of operations. Fulfilling regulations is a minimum fuel source
expectation for performance and essential to maintaining a • more efficient pumps and turbine compressors in pipelines
company’s social licence to operate.
• automated building systems and energy-efficient lighting in retail
To ensure compliance, oil and gas companies have implemented service stations
environment, health and safety (EH&S) management systems. In
1996, for example, the International Organization for Standardization • programs that encourage employees and customers to use energy
(ISO) published the first edition of ISO 14001. This introduced more efficiently
an international voluntary standard setting out requirements for
Companies are also looking to develop efficiencies in other areas,
corporate environmental management systems. Systems based
such as water management. Many companies now conserve water
on 14001 provide organizations with tools to identify and manage
through recycling and reuse strategies and by finding alternatives to
environmental impacts and to improve their environmental
freshwater.
performance. Since its initial publication, the standard has been
formally adopted by thousands of companies and organizations
around the world.
i
Today, some companies are developing comprehensive sustainability CASE STUDY
management systems that provide an integrated picture of their Efficiency through data visualization
environmental, economic and social risks and opportunities. A
number of companies are also setting performance goals that go Operators at Imperial Oil’s Cold Lake oil sands operation in
beyond compliance. These can lead to actions, such as strategies to Alberta use an energy monitoring tool called data visualization
reduce water use intensity, that significantly reduce environmental (DV) to improve energy efficiency.8 The company began using
impacts and operating costs. the tool in 2009 to provide a real-time view of the facility’s
energy use to every plant control room.
DV technology has allowed Imperial Oil to improve its energy
efficiency, saving over $1 million since the system was first
implemented.

103
ENGAGING COMMUNITIES PROMOTING ENERGY LITERACY

Companies engage communities in a number of important ways. The oil and gas industry promotes energy literacy and education to
Throughout all phases of planning and construction, companies engage Canadians on energy issues.
communicate with communities and landowners. This ensures that The Canadian Centre for Energy Information, for example, was founded
community groups are informed about project plans and are able to in 2002 by energy associations, government and energy companies
discuss their concerns with companies. to provide balanced, credible information about the Canadian energy
Often before entering an area, companies try to identify potential sector, including oil and natural gas.
benefits for local communities and ways to extend those benefits Inside Education, an Alberta non-profit education organization,
by providing work opportunities, training and development, and provides programs in the classroom and in the field that help
by hiring local contractors. Many companies have developed Canadian teachers and students understand energy- and
strategies for including local companies in their procurement of environment-related technologies and issues.
supplies and services.
Industry associations such as the Canadian Association of Petroleum
In addition, companies have community investment programs that Producers (CAPP) and the Canadian Gas Association (CGA) also
provide funding and employee volunteer hours to local charities play an active role in promoting energy literacy. For example, CAPP
and projects. The purpose of these programs is to promote positive administers Energy in Action, a hands-on program involving member
relationships and support community initiatives that build capacity companies that teaches students about oil and gas resources and the
and meet local needs. importance of environmental stewardship.
A focus of engagement activities is developing positive, long-term Together with government and some of the country’s major science
relations with Aboriginal communities. When proposed projects and technology museums, the oil and gas industry helped to launch
must be constructed on reserve lands or in traditional use areas, the Let’s Talk Energy in 2010 at Ottawa’s Canada Science and Technology
industry works with communities to identify specific concerns as well Museum. This multi-year program is designed to educate Canadians
as opportunities. Oil and gas companies and Aboriginal communities on energy issues through exhibitions, school programs and social
work together to develop project plans that will benefit both groups. media.
Benefits for Aboriginal communities may include investments in
local education and social programs as well as jobs and business
opportunities arising from project construction and operation.
CONTRIBUTING TO POLICY
The industry participates with all levels of government in developing
i CASE STUDY policy on important environmental and energy issues. Oil and gas
Consulting community members companies act directly or indirectly through a range of industry
associations such as CAPP, CGA, the Canadian Energy Pipeline
Talisman Energy needed to supply water to its shale gas Association (CEPA) and the Canadian Fuels Association.
operations in British Columbia’s Farrell Creek field.9 Because
of the volumes of water required for hydraulic fracturing, In the last decade, industry efforts have focused, for example, on
the company decided to stop transporting water by truck climate change, air quality, remediation of industrial sites, regulatory
and instead connect the field to a nearby dam reservoir via a processes and the importance of energy to Canada’s economy.
water pipeline. In 2008, CAPP, CEPA, CGA and the Canadian Fuels Association began
To address local concerns and facilitate the construction of a cooperative initiative aimed at articulating an energy framework for
the pipeline, Talisman began consulting with First Nations, Canada.10 In 2009, various oil and gas companies and associations
landowners and other community members in the district of joined with other industry groups to form the Energy Policy Institute
Hudson’s Hope. Beginning in 2010, this yearlong consultation of Canada (EPIC). EPIC’s purpose is to develop a comprehensive,
exceeded regulatory requirements and provided the basis for Canadian approach to energy that will provide the foundation for
enduring relationships with stakeholders in the area. recommendations to federal, provincial and territorial government
authorities responsible for energy and environment policy.11
Talisman successfully completed its pipeline in mid-2011.

104
An environmental technician checks a groundwater monitoring well at Nexen’s Long Lake Phase I integrated oil sands facility. Photo courtesy Nexen Inc.
i CASE STUDY
Reporting performance across the industry
CAPP’s Responsible Canadian Energy Program provides common The program’s measurements are divided into four key performance
metrics for performance measurement and reporting.12 By indicators: people, air, water and land. Under each of these
measuring, reporting and analyzing this data, member companies performance indicators are a series of metrics, such as fatalities, air
can demonstrate areas where the industry is making progress and emissions, freshwater withdrawal and annual well abandonments.
areas that require more action to improve results. Participation is The results of these measurements are published annually in the
not mandatory, but many companies from the upstream oil and gas Responsible Canadian Energy Program progress report, which provides
industry provide data. a context for the program’s measurements.

105
guidelines called the Oil and Gas Guidance on Voluntary Sustainability

REPORTING PERFORMANCE Reporting. These industry guidelines were developed by the American
Establishing a sustainability reporting process helps companies to Petroleum Institute (API) and the International Petroleum Industry
describe how they are addressing different impacts and issues while Environmental Conservation Association (IPIECA).
improving their performance. It also builds credibility with their In addition, some companies report on their greenhouse gas
stakeholders, including governments, communities, investors, NGOs emissions and climate change strategies through the Carbon
and employees. Disclosure Project (CDP). The CDP is an independent non-profit
In the 1990s, oil and gas companies were among the first organization that works with major corporations to disclose
corporations in Canada to produce stand-alone environmental information on their greenhouse gas emissions performance.
reports. Since then, a growing number of companies have expanded Recently, the CDP expanded its disclosure activities to include
reporting to include all aspects of sustainability performance – industry water management practices.
environmental, economic and social. Associations such as CAPP encourage its members to report
To prepare their reports, many companies have adopted the selected environmental, health and safety and economic
standards of the Global Reporting Initiative (GRI). The GRI performance indicators as part of the association’s Responsible
sustainability reporting guidelines provide principles and content Canadian Energy Program.
indicators to guide companies in preparing high-quality sustainability
reports. Some companies also report against industry-specific
AT A GLANCE – SUSTAINABILITY ACTIONS AND BENEFITS

Actions Aspects of sustainability Benefits
Improving governance Environmental, economic • Including sustainability in corporate decision-making.

and social performance
• Increasing awareness of sustainability issues and trends within
organizations.
Joining socially responsible Environmental, economic • Enabling companies to benchmark their performance against peers and
investor indexes and social performance identify opportunities to improve.
• Improving share performance through sustainability performance.
Investing in research Environmental, economic • Investing in research and innovation helps to improve industry
and development and social performance performance and reduce environmental impacts.
Meeting and Environmental and economic • Ensuring industry meets environmental laws and regulations through
exceeding compliance performance compliance.
• Meeting and exceeding compliance can enhance corporate reputation.
• Setting performance goals can reduce impacts and operating costs.
Developing cleaner products Environmental and economic • Developing cleaner petroleum products contributes to improved
performance vehicle performance and meets changing consumer needs.
Improving efficiency Environmental and economic • Making more efficient use of energy, water and land reduces
performance environmental impacts and operating costs.
Engaging communities Social and economic • Communicating with community groups about oil and gas activities
performance helps to build trust and local support.
• Hiring local companies and suppliers contributes to the local economy.
• Investing in community initiatives builds local capacity and enhances
quality of life.
Promoting energy literacy Social performance • Supporting energy literacy programs increases energy awareness
among Canadians.
Contributing to policy Environmental and economic • Contributing to policy on energy issues helps to advance responsible
performance performance and create a strong petroleum industry.
Reporting performance Environmental, economic • Reporting on performance builds credibility with stakeholders.
and social performance
• Reporting provides a basis for continuous improvement for companies
and workers.

106
Nexen offshore rig workers wearing their survival suits leave the helicopter pad upon arrival at the Scott-Telford platform in the North Sea.
Photo courtesy Nexen Inc.
Chapter Three Regulation
Governments develop and enforce regulations that govern all aspects

of oil and gas industry activities, including environmental performance,
safety, land access, landowner rights and surface and mineral rights.
Meeting regulations is a minimum expectation for industry performance.

107
In this chapter, you will learn about how Oil and gas activity in British Columbia is regulated mainly by the
B.C. Oil and Gas Commission. In Saskatchewan, Saskatchewan Energy
regulation impacts the upstream, midstream and Resources is the main regulatory agency.
and downstream sectors of the petroleum Two federal-provincial authorities – the Canada-Newfoundland
industry, and how industry standards and Labrador Offshore Petroleum Board and the Canada-Nova
Scotia Offshore Petroleum Board – regulate offshore exploration
complement these regulations. and development in Newfoundland and Labrador and Nova Scotia,
respectively. The National Energy Board (NEB), the national regulatory
body, regulates exploration and production in the Yukon, Nunavut and
the Northwest Territories.
Industry activities are subject to multiple regulators. For example,
Canada’s oil sands industry is regulated by eight separate federal and
provincial agencies, as shown below. For a detailed list of government
agencies in Canada, see page 127. MIDSTREAM – PROCESSING AND TRANSPORTATION
All aspects of the life cycle of a pipeline – from design and
Regulatory Agencies – Canada’s Oil Sands construction to operation and abandonment – are strictly regulated
Government of Alberta (primary resource jurisdiction) by a number of regulatory agencies and government departments.
Alberta Energy • resource rights and Crown royalties These organizations ensure Canada’s pipelines are operated safely,
responsibly and in the public interest.
Energy Resources • project approvals and compliance
Conservation Board Pipelines that cross provincial or international boundaries are
Alberta Environment and • environmental impact assessments,
regulated by the federal government, primarily under the authority
Sustainable Resource air and water, conservation and of the NEB. The board regulates the construction and operation, tolls
Development reclamation, public land access and tariffs of interprovincial and international pipelines. Pipeline
management, fish and wildlife operations may also be subject to regulations of other federal,
provincial or municipal bodies including Natural Resources Canada,
Government of Canada (national policies and standards) Environment Canada, Fisheries and Oceans Canada and Transport
Canadian Environmental • environmental assessments
Canada, depending on the type and ownership of the land that the
Assessment Agency pipeline crosses. The federal Transportation Safety Board investigates
pipeline incidents and makes recommendations for improvements.
Environment Canada • migratory birds, air and
Pipelines that are completely contained within a province fall under
water quality, species at risk
that province’s regulatory jurisdiction.
Fisheries and • fish and fish habitat, species at risk
Oceans Canada
Transport Canada • navigable waters
National Energy Board • interprovincial and export pipelines DOWNSTREAM – REFINING AND MARKETING
Source: Canadian Association of Petroleum Producers Provincial authorities also regulate safety aspects of local natural gas
distribution systems, and set regulations covering the application
and installation of natural gas appliances. Many municipalities across
Canada have established requirements and bylaws that govern the
UPSTREAM – EXPLORATION, DRILLING AND PRODUCTION siting and maintenance of natural gas pipelines as well as inspection
of natural gas appliance installations.
In Alberta, the Energy Resources Conservation Board (ERCB) is the
main regulator of the oil and gas exploration and production industry. Federal and provincial environment, energy, fisheries, labour and
It is responsible for the safe and efficient development of energy transportation officials enforce legislation affecting the refining,
resources. In conjunction with the ERCB, Alberta Environment and marketing and distribution of petroleum products.
Sustainable Resource Development (ESRD) regulates key aspects of
air emissions, water protection and land reclamation.
In October 2012, the Alberta government introduced Bill 2, the
Responsible Energy Development Act (REDA). REDA proposed a single INDUSTRY STANDARDS
regulator to manage the development of energy resources, including Non-profit and government organizations such as the CSA Group
oil, gas, oil sands and coal, as well as energy resource activities and the Canadian General Standards Board establish standards for
requiring approval or subject to regulation. This single regulator would products (such as gasoline and steel) and for industrial practices (such
assume all functions of the ERCB and the ESRD. as welding) used by the petroleum industry. Industry associations such
Oil sands projects affecting interprovincial air and water as the Canadian Association of Petroleum Producers, Canadian Energy
and fisheries are typically subject to joint federal-provincial Pipeline Association and the Canadian Fuels Association have also
environmental assessment. Provincial and federal energy, adopted voluntary environmental and safety codes of practice and
environment, health and safety authorities are also involved in operating guidelines for their member companies. Many oil and gas
many aspects of oil sands regulation. companies closely follow voluntary international standards, such as
ISO 14000 for environmental management systems.

108
Imperial Oil’s Cold Lake Wildlife at Work program helps to monitor wildlife on the company’s operating lease. For example, remote cameras are used
to study the movement of large mammals such as moose and deer around above ground infrastructure, like pipelines. The program is certified by the
Wildlife Habitat Council. Photo courtesy Imperial Oil Limited.
Chapter Four Sustainability Issues
Sustainable development in the oil and gas industry is shaped by

multiple environmental and social issues. Addressing these issues
is important to the future of the industry and its impacts on the
environment and in communities.

109
In this chapter, you will learn about some Informed by scientific data, continued environmental modelling and
reporting, the system is designed to collectively improve Canada’s air
of the key environmental and social issues quality by involving all provincial and territorial governments in
facing the oil and gas industry and how it a single agreement.
is taking action.
BIODIVERSITY
To access new resources, the oil and gas industry is increasingly
working in more remote and sensitive environments. These include
AIR QUALITY offshore regions, prairie grasslands, boreal forest and northern peat
The oil and gas industry is actively involved in addressing emissions lands and wetlands. The industry recognizes that its ability to operate
that affect regional air quality such as sulphur dioxide (SO2), nitrogen in these areas depends on carrying out its activities without adversely
oxides (NOx), volatile organic compounds (VOCs) and particulate affecting biodiversity.
matter. The industry’s key strategies for reducing impacts of air quality Some important examples of how the industry is managing its
include improving the energy efficiency of operations and capturing impacts include:
gases and vapours before they are released into the atmosphere.
• conducting environmental planning for projects to identify
Industry actions include: sensitive wildlife habitats
• installing enhanced sulphur recovery technology in the • consulting with community residents regarding local land
upstream industry management and conservation principles
• implementing industry guidelines to significantly reduce flaring • timing construction work and maintenance activities to avoid
and venting emissions wildlife mating and migration patterns
• employing leak detection technologies to better control emissions • using exploration techniques such as narrow seismic lines and
of methane, VOCs and other air pollutants multi-pad drilling to lessen impacts on wildlife and the land
• adding low-NOx burners to reduce emissions • participating in research programs to identify new ways to
• reformulating fuels to reduce sulphur emissions and other minimize impacts on species such as caribou and grizzly bears
air pollutants • establishing and monitoring safety zones during offshore seismic
surveys to mitigate potential impacts on marine mammals
The Canadian Fuels Association and its members have played
an active part in proposing and developing Canada’s National The industry supports the Alberta Biodiversity Monitoring Institute,
Framework for Petroleum Refinery Emission Reductions. The a non-profit organization that provides a comprehensive biodiversity
framework provides the principles and methods for jurisdictions to performance monitoring program for the province. Funded by the
establish facility emissions caps for key air pollutants and air toxins Alberta government and the energy industry, the institute collects
from petroleum refineries.13 data on wildlife species and habitats and human impacts on the
In northern Alberta, the oil sands industry has invested significantly environment across the province.
in emissions controls for existing facilities and in low-emission
technologies for new facilities. These investments ensure regional
air quality stays within regulated limits. Oil sands operators are also
i
required to fund air quality monitoring in the region. This monitoring CASE STUDY
is conducted by the Wood Buffalo Environmental Association, a Managing biodiversity
collaboration of communities, NGOs, industry, government and
Aboriginal representatives. To mitigate its impact on local wildlife populations near its
oil sands operations, Statoil has been running a scat detection
In 2012, the federal government introduced its Air Quality program since 2006.14 Using dogs to locate the feces (scat)
Management System, a collaborative measure with participating of caribou, moose and wolves, Statoil has been able to collect
provincial governments. The system includes: samples that provide a range of essential information about
• Canadian Ambient Air Quality Standards, which sets limits for local wildlife.
specific air pollutants Combined with GPS information, these scat samples allow
• air zones established within provinces and territories researchers to determine the animals’ distribution and provide
measures of wildlife’s reproductive and nutritional health.
• regional airsheds, which are overlapping regional boundaries
• base-level performance, which sets standard criteria for the
country’s major emitters
• mobile resources, which include emissions from vehicles

110
In addition, government and industry are exploring innovations like

CLIMATE CHANGE carbon capture and storage (CCS), a process that captures CO2 where
The consensus of world scientific opinion is that the climate is it is produced and transports it through pipelines to areas where it
warming at a rate unprecedented in recent history and that this is can be stored underground. Canada’s federal government and the
being caused largely by man-made emissions of greenhouse gases. Alberta, Saskatchewan and British Columbia provincial governments
The production and consumption of fossil fuels, such as oil and gas, have committed $2 billion to help make Canada a global leader in
produces greenhouses gases, primarily carbon dioxide (CO2) and the development of CCS technology.16 A number of companies have
methane (CH4). begun projects to capture CO2 and store it underground or transport it
to mature oil and gas fields to enhance recovery.
No other issue presents as large a challenge to the petroleum
industry’s ability to achieve sustainable energy development over In 2007, Alberta became the first jurisdiction in North America to
the long term. While the impacts of climate change affect the legislate greenhouse gas reduction for large industrial facilities. Any
environment, the solutions to this issue involve how we produce and facility, including oil sands, that emits more than 100,000 tonnes of
use energy; they relate to our economy and our communities, and they greenhouse gases a year is required to reduce its emissions intensity
affect our lifestyle choices. Achieving progress on this issue will require by 12 per cent from 2003 to 2005 levels. Facilities that fail to meet
solutions involving many different players across local, national and this target have the option of buying Alberta-based carbon offsets
global jurisdictions. or paying $15 per tonne over reduction targets into the province’s
Climate Change and Emissions Management Fund. The fund supports
The challenge faced by Canada’s petroleum industry is to reduce projects and technologies aimed at reducing greenhouse gas
greenhouse gas emissions while the demand for energy is growing. emissions in the province.17
The industry manages these emissions in various ways depending on
the sector. Midstream – processing and transportation
Many transmission pipeline companies are managing greenhouse
Upstream – exploration, drilling and production gas emissions through changes in operating practices or investments
The upstream industry continues to look for opportunities to reduce in energy-efficient equipment. Actions include installing high-
emission intensity by improving energy efficiencies and developing efficiency gas turbines or variable speed motors, incorporating design
new technologies. improvements such as internally coated pipes, and using pull-down
compressors to capture natural gas that might otherwise be vented
Industry improvements in energy efficiency include more efficient
during planned maintenance activities. Some companies are also
equipment, production processes and energy generation, as well as
employing heat and power technology that turns waste heat into
facilities to capture and reuse wasted energy. Production facilities,
energy, reducing energy consumption and emissions.
for example, use sophisticated energy management systems to
optimize energy use in their facilities and identify opportunities for
improvement. Companies are also using cogeneration to supply both
power and process heat from a single fuel source.
i CASE STUDY
Weyburn oil field
Cenovus Energy operates a CO2 enhanced oil recovery project at
i CASE STUDY Weyburn, Saskatchewan.18 The company injects a combination

The world’s first commercial-scale oil sands CCS of CO2 and water into a mature field, helping to push more oil
from the reservoir while storing greenhouse gas emissions that
In September 2012, Shell Canada announced plans to build
would otherwise be vented into the atmosphere.
the world’s first commercial-scale CCS project.15 The Quest
project will capture CO2 emissions from the Scotford Upgrader Cenovus’s Weyburn operation is the world’s largest geological
near Edmonton, a facility owned by the Athabasca Oil Sands CO2 sequestration project, storing more than 18 million tonnes
Project (AOSP). AOSP is a joint venture of Shell Canada, of CO2 to date. Scientists from 30 countries working under
Marathon Oil Corporation and Chevron Canada. the International Energy Agency’s GHG Weyburn-Midale CO2
Monitoring and Storage Research Project have been studying
Every year, beginning in 2015, the project will capture more
the project for a decade. The initiative is managed by the
than one million tonnes of CO2 from the Scotford Upgrader,
Petroleum Technology Research Centre in Regina.
which processes bitumen production from the Athabasca Oil
Sands Project. After piping these emissions to a storage site
80 kilometres away, the Quest project will inject the CO2 more
than two kilometres underground.
KEY DEFINITION EMISSIONS INTENSITY
These emissions will be trapped in a porous formation beneath
a layer of impermeable rock, and will be monitored to ensure The ratio of emissions to a measure of activity or output. For example, a
facility upgrading bitumen would be able to measure its CO2 emissions
that the gas remains permanently stored. against the volume of crude oil produced, providing its emissions per
barrel of oil.

111
A pilot project at Imperial Oil’s Cold Lake operation will use solvent in place of steam to help recover underground bitumen deposits, reducing
energy and water use. Photo courtesy Imperial Oil Limited.

112
2011 WORLD CO2 EMISSIONS BY SOURCE Pipeline operators have well-established leak detection and repair
(per cent of total emissions) programs to reduce fugitive methane emissions, small leaks that occur
throughout a pipeline system. Recently, they have introduced new tools
such as infrared imaging technology to identify hard-to-measure leaks
that can be promptly repaired to further reduce emissions.
%
In addition, a few pipeline companies are investing significantly in
C A A Petroleum 35.2
the use of alternative and renewable energy, including solar and
B Natural Gas 20.1
wind power, to lower greenhouse gas emissions at remote pumps
C Coal 44.7
and facilities.
Total 100.0
B Downstream – refining and marketing
By making better use of energy and improving the efficiency of the
refining process, Canadian petroleum refiners have been able to meet
2011 CANADIAN CO2 EMISSIONS BY SOURCE growing demand for refining products while reducing greenhouse gas
(per cent of total emissions) emissions. Between 1990 and 2010, total CO2 emissions in the sector
Source: United States Energy Information Administration decreased by 20 per cent and energy efficiency improved by seven
per cent.19
C Natural gas local distribution companies (LDCs) are also contributing
% to emission reductions. Since the 1990s, many LDCs have been
A Petroleum 51.3 delivering energy conservation and efficiency programs to customers
A
B Natural Gas 29.8 across the country. These companies use energy audits, consumer
C Coal 18.9 education programs and financial incentives to reduce consumption.
B Total 100.0 Since 2000, cumulative nationwide natural gas end-use savings from
these programs have been more than 1,700 million cubic metres. As a
direct result, more than 16 million tonnes of CO2 equivalent emissions
have been eliminated since 2000.20
2011 CANADIAN CO2 EMISSIONS BY SECTOR

(per cent of total emissions)
Source: Environment Canada
F %
E A Energy Industries 37.1
D A B Vehicle Transportation 27.4
C Industry 13.7
D Residential and Commercial 10.0
C
E Agriculture 8.6
F Waste 3.2
B Total 100.0
2011 WORLD CO2 EMISSIONS (millions of tonnes)

PETROLEUM NATURAL GAS COAL
1,165.7 208.9 6,946.3 China
2,351.0 1,274.1 1,985.0 United States
406.7 127.3 1,161.6 India
346.2 845.6 442.0 Russia
514.8 207.7 442.0 Japan
309.9 183.9 299.8 Germany
216.3 90.0 272.7 South Korea
239.3 316.5 4.6 Iran
281.8 163.4 103.6 CANADA
226.3 191.3 114.9 United Kingdom

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Effective land reclamation practices are an essential part of oil sands

LAND MANAGEMENT mining. The Alberta government requires that companies remediate
The industry manages a variety of land-related issues. Each industry and reclaim all land after bitumen has been extracted. As mining
sector addresses these issues in different ways. progresses on site, companies salvage and conserve topsoil to reclaim
areas when mining is complete. Each area is contoured and planted
Upstream – exploration, drilling and production with vegetation. According to CAPP, the current area disturbed by
oil sands mining activities is 715 square kilometres. Since oil sands
In the upstream sector, access to land is essential as companies
operations began in the 1960s, about 10 per cent of the active mining
explore for new oil and gas resources and develop new projects to
footprint has been or is being reclaimed by industry.23
meet Canada’s energy needs. Exploration and production activities,
whether drilling wells or mining oil sands, affect the landscape. Another focus for oil sands operators is finding better ways to
manage and reclaim tailings, a mixture of water, clay, sands and
One way that exploration and production companies are addressing
residual bitumen left over from the bitumen extraction process.
this challenge is by minimizing the area of land they use when they
Tailings are stored in large ponds, which can remain active for
start development. They do this by avoiding sensitive habitats, using
40 years. The industry continues to explore different technologies
narrow seismic lines, minimizing the area needed for well sites
to reduce the size of the ponds and to accelerate land reclamation
and working with other industrial users to share access roads. The
of tailings. For example, Shell’s Albian Sands project uses tailing
industry also employs multi-pad and horizontal drilling to decrease
thickeners to recapture water from fine tailings before they are
land surface impacts while accessing more of the resource.
released to the tailings pond. This enables the company to withdraw
Companies are responsible for reclaiming any land that has been less water and reduce the size of the pond.
disturbed by industry activities. When a well is no longer productive,
it is abandoned and the land is reclaimed according to regulations. Midstream – processing and transportation
This involves capping the well, removing equipment, cleaning up the Most of the pipeline industry’s impacts occur during construction
site and sometimes replacing soil and replanting. of pipelines, when soil is excavated to lay and bury the pipe. The
industry also has impacts during maintenance programs which
involve digging up sections of pipe to inspect and repair pipe to
prevent leaks.
i CASE STUDY
Reducing land footprint
When planning projects, pipeline companies conduct environmental
assessments to identify potential land issues, including impacts to
Appraisal drilling determines the size and composition soils, vegetation and habitat. They identify pipeline corridors that will
of hydrocarbon deposits and their surrounding geological avoid or prevent disturbance to sensitive ecosystems and, wherever
properties. During the 2010–2011 drilling season, Devon practical, locate new pipeline routes along existing rights-of-way
Canada adopted slant drilling at its Pike in situ oil sands to minimize impacts. When construction is complete, reclamation
appraisal project in northeastern Alberta to reduce the impact programs return the land to a productive state similar to that existing
on the surrounding environment.21 before disturbance.
While vertical drilling is still often used for appraisal drilling,
Downstream – refining and marketing
slant drilling allows multiple wells to be drilled from a
single location. As a result of its slant drilling, Devon was In the downstream refining business, much of the industry’s
able to reduce its land footprint by as much as 35 per cent activity is focused on the redevelopment of ‘brownfield’ sites:
in some areas. those with known or suspected environmental contamination.
These sites are abandoned or underused commercial or industrial
properties that could be redeveloped.
When downstream companies decommission sites, they remove
infrastructure and secure, evaluate and monitor the site until full
i CASE STUDY remediation is completed. These sites range from decommissioned

Accelerating tailings reclamation refineries to gas stations. From 2009 to 2011, downstream petroleum
companies remediated more than 450 surplus sites nationally.24
Suncor Energy’s Tailings Reduction Operations (TROTM) is a new
technology designed to dry and solidify mine tailings at an
accelerated rate.22
Whereas the industry average for reclaiming a tailings pond is WATER MANAGEMENT
30 years, TROTM is designed to produce reclaimable surfaces
The petroleum industry uses water in various ways. Oil sands
within 10 years. After mixing a material called polymer
development requires water for transporting and processing bitumen
flocculent into mature fine tailings (MFT), clay particles adhere
and for cooling. In situ oil sands projects use water to generate steam.
to one another, releasing water and allowing the MFT to dry in a
Water is also used in refining for heating, cooling and cleaning. The
matter of weeks.
industry is continually exploring different technologies and techniques
to improve water use and protect water quality.

114
Upstream – exploration, drilling and production One technique is to temporarily isolate the new pipeline during
In the exploration and production sector, companies are construction to prevent contamination of clean water. In sensitive
increasingly meeting their needs through recycling and reuse of environmental areas, companies may use directional horizontal
water. Oil sands producers recycle between 85 and 90 per cent of drilling to bore under rivers and pull the pipe through without
the water they use.25 Most in situ operators generate steam using disturbing the banks or the stream.
non-potable water. The industry is also researching the use of non-
aqueous technologies, including solvents, to reduce water demand Downstream – refining and marketing
for in situ recovery of oil sands. In the downstream refinery business, efforts have focused on reducing
the quantity of water used in the refining process and improving the
Water is also used to recover oil in mature reservoirs. In these
quality of water effluent. Refinery water use and consumption have
enhanced recovery projects, the industry is reducing its reliance on
steadily declined over the years. Today, Canadian Fuels Association
freshwater (both groundwater and surface water) through water
member refineries discharge water effluents at two to 33 per cent of
recycling and the increased use of saline (high salt content) water.
the levels allowed by federal regulations.27
When used with horizontal drilling, hydraulic fracturing has made
it possible to develop previously untapped resources, such as shale
gas and tight oil. It involves injecting water to fracture the rock and
recover the resource. Because this technique requires the use of water SPILL AND LEAK PREVENTION
and fracturing fluids, hydraulic fracturing is an issue of increasing
public concern in North America. The industry has responded by Spills and leaks can significantly affect the environment and
implementing a number of practices to conserve and protect water surrounding communities. Preventing spills requires preparedness
sources, including: and continuous improvement in every phase of operations where oil
and natural gas are produced, transported or stored.
• constructing vertical and horizontal wells with multiple barriers of
steel and cement to protect underground sources of drinking water Upstream – exploration, drilling and production
throughout the life of the well Internal corrosion is the leading cause of pipeline failure incidents for
• recycling water recovered from fracturing operations, wherever oil effluent pipelines.28 The industry addresses this problem by carrying
possible out regular pipeline inspections and maintenance, installing computer
equipment to detect leaks and replacing or relining sections of pipeline.
• using saline water as an alternative to freshwater
When a spill threatens surface water like streams, rivers or lakes,
• working with other companies to assess and efficiently manage
industry crews are dispatched immediately to halt the leak and prevent
local water resources
the contamination from spreading. Industry cooperatives in each
In 2011, CAPP introduced new industry guiding principles and producing area maintain stockpiles of absorbent booms, temporary
operating practices for hydraulic fracturing. These are intended to dams, special boats and equipment for this purpose. They conduct
guide the industry in protecting the quality and quantity of surface regular training exercises to practise skills and test equipment.
and groundwater, measuring and reporting water use, and advancing All offshore facilities maintain their own onboard spill response
technologies and best practices to reduce potential risks. teams and equipment. Companies devote considerable resources
toward preventing spills through the design of facilities and operating
procedures, and personnel are trained to respond quickly and
effectively if a spill occurs.
i CASE STUDY
Reducing water use Midstream – processing and transportation
Pipeline failures, such as leaks and ruptures, can involve a loss of
Cenovus Energy has completed a commercial pilot of a process integrity in the pipe, resulting in oil and natural gas being released into
to re-boil the leftover water from its steam-assisted drilling the environment. These incidents can be caused by dents or cracks,
operations to make additional steam.26 Completed at its Foster corrosion or impacts by equipment. When pipeline failures are avoided,
Creek SAGD operation near Cold Lake, Alberta, the process most risks to public safety and the environment can be eliminated.
allows Cenovus to reuse 93 per cent from the same barrel of
water. This reduces the amount of water the company must Pipelines are continually monitored for signs of integrity issues.
draw from local sources as well as its emissions. Companies employ computerized systems that can instantaneously
check for drops in pressure at regular points along the pipeline and
allow for remotely controlled shutdowns of sections of pipeline in
the event of an emergency. Critical isolation valves are configured
Midstream – processing and transportation to automatically trigger an alarm or shut down equipment when a
Pipeline operators are not significant users of water. Their main rupture or leak is detected.
impact on water resources occurs when building pipelines across
bodies of water. Pipeline companies take special precautions and use Frequent visual inspections are conducted using ground crews
advanced technologies to ensure pipeline construction across rivers and low-flying aircraft along pipeline rights-of-way. In addition to
and streams is carried out safely and with minimal impacts to water surveillance, the industry employs in-line inspection technologies
quality and aquatic habitats. to identify leaks and potential failures for repair.

115
As part of Cenovus Energy’s reclamation planning, it conducts a vegetation assessment before operations begin. The assessments record the
plant life growing in the area. The same assessment is done to track regrowth after operations are complete and reclamation is underway.
Photo courtesy Cenovus Energy Inc..

116
Working closely with manufacturers, companies are investing in practices. Enform, a not-for-profit safety organization created by the
research and development to improve the capacity and accuracy oil and gas industry, provides training to ensure workers can identify
of the instruments (known as ‘smart pigs’), which are designed to and reduce safety risks on the job. To maintain safety awareness,
travel inside a pipeline and collect data as they go. For example, new company supervisors frequently use on-site job observations to
forms of magnetic flux leak technology (a magnetic method used to recognize safe work performance and identify improvements.
detect corrosion in steel) and ultrasound technology are being used Companies also hold regular team meetings with their workers to
to inspect pipes for metal loss and cracks. share safety information and make sure that safety standards and
procedures are closely followed.
Downstream – refining and marketing
The industry also pays close attention to process safety. Companies
Petroleum products manufacturers provide spill containment implement safety standards and procedures throughout facility
equipment and training to avoid spills that might contaminate water design, construction and start-up activities. They also encourage
supplies. Companies work with regulators to prevent contaminants workers to follow proper operating procedures in facilities to prevent
from reaching water resources when spills occur. Throughout major incidents, such as fatalities, spills and fires.
the downstream industry, underground storage tanks have been
removed or upgraded to prevent leakage that might contaminate A commitment to worker safety has steadily decreased the frequency
soil and groundwater. of employee and contractor incidents across the petroleum industry.
As employees work in increasingly remote or challenging locations
and younger workers enter the oil and gas business, worker safety will
continue to be one of the industry’s top priorities.
CUMULATIVE EFFECTS
While individual companies must work to minimize their own
i
environmental impacts, they must also responsibly manage CASE STUDY
cumulative effects – the impacts of multiple projects and industries on Improving worker safety offshore
an area’s residents and ecosystems. Responding to cumulative effects
requires companies to work with industry partners, governments and In 2009, the offshore petroleum industry in Atlantic Canada
others on a range of regional impacts, including air quality, water implemented a new safety device that must be worn by any
quality, land and impacts on local infrastructure and communities. offshore workers travelling by helicopter to an offshore site:
the Helicopter Underwater Emergency Breathing Apparatus
Industry has been actively involved in a number of initiatives (HUEBA).30
to address the cumulative effects of oil sands development on
northern Alberta. Based on the same basic design as a SCUBA apparatus,
a HUEBA is made up of a valve connected to a tank of
In 2000, the oil and gas industry helped to found the Cumulative compressed air. In the event of an accident, a HUEBA would
Environmental Management Association (CEMA), a Fort McMurray- provide a worker with enough air to escape from a partially or
based organization that brings together stakeholders and ideas to totally submerged helicopter.
address the issue of cumulative effects. CEMA’s mandate is to study
the cumulative environmental effects of industry activity in the Wood
Buffalo region and produce guidelines and management frameworks.
Since its inception, CEMA has delivered a number of frameworks
focused on areas such as ozone, acid deposition, trace metals,
nitrogen, ecosystems and water.29 ABORIGINAL RELATIONS
The petroleum industry has also participated in a government‑led Many of the oil and gas industry’s exploration and development
process to develop a land use framework to address different activities are near Aboriginal communities or on their traditional
interests and promote responsible growth in Alberta. This process has lands. Maintaining positive relationships with Aboriginal stakeholders
initially focused on the development of a land use plan for the Lower is important for the industry to access lands.
Athabasca region, where many oil sands developments are located. Oil and gas companies actively engage Aboriginal communities to
In 2012, the Alberta government approved the plan, which identifies share information about their business activities and project plans.
and sets resource and environmental management outcomes for air, Through consultation, companies strive to develop long-term,
land, water and biodiversity. sustainable relationships with Aboriginal neighbours based on
mutual respect.
A number of practices have emerged from industry’s interactions
with Aboriginal people. These include:
WORKER SAFETY
• consulting with Aboriginal communities through all stages
Oil and gas employees operate heavy machinery, work in challenging of project development and operations
environments and manage equipment and pipelines that handle
hydrocarbons under high pressure. A strong focus on workplace safety • working with Aboriginal communities to minimize environmental
is essential in preventing accidents that can cause serious injuries impacts related to oil and gas activity
and even fatalities. • sponsoring studies to manage impacts on culturally important sites
Companies are committed to making all work sites meet or exceed • investing in initiatives that build capacity and promote education
worker safety regulatory requirements and industry-recommended and job training within Aboriginal communities

117
The industry’s efforts to build stronger relationships with Aboriginal

communities have resulted in employment and service opportunities. A sustAInAble future
Many oil and gas companies, especially in the oil sands sector, Canada’s oil and gas industry is making progress on sustainability.
have developed procurement strategies to hire qualified local and The concept is already causing a fundamental shift in the way the
Aboriginal businesses. They work closely with Aboriginal communities industry does business, helping oil and gas companies improve
so that they understand local Aboriginal companies and joint ventures environmental performance, build better community relationships
that can potentially participate in projects. Aboriginal people and and develop solutions to energy issues. Technological advances
businesses are also given special consideration for jobs in projects. on many fronts are making the exploration, production, processing
In this way, companies obtain services needed to run their operations and transportation of oil and natural gas more efficient and more
while contributing to jobs and building local community capacity. protective of the environment and communities.
According to CAPP, the oil sands industry employed more than 1,700 A commitment to sustainable business practices has taken hold in
Aboriginal employees in permanent jobs in 2010. In the same year, the industry. But how will this commitment continue to develop in
the industry contracted more than $1.3 billion for goods and services the future? Simply, we can expect a number of factors to shape this
from Aboriginal-owned businesses. It also provided more than commitment:
$5.5 million to support Aboriginal community programs.31
• long time frames – Although finite, there is an abundance of
oil and natural gas resources in Canada. At the same time,
addressing sustainability issues requires long-term planning.
Some environmental issues will be able to be solved with today’s
i CASE STUDY
Aboriginal participation in business education
innovations and technologies, while other issues, notably climate
change, will be with industry and society well into the future.
Since 2008, Encana has been a funding partner of the Ch’nook • further integration – Companies will look for new ways to
Indigenous Business Education program, an initiative focused integrate sustainability into their business decisions. They will
on increasing Aboriginal participation in post-secondary set up programs to engage workers in solutions and develop
business studies in B.C. and Canada.32 Offered through the management systems to continually improve their sustainability
University of British Columbia’s Sauder School of Business, performance. And they will set corporate targets to address
the program integrates topics such as Aboriginal values, sustainability issues.
entrepreneurship and business strategy.
• new models of collaboration – Co-operation has always been
The initiative has produced about 159 alumni since its launch part of the industry through partnerships, joint ventures and
in 2002. associations. But today more collaboration is required to enact
solutions that advance sustainable energy development more
quickly. An example is Canada’s Oil Sands Innovation Alliance
COSIA), formed in 2012. This precedent could stimulate other
models of collaboration as the industry looks for ways to address
i CASE STUDY
Investing in Aboriginal youth
environmental, economic and social issues related to energy
development.
Enbridge’s School Plus Program is designed to engage Aboriginal As awareness of environmental and energy issues grows, Canadians
youth in grades K–12 by funding extracurricular programs that will expect more sustainable performance from the country’s oil and
might otherwise be inaccessible.33 Teachers in eligible schools gas companies. Companies, more than ever, will need to shape their
near the company’s pipeline routes and its Ontario-based wind actions based on sustainability principles. This will involve addressing
farm can apply for up to $20,000 for each project. environmental impacts but also a wider range of social issues.
The program was established in 2009, in partnership with the Taking the lead in integrating these issues into operational plans
Assembly of First Nations, to encourage students to remain in will allow oil and gas companies to create more sustainable energy
school. To date, School Plus has awarded about $2 million in development and position themselves for future competitiveness.
grants, reaching over 7,000 Aboriginal students in urban and But developing a more sustainable energy system will not only
rural areas. require the actions of industry. Success will depend on other
The funding has been used to support initiatives including stakeholders as well. There is a role for different sectors to play: oil
cultural camps, sports programs, the arts, traditional and and gas companies must continue to improve their environmental,
outdoor activities and Aboriginal language studies. economic and social performance; governments will need to
provide a regulatory environment that encourages investment and
responsible development of Canada’s resources; and consumers
will need to make decisions that reduce energy consumption and
promote energy efficient choices.
This process of evolving Canada’s energy system to a more
sustainable future will take time, but the results will be worth it –
enhancing the economic and energy benefits of our country’s oil
and gas resources while steadily reducing the impacts of resource
development on environment and society.

118
Footnotes
1 United States Energy Information Administration http://www.eia.gov/oiaf/aeo/tablebrow 32 Canadian Association of Petroleum Producers, Responsible Canadian Energy and
ser/#release=IEO2001&subject=0IEO2001&table=1-IEO2001&region=0-0&cases=Reference- Continuous Improvement http://www.capp.ca/getdoc.aspx?DocId=206721&DT=
0504a_1630
33 Enbridge Inc. http://www.enbridge.com/InYourCommunity/AboriginalCommunities/
2 World Business Council for Sustainable Development EducationandScholarships/SchoolPlus.aspx
http://www.wbcsd.org/newsroom/faq.aspx
3 Business Council on National Issues, Towards a Sustainable and Competitive Future
http://www.ceocouncil.ca/wp-content/uploads/archives/May_1992_ENG_Report_
Towards_a_Sustainable_and_Competitive_Future.pdf
environmentCommunity/airClimateChange/Pages/GreenhouseGasEmissions.aspx
6 Cenovus Energy, Corporate Responsibility Report (Environmental Performance)
http://www.cenovus.com/responsibility/cr-report/docs/CRReport-EnvironmentalPerformance.
pdf
7 Canadian Gas Association, Canadian Natural Gas Magazine
http://www.cga.ca/wp-content/uploads/2011/02/CGA-Fall-2011-Magazine.pdf
8 Imperial Oil http://www.imperialoil.ca/Canada-English/community_ccr2011_climate_
efficiency.aspx
9 Talisman Energy, Corporate Responsibility Report http://cr.talisman-energy.com/2011/
communities-and-stakeholders/engaging-communities-and-stakeholders.html
10 Canadian Gas Association http://www.cga.ca/energy-framework-initiative/
9 Energy Policy Institute of Canada http://www.canadasenergy.ca/about-us/
11 Energy Policy Institute of Canada http://www.canadasenergy.ca/about-us/
12 Canadian Association of Petroleum Producers http://www.capp.ca/rce/
14 Statoil, Annual Report 2010 http://www.statoil.com/AnnualReport2010/en/sustainability/
Health,Safety,ClimateAndTheEnvironment/Environment/Pages/Biodiversity.aspx
15 Shell Canada http://www.shell.ca/en/aboutshell/media-centre/news-and-media-
releases/2012/0905quest.html
16 Toronto Star, June 8, 2012 http://www.thestar.com/news/canada/article/1208558--
carbon-capture-and-storage-an-uncertain-future-in-canada
18 Cenovus Energy http://www.cenovus.com/operations/oil/weyburn.html
20 Canadian Gas Association, Gas in the Future http://www.cga.ca/pdfs/CGA%20Gas%20
in%20the%20Future%20-%20Final%20Feb%207,%202011.pdf
21 Canadian Association of Petroleum Producers, Land Use in Canada’s Oil Sands
http://www.capp.ca/getdoc.aspx?DocId=193754&DT=NTV
22 Suncor Energy, 2011 Report on Sustainability
http://sustainability.suncor.com/2011/en/responsible/1784.aspx
23 Canadian Association of Petroleum Producers, Land Use in Canada’s Oil Sands
http://www.capp.ca/getdoc.aspx?DocId=193754&DT=NTV
25 Natural Resources Canada, Oil Sands: Water Management http://www.nrcan.gc.ca/
energy/sites/www.nrcan.gc.ca.energy/files/files/OilSands-WaterManagement_e.pdf
26 Cenovus Energy, Corporate Responsibility Report (Environmental Performance)
http://www.cenovus.com/responsibility/cr-report/docs/CRReport-EnvironmentalPerformance.
pdf
27 Canadian Fuels Association
http://canadianfuels.ca/assets/uploads/canadian_fuels_2012_sector_report/e/#/14
28 Canadian Association of Petroleum Producers, Mitigation of Internal Corrosion in Oil
Effluent Pipeline Systems http://www.capp.ca/getdoc.aspx?DocId=155641&DT=PDF
29 Cumulative Environmental Management Association
http://cemaonline.ca/index.php/about-us
environmentCommunity/healthSafety/Pages/Workers-Offshore-HUEBA.aspx
31 Canadian Association of Petroleum Producers, Fostering Effective Aboriginal
Relationships http://www.capp.ca/getdoc.aspx?DocId=173242&DT=NTV

119
Detail shot of the drilling control panel on the Ensign drilling platform. Photo courtesy Nexen Inc.
Canada officially adopted the metric system in 1979. Canadian

federal, provincial and territorial governments and industry
04
In this section you will
learn about the history of
the oil and gas industry,
associations report in metric units such as cubic metres and litres. its technology milestones,
metrics and terminology.
However, because the global oil and gas industry uses barrels and
cubic feet as standard measures, this publication also uses barrels
and cubic feet.
Additional
Information
SECTION 4 ADDITIONAL INFORMATION
120
Measurement
CRUDE OIL, NATURAL GAS LIQUIDS NATURAL GAS

AND REFINED OIL PRODUCTS In the U.S. and Imperial systems, the basic unit for natural gas
The standard North American unit of oil measurement is the barrel. volume measurement is the cubic foot (cf) measured at standard
The barrel, which holds 42 U.S. gallons, 159 litres or 0.159 cubic temperature and pressure (60° Fahrenheit, 14.73 pounds per square
metres, was the original container used to store and transport inch). Common multiples are one thousand cubic feet (Mcf), one
crude oil during the horse and wagon era. Barrels are commonly million cubic feet (MMcf), one billion cubic feet (Bcf) and one trillion
abbreviated as bbl. A standard bathtub filled to the brim holds about cubic feet (Tcf).
2.4 barrels of liquid. • One cubic foot of natural gas provides enough energy to heat
In the metric system (Système International d’Unités, or ‘SI’), a 17 cups of coffee.
standard unit of volume measurement is the cubic metre (m3). • Twenty-three Mcf (23,000 cubic feet) of natural gas provides
A cubic metre is simply the volume of fluid held by a container with enough energy to fuel an average water heater for one year.
dimensions of one metre by one metre by one metre. One cubic metre
of liquid would fill about 2.6 bathtubs, or 1,000 one-litre milk cartons. • 100.5 Mcf of natural gas provides enough energy to heat an
average 2,000-square-foot (186-square-metre) Canadian home
Canadians use more than 1.5 million barrels (247,000 cubic metres) for one year.
of crude oil and products per day. This is equivalent to the volume of
about 660 public swimming pools. Volumes of gasoline and motor • One MMcf (one million cubic feet) of natural gas provides enough
oils are measured in litres in Canada, and in U.S. gallons and quarts energy to heat 1,000 average Canadian homes for one year.
in the United States.
In SI, the official basic unit for natural gas volume measurement
Before 1979, Canada used the Imperial measurement system. One is one thousand cubic metres (103 m3), measured at standard
Imperial gallon is equal to 4.546 litres, and there are 35 Imperial temperature and pressure (15° C, 101.325 kilopascals). The following
gallons in a barrel. units and abbreviations are commonly used:
All liquid petroleum measurement in North America – including crude • One cubic metre of natural gas, about the volume taken up by a
oil, gasoline, diesel, jet fuel and heating oil – is temperature corrected large office desk, provides enough energy to heat water for about
to a standard 15º C at sea-level atmospheric pressure. 600 cups of coffee.
Liquid measurement conversions • One thousand cubic metres (103 m3) provides enough energy to
To convert from To Multiply by
fuel two water heaters for a year.
Cubic metre Barrel 6.292 • One million cubic metres (106 m3) provides enough energy to heat
350 average 2,000-square-foot (186-square-metre) Canadian
Barrel Cubic metre 0.15891
homes for one year.
Litre Barrel 0.006292
• One billion cubic metres (106 m3) provides enough energy to heat
Barrel Litre 158.91 350,000 average Canadian homes for one year.
Litre Cubic metre 0.001
Natural gas measurement conversions
Cubic metre Litre 1000.0
Cubic metre Cubic feet 35.301

Cubic feet Cubic metres 0.028
1,000 cubic metres Million cubic feet (MMcf) 0.035
(103 m3)
Million cubic feet (MMcf) 1,000 cubic metres 28.328
(103 m3)

121
ENERGY
In the U.S. and Imperial systems, energy content is measured in
British Thermal Units (Btu). One Btu is the heat required to raise
the temperature of one pound of water one degree Fahrenheit.
The joule is the basic SI unit used to measure energy content. One
joule is the equivalent of the energy required to heat one gram of
water by approximately one quarter of one degree Celsius, or to lift
a 100-gram object (such as a television remote control) one metre
vertically. Since the joule is such a small unit of energy, the energy
industry normally works in large multiples such as the megajoule
(one million joules) or gigajoule (one billion joules). Completely
burning one wooden match would release the equivalent of
approximately 1,000 joules.
Units, multiples and applications
1 thousand joules (103 J) = 1 kJ (kilojoule)

1 million joules (106 J) = 1 MJ (megajoule)
1 billion joules (10 J)
9
= 1 GJ (gigajoule)
1 trillion joules (1012 J) = 1 TJ (terajoule)
1 million gigajoules (10 J) 15
= 1 PJ (petajoule)
410 MJ = Used by one home in a day
(heating and power)
150 GJ = Used by one home in a year
(heating and power)
Energy conversions
Joules Btu 0.00095

Btu Joules 1054.615
Gigajoules (GJ) Million Btu (MMBtu) 0.948
Million Btu (MMBtu) Gigajoules (GJ) 1.055
Gigajoules (GJ) Thousand cubic feet (Mcf) 0.948
Thousand cubic feet (Mcf) Gigajoules (GJ) 1.055
Other conversions
Kilograms Pounds 2.2

Centimetres Inches 0.4
Metres Feet 3.28
Kilometres Miles 0.62
Hectares Acres 2.47
U.S. gallons Litres 3.79
Imperial gallons Litres 4.55
Barrels Imperial gallons 35
Barrels U.S. gallons 42

122
Acknowledgements
Reviewers Photography and illustrations

The following individuals have participated in the Centre for Energy’s The following organizations have generously provided photographs,
stakeholder review process. They have generously provided their illustrations and access to their photo libraries. We thank them for
time, insight and expertise and we thank them for their help in their time and support in developing this publication.
developing this publication. Alliance Pipeline Government of Alberta
Bob McManus, Paul Cheruvathur AJM Petroleum Consultants Imperial Oil Limited
Alberta Energy, Government of Alberta Brian Harder Photography Nexen Inc.
Canaport LNG Shell Canada
Randy Dobko
Cenovus Energy Inc. Suncor Energy Inc.
Alberta Environment and Sustainable Resource Development,
Geoscience BC Syncrude Canada Ltd.
Government of Alberta
Michael Cleland Board of directors
Canada West Foundation The Board of Directors of the Canadian Centre for Energy Information
Stephen Rodrigues, Jill Piccott has generously provided direction and expertise to assist in the
Canadian Association of Petroleum Producers development of this publication. We thank them for their support.
Cathy Hay Chair
Canadian Energy Pipeline Association Pierre Alvarez
Nexen Inc.
Ruth York
Canadian Gas Association Members
Paul Gagnon
John Stewart
Joli Fou Petroleums Ltd.
Canadian Nuclear Association
Ross Douglas
Craig Stenhouse
Mancal Corporation
Cenovus Energy Inc.
Kathy Sendall
Velma McColl
Alberta Innovates – Energy and Environment Solutions
Earnscliffe Strategy Group
Gerry Protti
Bob Curran, John Ludwick
Protti Consulting Inc.
Energy Resources Conservation Board
David MacInnis
Gary Leach
Chevron Canada Resources
Explorers and Producers Association of Canada
Denise Carpenter
Mark Lowey
Canadian Nuclear Association
Institute for Sustainable Energy, Environment and Economy,
University of Calgary Jake Irving
Canadian Hydropower Association
Phyllis Odenbach-Sutton, Richard Godin, Joe Wang, Catherine Bédard,
David Henry, James Zeni Janet Annesley
Natural Resources Canada Canadian Association of Petroleum Producers
Richard Laszlo Hon. Jay Hill
Quality Urban Energy Systems of Tomorrow (QUEST) Hon. Jay Hill Consulting Inc.
Simone Marler Federal government representative
Shell Canada Limited Mark Corey
Michael Lawrence, Gord Lambert Natural Resources Canada
Suncor Energy

123
Selected bibliography
The following publications provide additional information about the Hilborn, James D. (editor). Dusters and Gushers.
Canadian and international petroleum industries. Note that some of Toronto: Pitt Publishing, 1968.
these publications may only be available through reference libraries Hoffman-Mercredi, Lorraine D. iukonze. The Stones of Traditional
or private collections. Knowledge. Edmonton: Thunderwoman Ethnogrephics, 1999.
Anderson, Allan. Roughnecks and Wildcatters. Imperial Oil. The Trail of ‘48. Toronto: Booklet prepared by Imperial
Toronto: MacMillan of Canada, 1981. Oil Ltd. as a souvenir of the opening of the Edmonton Refinery,
Bellemare, Barbara (editor). The Syncrude Story – 17 July 1948.
In Our Own Words. Fort McMurray: Syncrude Canada Ltd., 1990. Kennedy, Tom. Quest: Canada’s Search for Arctic Oil.
Bott, Robert. Mileposts: The Story of the World’s Longest Pipeline. Edmonton: Reidmore, 1988.
Edmonton: Interprovincial Pipe Line, 1989.
Kerr, Aubrey. Atlantic 1948 No. 3. Calgary: S.A. Kerr, 1986.
Breen, David H. Alberta’s Petroleum Industry and the Conservation Corridors of Time. Calgary: S.A. Kerr, 1988.
Board. Edmonton: The University of Alberta Press, 1993. Corridors of Time II. Calgary: S.A. Kerr, 1991.
Bregha, Francois. Bob Blair’s Pipeline. Toronto: James Lorimer, 1979. Judy Creek and Beyond. Calgary: S.A. Kerr, 1999.
Leduc. Calgary: S.A. Kerr, 1991.
Bryson, Connie, ed. Opportunity Oil Sands. Redwater. Calgary: S.A. Kerr, 1994.
Winnipeg: Fleet Publications Inc., 1996.
Leffler, William L. Petroleum Refining for the Nontechnical Person.
Chandler, Graham. The Gathering Place: Creeburn Lake. 2nd ed. PennWell Publishing Company, 1985.
Calgary: The Athabasca Oil Sands Project, 2004.
May, Gary. Hard Oiler! The Story of Early Canadians’ Quest for Oil
Clark, K.; Hetherington, C.; O’Neil, C.; Zavitz, J. Breaking Ice at Home and Abroad. Dundurn, 1998.
with Finesse: Oil and Gas Exploration in the Canadian Arctic.
McKenzie-Brown, Peter; Gordon Jaremko, and David Finch.
Calgary: Arctic Institute of North America, 1997.
The Great Oil Age. Calgary: Detselig Publishers, 1993.
Dabbs, Frank. Branded by the Wind: The Life and Times of
Bill Herron. Calgary: Marjorie A. Herron, 2001. Stahl, Len. A Record of Service: The History of Western Canada’s
Pioneer Gas and Electric Utilities. Edmonton: Canadian Utilities
de Mille, George. Oil in Canada West: The Early Years. Limited, 1987.
Calgary: George de Mille, 1969.
Stenson, Fred. Waste to Wealth: A History of Gas Processing
Finch, David, and Jaremko, G. Fields of Fire – An Illustrated History in Canada. Calgary: Canadian Gas Processors Association, 1985.
of Canadian Petroleum. Calgary: Petroleum History Society,
The Royal Tyrrell Museum of Palaentology. The Land Before Us
Detselig, 1994.
– The Making of Ancient Alberta. Red Deer College Press, 1994.
Finnie, Richard. CANOL: The Sub-Arctic Pipeline and Refinery Project
Thomas, Alister (editor). The Super Roughneck: 50 years
Constructed by Bechtel-Price-Callahan for the Corps of Engineers,
of Canadian Oilpatch History as reported in The Roughneck.
United States Army 1942-1944. San Francisco, CA: Taylor & Taylor,
Calgary: Northern Star Communications Ltd., 2002.
1945.
Yergin, Daniel. The Prize. New York: Simon & Schuster, 1991.
Gray, Earle. Forty Years in the Public Interest – A History of the
National Energy Board. Vancouver: Douglas & McIntyre, 2000.
Gray, Earle. The Great Canadian Oil Patch. Toronto: MacLean-Hunter,
1970.
Gray, Earle. Super Pipe: The Arctic Pipeline – World’s Greatest Fiasco.
Toronto: Griffin Press, 1979.

124
Graphs, maps, tables and illustrations
Section 1 Page Page

Canadian Crude Oil Reserves by Type 8 Canadian Natural Gas Fields 19
Source: Canadian Association of Petroleum Producers Source: Natural Resources Canada, National Energy Board, Canadian
http://membernet.capp.ca/SHB/Sheet.asp?SectionID=2&SheetID=258 Society for Unconventional Resources
http://membernet.capp.ca/SHB/Sheet.asp?SectionID=2&SheetID=151 http://atlas.nrcan.gc.ca/site/english/maps/energy.html
http://membernet.capp.ca/SHB/Sheet.asp?SectionID=2&SheetID=256 http://www.energy.alberta.ca/NaturalGas/Gas_Pdfs/map_Fields.pdf
http://membernet.capp.ca/SHB/Sheet.asp?SectionID=2&SheetID=283 http://www.csur.com/sites/default/files/shale_gas_English_Web.pdf
Refinery Products from Crude Oil 10 2011 World Proved Natural Gas Reserves 19
Source: Statistics Canada Sources: United States Energy Information Administration
http://www.statcan.gc.ca/pub/57-601-x/2012001/t065-eng.htm (International), Canadian Association of Petroleum Producers (Canada)
Conventional and Unconventional Crude Oil 10 http://www.eia.gov/cfapps/ipdbproject/IEDIndex3.cfm?tid=3&pid=
Source: AJM Petroleum Consultants 3&aid=6
The Difference Between Heavy and Light Oil 10
Copyright 2012 Canadian Centre for Energy Information 2011 Canadian Exports 20
Raw Natural Gas Components 11 http://www.statcan.gc.ca/pub/65-001-x/2012009/t004-eng.htm
2011 GDP Contribution by Industry 20
Common Oil and Gas Traps 12 Source: Statistics Canada
Copyright 2012 Canadian Centre for Energy Information http://www.statcan.gc.ca/pub/15-001-x/15-001-x2012008-eng.htm
Formation of a Sedimentary Basin 13 2011 Canadian Energy Exports 20
Copyright 2012 Canadian Centre for Energy Information Source: Statistics Canada
Major Sedimentary Basins 16 http://www.statcan.gc.ca/pub/65-001-x/2012009/t004-eng.htm
Source: Natural Resources Canada 2010 - 2035 Projected World Primary Energy Demand by Fuel 21
http://atlas.nrcan.gc.ca/site/english/maps/energy.html Source: United States Energy Information Administration
2011 World Crude Oil Production 17 http://www.eia.gov/oiaf/aeo/tablebrowser/#release=IEO2011&sub
Sources: United States Energy Information Administration ject=0-IEO2011&table=1-IEO2011&region=0-0&cases=Reference-
(international), Canadian Association of Petroleum Producers (Canada) 0504a_1630
http://www.eia.gov/cfapps/ipdbproject/iedindex3.cfm?tid=5&pid=55 2011 Major Suppliers of Crude Oil and Refined Products
&aid=1&cid=regions&syid=2007&eyid=2011&unit=TBPD to the United States 21
http://membernet.capp.ca/SHB/Sheet.asp?SectionID=3&SheetID=273 Source: United States Energy Information Administration
2011 World Marketed Natural Gas Production 17 http://www.eia.gov/dnav/pet/pet_move_impcus_a2_nus_ep00_
Sources: United States Energy Information Administration im0_mbblpd_a.htm
(International), Canadian Association of Petroleum Producers (Canada) 2011 Direct Employment in the Canadian Oil and Gas Industry 23
http://www.eia.gov/cfapps/ipdbproject/iedindex3.cfm?tid=3&pid=24 Source: Petroleum Human Resources Council of Canada
&aid=1&cid=regions&syid=2007&eyid=2011&unit=BCF http://www.petrohrsc.ca/media/22451/final_canada_og_labour_
http://membernet.capp.ca/SHB/Sheet.asp?SectionID=3&SheetID=269 market_outlook_to_2015_fact_sheet_may_2012.pdf
Canadian Oil Fields 18
Sources: Natural Resources Canada, Alberta Energy Resources
Conservation Board, Canadian Society for Unconventional Resources
http://atlas.nrcan.gc.ca/site/english/maps/energy.html
http://www.ercb.ca/learn-about-energy/oilsands
http://www.csur.com/resources
2011 World Proved Crude Oil Reserves 18
Sources: United States Energy Information Administration
(International), Energy Resources Conservation Board
(Canada Oil Sands), Canadian Association of Petroleum
Producers (Canada Conventional)
http://www.eia.gov/cfapps/ipdbproject/IEDIndex3.cfm?tid=5&pid=57
&aid=6 http://www.ercb.ca/sts/ST98/ST98-2012.pdf

125
Section 2 Page Page

At a Glance – Exploring for New Oil and Natural Gas 27 2011 Canadian Crude Oil and Equivalent Production 62
Typical Land Dispositions in Western Canada 29
Source: Petroleum Information/Dwights
2011 Canadian Marketed Natural Gas Production 62
2011 Revenue from Land Sales 30
Terra Nova, North Amethyst and Hebron 63
Vibroseis 3D Seismic Method 32
Crude Oil Battery 66
At a Glance – Drilling Operations 35
Anatomy of a Land-Based Drilling Well 36
At a Glance – Bitumen Upgrading 66
Upgraders – Operating, Under Construction and Planned 67
Rotating Systems 37
Source: Alberta Energy, Government of Alberta
http://www.energy.gov.ab.ca/landaccess/pdfs/oilsands_projects.pdf
Hoisting System 38
At a Glance – Typical Pipeline Construction Stages 71
2012 Liquids Pipelines 74
Circulating System 39
Source: Canadian Energy Pipelines Association
http://www.cepa.com/map/
Blowout Preventer (BOP) 40
2012 Natural Gas Pipelines, LNG Terminals 75
Illustration courtesy Precision Drilling Corporation
Source: Canadian Energy Pipelines Association
2011 Wells Drilled in Canada 41 http://www.cepa.com/map/
Source: Canadian Association of Oil Well Drilling Contractors
2011 Crude Oil and Equivalent Production,
http://www.caodc.ca/statistics/wellcounts_province_annual.html
Supply and Distribution 80
2011 Canadian Drilling Rig Utilization Rates 41 Source: National Energy Board
Source: Canadian Association of Petroleum Producers http://www.neb-one.gc.ca/clf-nsi/rnrgynfmtn/nrgyrprt/nrgdmnd/
http://www.caodc.ca/statistics/rigcounts-service_monthly.html nrgytrdfct2011/nrgtrdfct-eng.html
2012 Oil Sands Projects 48 2011 Natural Gas Production and Distribution 81
Sources: Alberta Energy, Government of Alberta, Alberta Energy Source: National Energy Board
Resources Conservation Board, Alberta Geological Survey, Canadian http://www.neb-one.gc.ca/clf-nsi/rnrgynfmtn/nrgyrprt/nrgdmnd/
Energy Pipeline Association nrgytrdfct2011/nrgtrdfct-eng.html
http://www.energy.gov.ab.ca/landaccess/pdfs/oilsands_projects.pdf
Simplified Cross-Section of a Distillation Tower 84
http://www.ercb.ca/learn-about-energy/oilsands
http://www.ags.gov.ab.ca/energy/oilsands/index.html
http://www.cepa.com/map/ 2012 Canadian Refineries 87
Source: Natural Resources Canada, Canadian Fuels Association
At a Glance – Typical Oil Sands Mining Operation 51
http://canadianfuels.ca/index_e.php?p=65
Steam-Assisted Gravity Drainage (SAGD) 52
2011 Petroleum Product Consumption 87
Cyclic Steam Stimulation 54 http://www.statcan.gc.ca/pub/57-601-x/2012001/t066-eng.htm
2011 Canadian Average Gasoline Price Components 89
Tailings Pond Cross-Section Source: Kent Marketing Services
Tailings Pond Overhead View 57 http://www.kentmarketingservices.com/dnn/PetroleumPriceData.aspx
Illustrations courtesy of Government of Alberta
2009 Diesel Use by Sector 89
http://oilsands.alberta.ca/tailings.html
Horizontal Drilling http://oee.nrcan.gc.ca/publications/statistics/handbook11/pdf/
Horn River Basin 59 handbook11.pdf
Illustration courtesy Nexen Inc.
2009 Energy Use by Fuel 90
http://oee.nrcan.gc.ca/publications/statistics/handbook11/pdf/
handbook11.pdf

126
Page Section 3 Page

2011 Taxes on Gasoline When the Pump Price is The Three Dimensions of Sustainability 95
One Dollar per Litre 90 Copyright 2012 Canadian Centre for Energy Information
At a Glance – Key Forces Driving Sustainability in Industry 96
http://www.nrcan.gc.ca/energy/sources/petroleum-crude-prices/
gazoline-reports/2012-01-13/2080#supsup Sustainability – The Way Industry Does Business 99
2012 International Retail Gasoline Prices 90
Source: International Energy Agency At a Glance – Sustainability Actions and Benefits 105
http://www.iea.org/stats/surveys/mps.pdf Regulatory Agencies – Canada’s Oil Sands 107
2011 Used Oil Recycling Programs in Canada 91 Source: Canadian Association of Petroleum Producers
Source: National Used Oil Material Advisory Council 2011 World CO2 Emissions by Source 112
BC http://usedoilrecycling.com/resources/file/BC/BCUOMA_AR_2011.pdf Source: United States Energy Information Administration
Alberta http://usedoilrecyclingab.com/webcura/files/259140_2011- http://www.eia.gov/cfapps/ipdbproject/iedindex3.cfm?tid=90&pid=1
auoma-annualreport.pdf &aid=8&cid=regions&syid=2006&eyid=2010&unit=MMTCD
Saskatchewan http://usedoilrecyclingsk.com/webcura/files/257415_ http://www.eia.gov/cfapps/ipdbproject/iedindex3.cfm?tid=90&pid=5
sarrc-2011-annualreport.pdf &aid=8&cid=regions&syid=2006&eyid=2010&unit=MMTCD
Manitoba http://usedoilrecycling.com/en/mb http://www.eia.gov/cfapps/ipdbproject/iedindex3.cfm?tid=90&pid=3
Quebec http://www.soghu.com/uploads/12.06.21%20rapport%20 &aid=8&cid=regions&syid=2006&eyid=2010&unit=MMTCD
annuel%202011%20(EN).pdf
2011 Canadian CO2 Emissions by Source 112
http://www.eia.gov/cfapps/ipdbproject/iedindex3.cfm?tid=90&pid=1
&aid=8&cid=regions&syid=2006&eyid=2010&unit=MMTCD
2011 Canadian CO2 Emissions by Sector 112
Source: Environment Canada
http://unfccc.int/national_reports/annex_i_ghg_inventories/
national_inventories_submissions/items/6598.php
2011 World CO2 Emissions 112
Section 4
Liquid Measurement Conversions 120
Natural Gas Measurement Conversions 120
Units, Multiples and Applications 121
Energy Conversions 121
Other Conversions 121

127
Other information sources
Government agencies
Federal • National Energy Board (NEB)
www.neb-one.gc.ca/clf-nsi/rcmmn/hm-eng.html
• Natural Resources Canada (NRCan)
www.nrcan.gc.ca/energy/home
• Canadian Environmental Assessment Agency
www.ceaa-acee.gc.ca/default.asp?lang=En&n=D75FB358-1
• Canadian General Standards Board
www.tpsgc-pwgsc.gc.ca/ongc-cgsb/index-eng.html
• Environment Canada
www.ec.gc.ca/dd-sd/default.asp?lang=En&n=C2844D2D-1
• Fisheries and Oceans Canada
www.dfo-mpo.gc.ca/index-eng.htm
• Transport Canada
www.tc.gc.ca/eng/menu.htm
British Columbia • BC Ministry of Energy, Mines and Petroleum Resources
www.gov.bc.ca/ener/
• BC Oil and Gas Commission
www.bcogc.ca
• BC Utilities Commission
www.bcuc.com/Default.aspx
Alberta • Alberta Energy
www.energy.alberta.ca/index.asp
• Alberta Energy Resources Conservation Board (ERCB)
www.ercb.ca
• Alberta Environment and Sustainable Resource Development (ESRD)
www.environment.alberta.ca
• Alberta Utilities Commission (AUC)
www.auc.ab.ca/Pages/Default.aspx
Saskatchewan • Saskatchewan Energy and Resources
www.economy.gov.sk.ca/oilgas
Manitoba • Manitoba Innovation, Energy and Mines
www.manitoba.ca/iem/energy/index.html
• Manitoba Public Utilities Board
www.pub.gov.mb.ca
Ontario • Ontario Energy Board (OEB)
www.ontarioenergyboard.ca/OEB/Industry
• Ontario Ministry of Natural Resources (MNR)
www.mnr.gov.on.ca/en/STEL02_168288.html?CSB_ic-name=browseByTopic&CSB_ic-info=energy_Eng
Quebec • Ministère des Ressources naturelles et de la Faune
www.mrn.gouv.qc.ca
• Régie de l’énergie
www.regie-energie.qc.ca/en/index.html
New Brunswick • New Brunswick Department of Natural Resources
www2.gnb.ca/content/gnb/en/departments/natural_resources.html
• New Brunswick Energy and Utilities Board (EUB)
www.nbeub.ca/index.php/en/
Nova Scotia • Canada-Nova Scotia Offshore Petroleum Board
www.cnsopb.ns.ca
• Nova Scotia Department of Energy
www.gov.ns.ca/energy/oil-gas/

128
Prince Edward Island • PEI Department of Finance, Energy and Municipal Affairs
www.gov.pe.ca/energy/
• PEI Regulatory and Appeals Commission
www.irac.pe.ca
Newfoundland and Labrador • Canada-Newfoundland and Labrador Offshore Petroleum Board
www.cnlopb.nl.ca
• Newfoundland and Labrador Department of Natural Resources
www.nr.gov.nl.ca/nr/energy/index.html
Northwest Territories • NWT Department of Industry, Tourism and Investment
www.iti.gov.nt.ca/energy/
• NWT Public Utilities Board (PUB)
www.nwtpublicutilitiesboard.ca/about.htm
Nunavut • Nunavut Department of Economic Development and Transportation
www.edt.gov.nu.ca/apps/authoring/dspPage.aspx?page=home
Yukon • Yukon Ministry of Energy, Mines and Resources
www.emr.gov.yk.ca
• Yukon Oil and Gas Resources (OGR)
www.emr.gov.yk.ca/oilandgas/

129
Canadian oil and gas industry associations and societies In Situ Oil Sands Alliance (IOSA)
www.iosa.ca
Exploration, production and service industry Oil Sands Developers Group (OSDG)
Association of Canada Lands Surveyors (ACLS) www.oilsandsdevelopers.ca
www.acls-aatc.ca
Canadian Association of Drilling Engineers (CADE) Offshore
www.cadecanada.com Newfoundland and Labrador Oil and Gas Industries Association (NOIA)
Canadian Association of Geophysical Contractors (CAGC) www.noia.ca
www.cagc.ca The Maritimes Energy Association
Canadian Association of Oilwell Drilling Contractors (CAODC) www.maritimesenergy.com
www.caodc.ca
Petrochemicals
Canadian Association of Petroleum Land Administration (CAPLA)
www.caplacanada.org Chemistry Industry Association of Canada (CIAC)
www.ccpa.ca
Canadian Association of Petroleum Landmen (CAPL)
www.landman.ca
Pipelines
Canadian Association of Petroleum Producers (CAPP)
Canadian Energy Pipeline Association (CEPA)
www.capp.ca/Pages/default.aspx
www.cepa.com
Canadian Association of Petroleum Production Accounting (CAPPA)
www.cappa.org Refining, distribution and marketing
Canadian Society of Exploration Geophysicists (CSEG) Canadian Fuels Association (CFA)
www.cseg.ca www.canadianfuels.ca
Canadian Society of Petroleum Geologists (CSPG)
www.cspg.org
Health and safety
CSA Group
Energy Services BC www.csagroup.org/Default.asp?language=english
www.energyservicesbc.org
Enform
Explorers and Producers Association of Canada www.enform.ca
www.explorersandproducers.ca
Oil Sands Safety Association (OSSA)
Orphan Well Association www.ossa-wb.ca
www.orphanwell.ca
Petroleum Accountants Society of Canada (PASC) Careers and training
www.petroleumaccountants.com ECO Canada
Petroleum Services Association of Canada (PSAC) www.eco.ca
www.psac.ca Enform
Society of Petroleum Engineers – Canadian Section (SPE) www.enform.ca
www.spe.org/canada/ Petroleum Human Resources Council of Canada (PHRCC)
www.careersinoilandgas.com
Natural gas
Energy institutes and research centres
Canadian Gas Association (CGA)
www.cga.ca Alberta Innovates – Energy and Environment Solutions
www.ai-ees.ca
Canadian Natural Gas Vehicles
www.cngva.org Canada Centre for Mineral and Energy Technology (CanmetENERGY)
www.canmetenergy.nrcan.gc.ca/home
Gas Processing Association of Canada (GPAC)
www.gpacanada.com Canadian Energy Research Institute (CERI)
www.ceri.ca
Unconventional oil and gas Canadian Institute of Mining, Metallurgy and Petroleum (CIM)
Canada’s Oil Sands Innovation Alliance (COSIA) www.cim.org/en.aspx
www.cosia.ca Canadian Oil Sands Network for Research and Development
Canadian Heavy Oil Association (CHOA) (CONRAD)
www.choa.ab.ca www.canadianoilsandsnetwork.ca
Canadian Society for Unconventional Resources (CSUR) Carbon Management Canada, University of Calgary
www.csur.com www.ucalgary.ca/prg/cmc

130
Centre for Oil Sands Innovation (COSI), University of Alberta Energy education
www.cosi.ualberta.ca Canada Science and Technology Museum
Institute for Sustainable Energy, Environment and Economy (ISEEE), www.sciencetech.technomuses.ca/english/index.cfm
University of Calgary Canadian Centre for Energy Information
www.iseee.ca www.centreforenergy.com
Ontario Petroleum Institute (OPI) Inside Education
www.ontpet.com www.insideeducation.ca
Petroleum Research Newfoundland and Labrador Leduc #1 Energy Discovery Centre
www.pr-ac.ca www.leducnumber1.com
Petroleum Technology Alliance Canada (PTAC) Oil Sands Discovery Centre
www.ptac.org www.history.alberta.ca/oilsands/default.aspx
Petroleum Technology Research Centre (PTRC) Petroleum History Society
www.ptrc.ca www.petroleumhistory.ca
Pipeline Engineering Center, University of Calgary SEEDS Foundation
www.schulich.ucalgary.ca/PEC/ www.seedsfoundation.ca/index.asp?pid=11
Sustainable development U.S. and international industry associations
Alberta Biodiversity Monitoring Institute American Gas Association (AGA)
www.abmi.ca/abmi/home/home.jsp www.aga.org/Pages/default.aspx
C3 American Petroleum Institute (API)
www.carbonoffsetsolutions.climatechangecentral.com www.api.org
Canadian Council of Ministers of the Environment (CCME), Association of Energy Service Companies (AESC)
Air Management System www.aesc.net
www.ccme.ca/ourwork/air.html?category_id=146
Association of Oil Pipe Lines (AOPL)
Clean Air Strategic Alliance (CASA) www.aopl.org
www.tpsgc-pwgsc.gc.ca/ongc-cgsb
Carbon Disclosure Project (CDP)
Cumulative Environmental Management Association (CEMA) www.cdproject.net/en-US/Pages/HomePage.aspx
www. cemaonline.ca
Global Reporting Initiative (GRI)
Dow Jones Sustainability Index www.globalreporting.org
www.sustainability-index.com
International Energy Agency (IEA)
Jantzi Social Index www.iea.org
www.sustainalytics.com/indexes
International Organization for Standardization (ISO)
Wood Buffalo Environmental Association www.iso.org
www.wbea.org
International Petroleum Industry Environmental Conservation
Energy policy Association (IPIECA)
www.ipieca.org
Canada West Foundation
www.cwf.ca Interstate Natural Gas Association of America (INGAA)
www.ingaa.org
Canadian Council of Chief Executives
www.ceocouncil.ca Pipeline Research Council International (PRCI)
www.prci.org
Energy Council of Canada
www.energy.ca U.S. Energy Information Administration (EIA)
www.eia.gov
Energy Policy Institute of Canada (EPIC)
www.canadasenergy.ca World Business Council for Sustainable Development (WBCSD)
www.wbcsd.org/home.aspx
World Petroleum Council (WPC)
www.world-petroleum.org

131
Selected industry timeline
1800 1900
1862 1889
Canada completes one of the Eugene Coste drills natural gas
world’s first oil pipelines, from wells in Essex County, Ontario.
Petrolia to Sarnia, Ontario.
1890
1866 Medicine Hat begins drilling
James Williams creates the natural gas wells to fuel cooking,
world’s first vertically integrated heating and lighting.
1848 oil company. 1901
The first geological assessment 1892 The Ontario government bans the
of the oil sands is done by John 1870 Rudolph Diesel develops the export of natural gas.
Richardson. Approximately 20 small refineries diesel engine.
are set up in southern Ontario to 1902
1850 manufacture kerosene. 1893 The first commercial gas field is
Oil is discovered in southern Parliament authorizes the discovered in Medicine Hat.
Ontario. 1875 Geological Survey of Canada to
John Macoun conducts the first investigate the oil sands as a 1905
1851 government geological study of petroleum source. Automobiles powered by
Charles Tripp founds the first the oil sands. gasoline engines begin to gain
registered oil company in 1894 wide popularity.
North America. 1880s A federal government field party
Imperial Oil Company Limited is drills the first wells into the oil 1909
1853 born through the amalgamation of sands at Athabasca Landing in Eugene Coste makes a significant
Canada builds its first pipeline – 16 Ontario refining companies. northern Alberta. natural gas discovery at Bow
a 25-kilometre cast iron pipe – Island, Alberta.
to move natural gas to Trois 1883 1895
Rivières, Quebec. A Canadian Pacific Railway Eugene Coste exports natural gas 1912
crew discovers natural gas near from Essex County to Detroit. A 275-kilometre natural gas
1859 Medicine Hat, Alberta, while pipeline is built from Bow Island
Natural gas is discovered in drilling for water. 1898 to Calgary.
New Brunswick. Imperial Oil consolidates its
1885 refining operations at Sarnia
James Williams digs a well in
Enniskillen Township, Ontario. The Bunsen burner is invented to to gain access to U.S. crude oil
mix natural gas and air for safe, supplies to supplement Ontario’s
controlled heating and cooking. declining production.
Technology milestones
1800
1846 tool drilling rig to punch through a process to extract the sulphur
Between 1846 and 1853, Abraham rock into an oil reservoir at Oil compounds, using copper oxide
Gesner perfects the technique Creek, Pennsylvania. powder. Starting in the late 1890s,
of heating hydrocarbons and this process is used to treat
distilling the vapours into useful 1862 petroleum products in Canada.
fuels. His work helps to turn crude John Fairbank invents the jerker-
oil into a commercial commodity. line system for pumping crude oil. 1892
Rudolph Diesel invents the diesel
1859 1888 engine, which gains popularity for
Edwin Drake introduces a practical Early crude contains undesirable industrial machinery and ships.
way to produce large quantities sulphur compounds, which cause The engine is later used for trains,
of crude oil when he uses a cable- odours. Herman Frasch invents trucks and eventually automobiles.

132
1913 1923 1941 1950

The number of cars on Canadian A 124-kilometre natural gas Canadian Pacific Railway Railroads began switching from
roads increases to 50,000, pipeline is built from Viking, announces plans to rebate 50 per bunker ‘C’ to diesel fuel, negatively
helping to drive demand for Alberta, to Edmonton. cent of its royalty to stimulate impacting Lloydminster oil sales.
petroleum products. heavy oil development.
Oil pipelines are built east to
1925
A 380-kilometre oil pipeline is Sarnia and west to Vancouver.
1914 Rotary drilling rigs, predecessors built from South Portland, Maine,
The Dingman #1 well sparks the of the types used today, are to Montreal. 1950
first oil boom in Turner Valley, introduced in Turner Valley.
Alberta. Interprovincial Pipe Line (now
1943 Enbridge Pipelines) transports
1927
Work begins on Canada’s first crude oil from Edmonton to
1915 Bitumen begins to be processed offshore well on an artificial Superior, Wisconsin.
Sidney Ells proposes the first to produce roofing and road island off the coast of Prince
industrial use for bitumen. His surfacing materials. Edward Island. 1952
ideas lead to the first asphalt
paved roads in Canada. Natural gas is used as a raw
1930 1944 material for fertilizer and
Mineral rights are transferred Shell Canada discovers a major other products.
1916 from the federal government to sour gas reservoir at Jumping
The use of gasoline-powered provincial governments in Western Pound west of Calgary. 1953
vehicles and ships fueled by Canada.
bunker oil during the First World Industry begins the first efforts to Oil replaces coal as Canada’s
War increases fuel demand. recover sulphur from sour gas. largest source of energy.
1938
Alberta establishes the Petroleum The Canadian Oil Pipeline Trans Mountain Pipeline
1920s and Natural Gas Conservation Board system (now Kinder Morgan
completes a crude oil pipeline
Service stations open across to ensure orderly development of from Norman Wells to Whitehorse. Canada) transports crude oil
Canada to provide gasoline, the province’s resources. from Edmonton to Vancouver.
lubricants and vehicle repairs. 1946
1940 1954
Husky Oil builds a refinery in
1920 Shell explores the Athabasca oil Pembina Pipeline system is built
Lloydminster, Alberta.
Imperial Oil discovers oil at sands in northern Alberta. to transport crude oil from Drayton
Norman Wells, Northwest 1947 Valley, Alberta, to Edmonton.
Territories.
Imperial Oil makes the Leduc
discovery near Edmonton,
triggering a major oil boom in
Western Canada.
1900
1905 1919 1921
Automobiles powered by spark- Ludger Mintrop patents the first Dr. Karl Clark begins his pioneering
ignited gasoline engines begin to seismic surveying method. The work on a hot-water flotation
dominate the growing auto market. first Canadian seismic survey is process to separate bitumen from
conducted at Turner Valley, Alberta oil sands. His efforts lead to a
1914 in 1929. patented process by 1929.
Imperial Oil adds a process called
‘cracking’ to its Sarnia, Ontario, 1920s 1924
refinery. Thermal cracking uses The first well-logging instruments The first plant to ‘scrub’ hydrogen
heat to break large hydrocarbon to guide underground drilling sulphide from sour gas is built in
molecules into smaller molecules appear in Canada. Turner Valley.
to make gasoline.

133
1955 1962 1970 1976

Westcoast Transmission Company Alberta government announces an Imperial Oil makes Canada’s first Interprovincial Pipe Line extends
(now Spectra Energy) begins oil sands policy to provide for the Arctic oil discovery at Atkinson to Montreal.
construction of a 24-inch pipeline development of oil sands. Point, Northwest Territories.
from Tayor, British Columbia, to 1977
the United States. 1963 1972 Oil is discovered at West Pembina,
A pipeline is built to connect The federal and British Columbia Alberta.
1957 Husky’s Lloydminster refinery to governments impose a
Oil is discovered at Swan Hills, the main Interprovincial Pipe Line. moratorium on oil and gas drilling 1978
Alberta. off the West Coast. Syncrude, the second commercial
1964 mining-upgrading oil sands
1957 The Syncrude consortium is 1973 installation, begins production.
TransCanada Pipelines begins formed to do research on the The Cohasset field is discovered
construction of a natural gas economic and technical feasibility offshore Nova Scotia. Together 1979
pipeline across Canada. of mining oil from the Athabasca with the Panuke field (discovered The Hibernia field is discovered
oil sands. in 1986), it becomes part of offshore Newfoundland.
Westcoast Transmission Company Canada’s first offshore oil
begins transporting natural At Fort McMurray, Alberta, development.
gas from northeastern British construction begins on the Great 1980
Columbia to the B.C.-U.S. border. Canadian Oil Sands plant, the Federal government implements The National Energy Program is
world’s first large-scale oil sands policies that create ‘made-in- announced in Canada.
1959 operation. Canada’ crude oil prices well
The federal government creates below world levels. 1981
the National Energy Board to 1965 The Hebron-Ben Nevis
oversee energy trade. Oil is discovered at Rainbow Lake, 1974 field is discovered offshore
Alberta. Panarctic makes Bent Horn oil Newfoundland.
1960 discovery on Cameron Island – the
Foothills Pipe Lines begins
The first seismic survey is carried 1967 only oil field to be commercially
transporting natural gas from
out in the Sable Island area off the Shell discovers oil off Sable Island, produced in the Canadian Arctic.
central Alberta to the U.S. border.
coast of Nova Scotia. Nova Scotia.
1975
Exploration begins in Canada’s The Great Canadian Oil Sands plant Petro-Canada founded as a
Arctic islands. starts operation, becoming the Crown corporation by the federal
world’s first commercial oil sands government.
1961 mine and upgrader complex.
Alberta establishes air quality
standards.
1929 1940 1949 1952

The first horizontal well is drilled Refineries improve the cracking The first commercial application of Thermal steam flooding recovery
in Alberta. process through the use of hydraulic fracturing takes place at applications begin at Shell’s pilot
catalysts. This becomes known an oil well in Oklahoma. project in Yorba Linda, California.
1930s as ‘cat cracking’ and is used
Rotary rigs begin to be used during the Second World War 1951 1960s
widely in oil and gas exploration to meet the need for high-octane Shell builds a plant to recover The processing and interpretation
in Canada, replacing earlier cable- aviation fuels. sulphur from natural gas at of seismic data is revolutionized
tool rigs. Jumping Pound west of Calgary. by the introduction of computers.

134
1982 1986 1992 1997

The Ocean Ranger, a mobile On November 1, deregulation of At the Earth Summit in Rio de Average annual production of
offshore drilling unit, sinks natural gas pricing and marketing Janeiro, Canada signs the UN all oil sands projects surpasses
in Canadian waters, with the takes effect. Framework Convention on Climate 500,000 barrels a day.
loss of all 84 people on board. Change to reduce greenhouse gas
This prompts the industry to emissions. Kinder Morgan Canada begins
1987
significantly improve worker and operation of its Express Pipeline,
Free and open continental energy which transports crude oil from
process safety in offshore areas. trade is promised in a new free 1993
Hardisty, Alberta, to U.S. markets.
trade agreement between Canada Syncrude and the Fort McKay
1984 and the United States. First Nation begin a pilot project Hibernia oil field begins production
Husky Oil and the Alberta and where a group of wood bison are off the coast of Newfoundland and
Saskatchewan governments reach 1989 established on reclaimed oil sands Labrador.
agreement on the $3.2 billion The Exxon Valdez tanker runs mining land.
Gulf Canada starts the Surmont
Lloydminster Upgrader. aground, spilling 270,000 barrels SAGD pilot.
of oil off the coast of Alaska. 1995
The Terra Nova field is discovered
and oil is discovered at White Canada’s Voluntary Challenge 1998
Horizontal drilling, a technology and Registry is established to
Rose, offshore Newfoundland. originally developed to extend Suncor’s Steepbank North Mine
encourage organizations to reduce
wells from offshore platforms, begins operations.
1985 greenhouse gas emissions.
is adapted for onshore use in
The federal government and Western Canada. Canadian Prime Minister Jean 1999
producing provinces sign the Chrétien announces $25 billion Shell Canada and its partners
Western Accord, committing to 1990 of tax breaks for the oil sands begin construction of the $5.7
deregulation in the natural gas Canadian petroleum refiners industry. billion Athabasca Oil Sands
industry. eliminate lead as a gasoline Project, including the Muskeg River
additive. 1996 Mine and Scotford Upgrader.
Commercial production begins
at Imperial’s Cold Lake in situ oil The Alberta and federal
Construction begins on Suncor’s
sands project. 1991 governments establish ‘generic’
Millennium Project, a $3.4 billion
Husky Oil Lloydminster Upgrader royalty and tax arrangements to
Interprovincial Pipe Line completes expansion of oil sands mining and
comes on stream. encourage investment.
construction of its pipeline upgrading facilities.
from Norman Wells, Northwest 1992 1997 The Sable Offshore Energy Project
Territories, to Zama, Alberta. This Canada and other governments off the coast of Nova Scotia begins
is the first buried pipeline through Suncor begins phasing out bucket
wheels and conveyor belts in its reach an international agreement natural gas production.
permafrost in Canada. in Kyoto, Japan, to limit
oil sands operations in favour of
trucks and shovels. greenhouse gas emissions.
1965 1978 1980s 1990s

Imperial Oil begins piloting cyclic Dr. Roger Butler develops and Horizontal drilling, a technology Oil sands developers introduce
steam stimulation (CSS) technology publishes the basic concept of originally developed to extend hydrotransport, which uses
at Cold Lake, Alberta, injecting steam-assisted gravity drainage wells from offshore platforms, pipelines instead of conveyors to
steam under high pressure to (SAGD) to recover bitumen. is adapted for onshore use in carry oil sand to the processing
extract underground bitumen. Western Canada. plant.
1980s
Two-dimensional geological 1980
mapping is superseded by 3D Imperial Oil conducts a SAGD test
mapping. This technique better at Cold Lake, involving one of the
shows thicknesses and properties world’s first horizontal wells as a
of subsurface layers. producer, plus two vertical injectors.

135
2000
2000 2002 2003
The World Petroleum Congress is Encana’s Christina Lake SAGD Opti/Nexen’s Long Lake SAGD pilot
held in Calgary. Held every three project begins operations. project begins operations.
years, this major international
event attracts government Petro-Canada’s MacKay River SAGD Athabasca Oil Sands Project,
officials, oil companies and other project commences production. owned by Shell, Chevron and
stakeholders to discuss issues Western Oil Sands Ltd., begins
Terra Nova oil field off the coast of production.
and opportunities in energy Newfoundland begins production,
2000 exploration and production. using a floating production, A record number of gas wells are
Aurora Mine, the first remote oil storage and off-loading system. drilled in the Western Canada
sands mine, opens northeast of 2001 Sedimentary Basin, but production
Syncrude’s Fort McMurray plant. Encana announces plans for first decreases and price rises.
Alberta’s land sale brings in $125
commercial coalbed methane
million – the largest sale in the
Alliance Pipeline starts project in Canada. Canada’s output of bitumen from
province’s history at the time.
transporting natural gas from oil sands is 1.2 million barrels a
northeastern British Columbia and Talisman Energy announces major day at the end of the year.
Alberta Energy Company makes
northeastern Alberta to Illinois. natural gas discovery in Monkman
a major natural gas discovery at
Pass in northern British Columbia. Gasoline prices climb to more than
Ladyfern in northeastern British
A record 21,967 well licences are $0.90 per litre in parts of Canada.
Columbia. Canadian government ratifies
issued in Canada.
Kyoto Protocol to reduce
The world’s first commercial 2004
Major expansion projects are greenhouse gas emissions.
steam-assisted gravity drainage Suncor’s Firebag SAGD project
completed at Joffre and Fort
(SAGD) project begins operation The Mallik gas hydrate production begins production.
Saskatchewan, Alberta, to the
for Alberta Energy Company at research project is launched in the
world’s two largest ethylene-based Oil Sands Quest begins
Foster Creek. Mackenzie Delta by an industry-
petrochemical plants. oil sands exploration and
government consortium.
Canada’s conventional heavy delineation programs on lands in
During this decade, the petroleum
oil production peaks at 572,500 Alberta Energy Company and Saskatchewan contiguous with the
refining industry invests billions to
barrels per day. PanCanadian Petroleum merge to Athabasca oil sands.
produce ultra-low sulphur gasoline
and diesel fuels, in accordance form Encana Corporation.
In Alberta, bitumen production Imperial Oil moves its head office
with new federal regulations. (271 million barrels) exceeds The Orphan Basin off the coast from Toronto to Calgary.
conventional oil production (264 of Newfoundland and Labrador
million barrels) for the first time. draws more than $670 million in Federal government sells its
exploration commitments. final 19 per cent ownership in
Petro-Canada.
2000
2000 2002 2005
PanCanadian Petroleum launches Heavy oil producers begin Increasingly oil sands operators
one of North America’s largest development and refinement and researchers explore non-
carbon dioxide (CO2) miscible flood of technologies such as vapour aqueous methods of bitumen
projects to enhance oil recovery extraction (VAPEX) and in situ extraction, looking at innovative
at Weyburn, Saskatchewan. combustion. ways to separate bitumen from
the oil sands with little or no
The use of automated drilling rig water use.
2001
technology increases in Western
The world’s first commercial SAGD Canada, providing new drilling
project begins operation at Alberta efficiencies.
Energy Company’s Foster Creek.

136
2005 2006 2007 2009

A record 24,752 wells are drilled Average annual production of all Imperial and ExxonMobil Canada Imperial Oil announces it is
in Canada. oil sands projects surpasses one acquire a multi-year exploration proceeding with the Kearl oil
million barrels per day. licence, covering more than sands project.
Encana and Apache conduct early 500,000 acres, to explore for
exploration for shale gas in the Industry consortium led by Chevron hydrocarbons in the Beaufort Sea Canada’s oil sands production
Horn River Basin in northeastern drills the Great Barasway F-66 in Canada’s North. reaches 313,000 barrels per day.
British Columbia. well in the Orphan Basin east of
Newfoundland. The well is drilled For the first time, British Columbia Suncor and Petro-Canada
Increasingly strong natural gas at 2,400 metres, setting a Canadian collects more revenue than merge. Their combined market
prices strengthen industry’s deep water drilling record. Alberta in land sales. capitalization is estimated at
focus on shale gas development $38 billion.
opportunities.
2007 2008 Production begins at Canadian
The White Rose oil field off the Alberta becomes the first World oil prices hit a new record Natural Resources Limited’s
coast of Newfoundland begins jurisdiction in North America to high of over $147 a barrel. Horizon oil sands mine.
production. legislate mandatory greenhouse
Alberta government issues its Commercial production begins at
gas reductions for large industrial
Suncor applies to build $10 billion first reclamation certificate for OPTI-Nexen’s Long Lake oil sands
facilities, including oil sands
Voyageur project to expand oil Syncrude’s 104-hectare Gateway project.
operations.
sands production. Hill area.
Canada receives its first LNG
Industry spends $300 million for
Growing industry acceptance Alberta government announces shipment at St.John, New
shale gas prospects in northeast
of SAGD technology enhances plan to spend $2 billion to support Brunswick.
British Columbia.
opportunities for oil sands large-scale carbon capture and
developers. Encana splits into two energy
Alberta government introduces a storage (CCS) projects.
companies, with Encana focusing
new oil and gas royalty program to
Irving Oil and Repsol YPF of Spain An industry consortium begins to on natural gas plays and Cenovus
increase government revenues.
begin developing an LNG import develop plans for a LNG export Energy becoming an integrated oil
and regasification terminal in New rock fracturing technology terminal at Kitimat, British company.
Saint John, New Brunswick. begins to open development Columbia.
of tight oil plays in Alberta and 2010
Husky Energy announces plans to Devon Canada’s Jackfish oil sands
Saskatchewan. Alberta government announces
proceed with $10 billion Sunrise project begins production, using
oil sands project northeast of Fort Canadian government announces only recycled or deepwell saline plans to change oil and gas royalty
McMurray. mandatory industrial targets water. rates to enhance the province’s
to address climate change and competitiveness in the oil and gas
reduce air pollution. sector.
2010 2010 2010 2011

The combination of horizontal Cenovus Energy commercializes Suncor receives approval from Cenovus Energy commercializes
drilling and hydraulic fracturing its wedge well technology, which Alberta regulators to expand its blowdown boiler technology
opens up development of shale is used to increase total recovery use of its new TRO™ tailings to improve efficiency and
gas plays in Canada. Shale gas of oil in SAGD operations while management approach, which reduce water use at its oil sands
development accounts for nine lowering environmental impact. involves converting fluid fine operations.
per cent of Canada’s total natural tailings more rapidly into a solid
gas production in 2010, and it is landscape. The process is expected
predicted that by 2020 it could to reduce tailings management
provide more than 40 per cent of time for oil sands.
the country’s natural gas needs.

137
2010 2011 2011 2012

Alberta exports about 1.4 million Suncor and Total partner to jointly Wildfires sweep through areas Shell Canada and MGM Energy
barrels a day of crude oil to the develop Suncor’s Fort Hills mining of northern Alberta, temporarily Corp. team up to drill the Canol
United States, supplying 15 per project and Voyageur upgrader and shutting down many oil and shale oil play in the Central
cent of U.S. crude oil imports. Total’s Joslyn mining project. gas projects and causing major Mackenzie Valley region of the
destruction to the town of Northwest Territories.
Suncor celebrates reclamation to a China National Offshore Oil Slave Lake.
solid surface of Tailings Pond One, Corporation (CNOOC) purchases
the first reclaimed tailings pond in OPTI Canada for $2.2 billion. Alberta sells a record $3.6 billion
the oil sands sector. in oil and gas rights, including
OPTI’s main asset is a 35 per cent $104 million in the oil sands.
France’s largest oil company, Total, interest in Nexen’s Long Lake oil
secures a stake in Canada’s oil sands project.
2012
sands, buying UTS Energy Corp. for
$1.5 billion. U.S. State Department delays its Federal and Alberta governments
decision on the Keystone XL oil announce plans to significantly
Shell’s Jackpine oil sands mine pipeline expansion until 2013. expand environmental monitoring
commences production. The proposed pipeline is intended in the oil sands region of
to deliver Canadian crude oil to northeastern Alberta.
Alberta sets a record for oil and refineries on the U.S. Gulf Coast.
gas land sale revenue of nearly National Energy Board begins
$2.4 billion, surpassing the TransCanada Pipelines begins public hearings for Enbridge’s
previous record of $1.8 billion set transporting crude oil on its proposed Northern Gateway
in 2005. Keystone pipeline from Hardisty, pipeline.
Alberta, to Cushing, Oklahoma.
The National Energy Board gives Cenovus Energy sends its first
a consortium, headed by Imperial Canadian Association of Petroleum shipment of crude oil (about
Oil, approval to build a $16 Producers introduces new guiding 250,000 barrels) to China from
billion natural gas pipeline from principles for hydraulic fracturing marine facilities in Vancouver.
the Mackenzie Delta to northern that relate to water management
Alberta. and water and fluids reporting China National Offshore Oil
practices for shale development. Corporation (CNOOC) proposes a
2011 $15 billion offer to buy oil and gas
Canadian government formally producer Nexen.
Oilsands Quest receives the first withdraws from the Kyoto Protocol
oil sands leases in Saskatchewan on climate change.
after converting portions of its Axe
Lake permits to leases.
The history of Canada’s oil and gas industry
Evolution of Canada’s Oil and 10 11 12
Gas Industry is a companion

publication to Our Petroleum
Challenge. Evolution describes
the petroleum industry’s
In the 19th century, southwestern Ontario was Canada’s petroleum-producing centre. The oil was refined into kerosene and other products.
Photo courtesy Imperial Oil Limited.
In the 1860s hundreds of oil wells dotted the landscape around Petrolia, Ontario. The wooden derricks were left in place after drilling and were used to
trial-and-error pioneering start

raise and lower tools needed to maintain the flow of oil from the wells. Photo courtesy Glenbow Archives, Calgary, Canada, NA-302-9.
the first oil boom hArd oilers
In 1859 self-proclaimed ‘Colonel’ Edwin Drake found a way to As the first drilling boom tapered off around Petrolia, experienced
produce large quantities of crude oil when he used a cable- Canadian drillers and their bosses took their skills to other new oil
tool drilling rig to punch into an oil reservoir at Oil Creek in fields around the world. The Canadian drillers called themselves
Chapter Two
Pennsylvania. His well was important because it penetrated a ‘hard oilers.’ It was certainly hard work, depending on luck as much
to the advanced technology of

North AmericA’s first oil compANy layer of rock into the pressurized oil below. Williams also drilled as geological knowledge, but the name may also have referred to the
through rock into a producing formation sometime in 1858 or 1859, hard rock through which they drilled. Beginning around 1874 and
In 1850, geologist Thomas Sterry Hunt of the Geological Survey of
Birth of an industry Canada reported seepages of crude oil in the swampy ‘gum beds’
although there is some uncertainty about exactly when he went
from digging to drilling. Crude oil was already being produced from
continuing for about half a century, the hard oilers worked in exotic
locales such as Russia, the Middle East, Indonesia and South America,
of Enniskillen Township, Lambton County, Ontario. A year later,
wells in Ontario and eastern Europe, but the publicity surrounding but they called Petrolia home.
businessman Charles N. Tripp of Woodstock, Ontario, founded the
Drake’s well unleashed the first real oil boom. It is often cited as
the 21st century.

International Mining and Manufacturing Company to exploit the
the beginning of the modern oil era.
asphalt beds and oil springs. It was the first registered oil company
The Canadian crude oil industry was born in North America. During the oil boom of the 1860s and 1870s, entrepreneurs set up about
in a boggy area of southwestern Ontario, 18 small, primitive refineries in and around the Enniskillen Township eArly refiNeries
Tripp obtained a chemist’s report indicating the crude oil could be
oilwells. By 1866, a thriving town also sprang up in the oil field; Petrolia, In the late 19th century, as oil fields were developed in southwestern
Enniskillen Township, in and around the used to produce solvents, lamp fuel and other chemicals. It prompted
sometimes spelled Petrolea in the early years, was formally incorporated Ontario and elsewhere around the world, the oil industry focused
him to build the first asphalt production plant, winning an honourable
neighbouring hamlets of Oil Springs and mention for this product at the Universal Exhibition in Paris in 1855.
as a municipality in 1874. However, most of the Ontario crude contained on making and selling kerosene, also known as lampolene. Paraffin,
undesirable sulphur compounds, which caused odours, and the products
Petrolia. From humble beginnings in the In the same year, Tripp sold his company to James Miller Williams, a had trouble competing with those from Pennsylvania and Ohio. In
grease and lubricating oil found ready markets, but the more volatile
products were considered a dangerous nuisance. Gasoline was often
1850s, the industry brought several decades carriage maker from Hamilton, Ontario. Williams soon discovered that addition, the output from most wells was small. just discarded as waste.
It is free to download as a PDF and

the deeper he dug, the more oil flowed into the hole. By 1858, his
of great prosperity and continues to produce 15-metre-deep well was producing significant quantities of crude oil.
The sulphur in ‘sour’ crude oil was a serious problem for the oil refining The first refineries were no more complicated than a tea kettle.
industry until 1888 when Herman Frasch, a German-American chemical
small amounts of crude oil more than a From the producing wells around Oil Springs and Petrolia, Williams’ engineer, invented a process to extract the sulphur compounds using
Crude oil was heated in a closed vessel to vapourize the lighter,
more volatile hydrocarbons. As the vapour cooled, the liquids would
century and a half after the first discovery. company transported crude oil 200 kilometres to Hamilton, refined copper oxide powder. The Frasch process was used after 1895 to treat condense. A little cooling would capture kerosene, while more cooling
it there and sold lamp oil and other products. It was the first fully petroleum products in the Canadian oil industry. would collect gasoline. The remaining heavy oil and coke – known as
e-book at www.centreforenergy.com.
integrated petroleum company in North America and Williams is the residuum – could be removed and burned to provide heat for the
often called the founding father of Canada’s petroleum industry. next cooking cycle. Processing residuum with chemicals produced
Tripp and Williams owed their successes in part to the work of lubricants, waxes and asphalt.
another Canadian. Between 1846 and 1853, Abraham Gesner of Although kerosene lamps would be widely used for another 50 years
James Miller Williams, a carriage
Halifax, Nova Scotia developed a technique for producing a new
GeoloGical Survey of canada
maker from Hamilton, Ontario, – and some are still lighting remote cabins today – the oil industry
was the ‘founding father’ of the synthetic lamp oil from coal. He obtained a patent on this product – The Geological survey of Canada (GsC) was established in faced the prospect of a slow decline after cities such as Toronto,
Canadian oil industry. originally called ‘keroselain’ but soon afterwards known as kerosene 1842. It was Canada’s first scientific agency and one of the Montreal and Ottawa introduced electric lighting in the 1880s.
He dug and drilled the first – and opened his first plant in New York in 1854. nation’s first government organizations of any kind. The GsC’s
commercial oil wells in initial focus was to look for coal and other minerals. Throughout
southwestern Ontario and In 1855 American chemist Benjamin Silliman Jr. applied the same
its long history, the GsC has played a key role in gathering,
established North America’s process, called fractional distillation to a sample of Pennsylvania Key Definition GAsolInE
recording and analyzing basic information about Canada’s
first integrated oil company. rock oil and found it produced high-quality lamp oil. Gasoline is a complex mixture of relatively volatile hydrocarbons, with or
Photo courtesy Library and Archives Canada.
natural resources and other aspects of the nation’s geology.
without small quantities of additives, suitable for use in spark-ignition engines.
SECTION 2 THE EARLY INDUSTRY EVOLUTION OF CANADA’S OIL AND GAS INDUSTRY

138
Glossary C
Carbon capture and storage (CCS) Capturing carbon dioxide before
it can be released into the atmosphere. CCS involves removing
CO2 during processing, compressing it and injecting it into a deep
A geological formation or using it in enhanced oil recovery projects
Abandonment Converting a drilled well to a condition that can be left
Carbon dioxide (CO2) A greenhouse gas produced by burning organic
indefinitely without further attention and will not damage freshwater
compounds and fossil fuels, respiration and decomposition. Most of
aquifers, potential petroleum reservoirs or the environment.
the industry’s direct greenhouse gas emissions are carbon dioxide.
Acidizing Injecting acids under pressure into the rock formation to
Casing A protective barrier used to isolate a wellbore from the
create channels that allow the hydrocarbons to flow more easily into
surrounding earth and water.
the wellbore.
Christmas tree An assembly of valves and fittings used to control the
API gravity A method of measuring the ‘weight’ of crude oil. The larger
flow of oil or gas from a well.
the API gravity, the lighter and less viscous the oil is. It is calculated
using the formula °API = (141.5/SG) – 131.5, where SG is the specific Coal Solid hydrocarbons formed primarily of the remains of land
gravity of the crude oil expressed in kilograms per cubic metre. plants that have been transformed by heat and pressure resulting
from deep burial.
Associated gas Natural gas that is produced from the same reservoir
along with crude oil, either as free gas or in solution. Coalbed methane (CBM) Natural gas formed and trapped in
coalbeds.
Coiled tubing Continuous, jointless, high-pressure rated hollow steel
B tubing or pipe used in drilling or well stimulation activities.
Barrel The standard North American unit of measurement for oil. Coking A process that removes carbon, creating ‘coke.’
A barrel contains 42 U.S. gallons, 159 litres or 0.159 cubic metres. Cold heavy oil production with sand (CHOPS) Conventional in situ
Commonly abbreviated as bbl. production methods used in oil sands and heavy oil deposits too thin
Batteries Field facilities that process conventional crude oil, to make steam injection economic.
separating natural gas, crude oil and water. Completion The process of preparing a well for production. This
Benzene A volatile organic compound that occurs naturally in generally involves installing production casing, employing a service
petroleum and is also produced by some refining processes and by rig, installing production tubing and finally perforating the casing to
combustion of fuels in engines. Used as a petrochemical feedstock. allow crude oil or natural gas to enter the wellbore.
Biodiversity The measurable diversity of plant and animal species. Condensate A natural gas liquid that consists of pentanes and
heavier liquid hydrocarbons obtained from processing natural gas for
Biogas Natural gas formed from the anaerobic decomposition of market.
organic material such as plant and animal matter, manure and
sewage at or near the earth’s surface. Consolidated tailings A slurry created by adding gypsum to the clay
and water left after bitumen has been removed from oil sands during
Bitumen Unconventional crude oil that exists in a semi-solid or solid the separation process.
form that cannot flow or be pumped to the surface without being
heated or diluted. Conventional crude oil Crude oil with API gravity above 10° and that
can flow or be pumped to the surface without being heated or diluted.
Blowout An uncontrolled flow of gas, oil or other fluids from a well.
Conventional natural gas Naturally occurring gaseous petroleum,
Blowout preventer (BOP) A series of specialized valves, shears and consisting primarily of methane (CH4) found in a reservoir that does
rams used to seal and control pressures and fluids during drilling, not need extensive treatment for the gas to flow to the surface.
completion and remedial operations.
Conventional reservoirs Primarily sandstone and limestone
Bonus payment A one-time amount paid at land sales for Crown reservoirs where the permeability is sufficient to allow the fluids
mineral rights. Bonus payments are in addition to rental fees. to flow without extensive treatment. Fluids within a conventional
British thermal units (Btu) The standard unit of measurement reservoir generally consist of natural gas overlying crude oil overlying
for energy in the U.S. and Imperial systems. One Btu is the heat water, where the natural gas supplies the pressure that causes the
required to raise the temperature of one pound of water one degree gas and oil to flow to surface through the wellbore.
Fahrenheit. Cores Continuous, cylindrical rock samples.
Brownfield sites Abandoned or underused commercial or industrial Cratonic Relating to a relatively stable, undisturbed part of the
properties with known or suspected environmental contamination Earth’s continental crust.
that can be redeveloped.
Crown rights Mineral or surface rights held by the government.
Approximately 90 per cent of mineral rights in Canada are held by
either the federal government or provincial governments
Crude oil A black, brownish or amber liquid that is a complex mix
of hydrocarbons and associated impurities. See also: Light crude oil,
Medium crude oil, Heavy crude oil, Extra heavy crude oil.

139
Cumulative effects The total impact on the environment of all dioxide can be injected into a reservoir to ‘enhance’ or increase oil
activity in a region, past, present and future. production.
Cutlines Lines cut through wooded areas to provide space for seismic Exploration licence Provides the right to explore for, test and develop
cables and geophones. petroleum resources; leads to a significant discovery licence which
Cuttings Rock chips cut by the drill bit and brought to the surface by leads to a production licence.
the drilling mud. Extra heavy crude oil Crude oil with an API gravity below 10° and
Cyclic steam stimulation (CSS) A three-phase in situ production often requires heating or dilution to be pumped to the surface. Extra
method involving a period of steam injection, a period during which heavy crude oil sinks in water while light, medium and heavy crude
the steam heats and softens the bitumen and a period of producing oil floats.
the softened bitumen.
F
D Farmout An arrangement whereby the owner of a lease assigns
some portion (or all) of the lease to another company for drilling.
Degraded oil Crude oil in which the simpler hydrocarbons have been
digested (degraded) by bacteria, leaving the heavier, more complex Feeder lines Pipelines that transport crude oil and other products
hydrocarbons, sulphur compounds and metals. such as natural gas liquids from batteries, processing facilities and
storage tanks in the field to transmission pipelines.
Derricks Load-bearing tower-like structures over a natural gas or
crude oil well that holds the hoisting and lowering equipment for Feedstock Raw materials that are processed into usable goods;
drilling, testing and reworking wells. natural gas liquids are feedstocks for petrochemical manufacturing.
Deviated drilling See: Directional drilling Fire flood An in situ production method in which oxygen is injected
into the reservoir and ignited to heat the bitumen so that it can be
Diesel fuel A petroleum distillate fuel generally consisting of
pumped to the surface.
between 10 and 15 carbon atoms per molecule. Diesel has a higher
energy content than gasoline and a higher boiling point. Flaring Burning of natural gas through a vertical stack to safely dispose
of the gas during drilling, testing, producing and processing operations.
Directional drilling Any controlled drilling that is purposely deviated
from the vertical. Floating production, storage and offloading (FPSO) vessel A vessel
used to store oil produced by an offshore platform before transferring
Distribution pipelines Pipelines that deliver natural gas to homes,
the oil to a tanker or pipeline.
businesses and some industries.
Flowline See: Gathering pipelines
Downhole assembly The equipment at the downhole end of the drill
string, including drill bits, collars (heavy drilling pipe that puts weight Fractionating tower A tall steel tower layered with perforated
on the bit) and mud motors. trays where fractionation occurs. Crude oil is heated to the boiling
point at the base of the tower and as the vapours rise and cool, the
Downhole motor See: Mud motor
components of crude oil condense at different temperatures and are
Downstream The sector of the petroleum industry that includes collected on the tray at the corresponding height of the tower.
refining and marketing.
Fractionation Separating the various components, or ‘fractions,’ of
Drill string A column or string of drill pipe. crude oil.
Drilling mud A mixture of clay and water or oil circulated down the Fracturing (fracking, fracing) See: Hydraulic fracturing
inside of the drill pipe and up the outside between the drill pipe and
Freehold Mineral rights that are not owned by the Crown. Mineral
the wall of the bore hole to cool the bit, remove drill cuttings and
rights owned by the federal government on behalf of First Nations or
control pressure.
in National Parks, and by individuals and companies.
Dry hole A well not capable of producing commercial quantities of oil
or gas. The pore spaces of dry holes are often water-saturated.
G
Gas hydrates Frozen, crystalline solids comprising gas molecules
E
contained within a lattice of water molecules. The most common
Emissions intensity The ratio of emissions to a measure of activity form of gas hydrate is methane hydrate. Gas hydrates are found on
or output. For example, a facility upgrading bitumen would be able to ocean floors and in the Arctic.
measure its CO2 emissions against the volume of crude oil produced,
Gasoline A petroleum distillate fuel generally consisting of between
providing its emissions per barrel of oil.
five and 12 carbon atoms per molecule. Gasoline has a lower energy
Energy density The amount of energy stored in a substance, usually content than diesel and a lower boiling point.
expressed as energy per unit mass or energy per unit volume.
Gathering pipelines A pipeline that gathers products from wells and
Enhanced oil recovery (EOR) Any method that increases oil moves them to oil batteries or natural gas processing facilities.
production by using techniques or materials that are not part of
normal pressure maintenance. For example, natural gas or carbon

140
Geophones Receivers that pick up seismic energy reflected off I

subsurface geologic features such as the boundaries between two
In situ recovery From the Latin for ‘in place’; oil production that uses
rock types.
heat or solvents to decrease the viscosity of bitumen while it is still in
Geophysical surveys Searching and mapping the subsurface the reservoir, enabling it to be pumped to the surface.
structure of the Earth’s crust using geophysical methods to locate
Infill drilling Wells drilled between established producing wells on a
probable reservoir structures capable of producing commercial
lease in order to increase production from the reservoir.
quantities of natural gas or crude oil.
Injection wells The top wells in steam-assisted gravity drainage
Geophysics Magnetic, gravitational and density data gathered to
operations. These inject the steam that heat formations.
model subsurface features such as basins, structures, stratigraphy
and geological boundaries. Intermontane Situated between mountain ranges.
Greenhouse gases Atmospheric gases that absorb and emit infrared
radiation. The primary greenhouse gases emitted by the oil and gas
industry are carbon dioxide (CO2) and methane (CH4). K
Gross domestic product The total dollar value of all goods and Kelly On a rotary drill rig, a square or polygonal pipe that fits through
services produced over a given time period. a slot in the rotary table and turns the drill string and bit.
Kerosene A heating oil used occasionally in cooking and
transportation. One of the three main products produced by
H upgrading. Also called paraffin.
Heavy crude oil Crude oil with an API gravity below 22.3° and Kick When fluids with a higher pressure than that exerted by the
contains a smaller proportion of natural gasoline and diesel fuel drilling mud enter the wellbore.
components and therefore requires more extensive refining to make
transportation fuels.
Heavy fuel oil A petroleum product used primarily as a heating fuel L
by industry, businesses and institutions in Canada, as well as a fuel
Land management The process of managing the use and
for electricity generation and as marine fuel.
development of land.
Horizontal drilling Drilling a well that deviates from the vertical and
Lease An agreement between two or more parties where the owner
travels horizontally through a producing formation.
of the surface and/or mineral rights grants another party the right to
Hydraulic fracturing A method of improving production in which drill and produce petroleum substances in exchange for payment.
a fluid is pumped down a well at high pressure to create cracks or
Light crude oil Crude oil with an API gravity higher than 31.1° and
fractures in the rock. Following this, proppant, usually consisting of
flows easily through wells and pipelines. When light oil is refined, it
sand, ceramic beads or resin-coated granules, is also pumped down
produces a large quantity of transportation fuels such as gasoline,
the well and into the fractures to prop them open, allowing the oil or
diesel and jet fuel. Light oil commands the highest price per barrel.
gas to move more freely through the reservoir and into the well.
Liquefied natural gas (LNG) Natural gas in its liquid state, which
Hydrocarbons A class of organic compounds consisting only of carbon
makes it feasible and economical to transport over long distances.
and hydrogen that are the basis for crude oil, natural gas and coal.
LNG is restored to its original gaseous form through a process called
Hundreds of products are made by separating and sorting hydrocarbon
regasification.
molecules, then re-combining or further processing them.
Hydrocracking A process that adds hydrogen during upgrading.
Hydrogen sulphide (H2S) A poisonous chemical compound found in M
‘sour’ natural gas. Flaring converts the hydrogen sulphide into sulphur
Marketable natural gas Natural gas that meets pipeline
dioxide (SO2).
specifications and which can be used as fuel for heating, generating
Hydrophones Geophones used in marine seismic surveys, towed on electricity or transportation and as raw material for manufacturing.
the surface behind boats.
Measurement while drilling (MWD) Technology that transmits
Hydrotransport Where mined oil sands are mixed with hot water to information from downhole measuring devices to the surface while
form a slurry that is piped to the processing plant. During transport, drilling is ongoing.
the bitumen begins to separate from the sand. Hydrotransport
Medium crude oil Crude oil with an API gravity between 22.3° and
replaced conveyor belts in oil sands mining.
31.1°. Medium crudes are priced lower than light crudes because they
Hydrotreating A process used to stabilize crude oil products in the yield fewer high-end products such as gasoline and diesel, and are
process of being upgraded and remove impurities such as sulphur. more expensive to refine.
Methane (CH4) A greenhouse gas that is the primary component of
natural gas.
Midstream The sector of the petroleum industry that includes
processing and transportation.

141
Mineral rights The rights to explore for and produce the resources P
below the surface.
Packers Valves and rubber sleeves used to isolate producing zones.
Miscible flood An enhanced oil recovery process in which a fluid
Perforate To make holes through the casing opposite the producing
capable of mixing completely with the oil it contacts is injected into
formation to allow the oil or gas to flow into the well.
an oil reservoir to improve recovery.
Permeability The capacity of reservoir rock to transmit fluids; how
Mud See: Drilling mud
well the pore spaces of a reservoir are connected to allow fluid flow
Mud motor A downhole drilling motor that is powered by the force to the well.
of the drilling mud pushed through the motor by the mud pumps at
Petrochemicals Chemicals derived from petroleum that are used
the surface.
as feedstocks for the manufacture of a variety of plastics and other
Multilateral drilling Where several horizontal wells are drilled from a products such as synthetic rubber.
single horizontal wellbore.
Petroleum The general term for solid, liquid and gaseous
Multi-stage hydraulic fracturing Where a reservoir is fractured in hydrocarbons.
stages with each stage being isolated to concentrate the pressure,
Petroleum Administration for Defense Districts (PADD) A system
creating a more effective fracture zone.
developed to organize petroleum product rationing in the United
Multi-well pads Drilling pads from which more than one well is drilled. States during the Second World War. Today, the system is primarily
used to track and analyze crude oil and petroleum product moving
into, out of and within the United States.
N Petroleum and natural gas rights The right to explore, develop and
produce crude oil and natural gas on a defined area.
Naphtha A light petroleum component used mainly to make
gasoline. One of the three main products produced by upgrading. Pigs Cylindrical devices inserted into a pipeline to inspect the pipe or
to sweep the line clean of water, rust or other foreign matter. Pipeline
National Energy Board An independent federal agency established
inspection and cleaning devices are called pigs because early models
in 1959 to regulate international and interprovincial aspects of
squealed as they moved through the pipe. A ‘smart pig’ is equipped to
Canada’s oil, gas and electric utility industries.
record the existence, location and severity of anomalies in a pipeline.
Natural gas Naturally occurring gaseous petroleum. Natural gas
Porosity The capacity of a rock to hold natural gas, oil or water; the
is mostly methane (CH4), although it usually occurs in nature as a
open or void spaces within a rock, usually expressed as a percentage
mixture with other hydrocarbons such as ethane (C2H6), propane
of the rock volume.
(C3H6), butane (C4H10) and pentane (C5H12), and with other substances
such as carbon dioxide (CO2), nitrogen (N2), sulphur compounds or Primary energy The energy contained in natural substances before
helium (He). conversion to another form. The energy in crude oil is primary; the
energy in gasoline is secondary energy.
Natural gas liquids (NGLs) Ethane, propane, butane and
condensates. These liquids are the primary feedstocks for Primary recovery The production of oil and gas from reservoirs using
petrochemical production. the natural energy available in the reservoirs and pumping techniques.
Nitrogen oxides A group of binary compounds of oxygen and Progressing cavity pump (progressive cavity pump) A pump that
nitrogen or a mixture of these compounds. Can be produced as a contains a screw-like rotor that progresses a fluid along a pipe as the
byproduct of upgrading and refining. rotor turns.
Non-governmental organizations (NGOs) Organizations that operate Proppant Sand grains, ceramic beads or resin-coated granules
independently of government. This includes environmental groups, pumped down a well after fracturing to prop the fractures open.
human rights advocacy organizations, social change agencies and Proved reserves Known reserves that can be recovered under existing
development organizations economic conditions using existing technology.
Pumpjack Surface equipment placed over a producing oil well
consisting of a pivoting beam, one end of which is attached to a
O mechanism that rocks the beam, the other end of which is attached
Oil sands An unconventional reservoir comprising unconsolidated to the rod string. Pumpjacks supply the motion that operates bottom-
sand, silt and clay grains. Each sand grain is surrounded by a layer of hole pumps.
water and a film of bitumen.
Orphan well A well which has no legally responsible or financially
able party to deal with its abandonment and reclamation.
Overburden In oil sands mining, the material lying on top of the oil
sands deposit.

142
R Smart pigs See: Pigs

Reclamation Removing all surface equipment and facilities and Specific gravity A method of measuring the ‘weight’ of crude oil using
restoring the surface to its equivalent condition prior to use. the metric density scale (kilograms per cubic metre).
Recovery factor The percentage of crude oil or natural gas in a Social licence to operate The approval or acceptance that companies
reservoir that can be recovered economically. must continually obtain from communities and landowners for their
operations or project plans.
Regasification The process of restoring liquefied natural gas to its
original gaseous form. Solution gas Natural gas dissolved in crude oil in the reservoir.
Reserves The amount of oil and natural gas which is known to exist Sour gas Raw natural gas with a relatively high concentration
in a particular area. of sulphur compounds. All natural gas containing more than
one per cent hydrogen sulphide is considered sour.
Reservoir A porous and permeable underground rock formation
containing a natural accumulation of crude oil or natural gas that is Sour oil Crude oil containing free sulphur, hydrogen sulphide or other
confined by impermeable rock or water barriers, and is separate from sulphur compounds. Sour crude oil generally contains more than 0.5
other reservoirs. per cent sulphur.
Resources Remaining total volume of recoverable oil and natural Stakeholders Anyone who is affected by or has an interest in
gas. This includes deposits not currently economical to produce, a company’s actions, including residents, employees, investors,
deposits not yet discovered but presumed to exist and deposits that customers, governments, non-governmental organizations, academic
may be recovered with future technology. institutions and communities.
Rights reversion Reversion of petroleum and natural gas rights back Steam-assisted gravity drainage (SAGD) An in situ recovery
to the Crown. Deep rights reversion is the reversion of rights below technique for extracting heavy oil or bitumen that involves drilling
the deepest formation proved to be capable of production. Shallow a pair of horizontal wells one above the other; one well is used for
rights reversion is the reversion of petroleum and natural gas rights steam injection and the other for production.
above the shallowest formation proved to be capable of production. Steam injection Where steam is injected into an oil well to reduce
Rod string A string of steel rods used to provide up-and-down or the viscosity of oil or soften bitumen and enhance or enable
rotary motion for a bottom-hole pump to lift oil to the surface. production.
Rotary table A heavy, circular casting mounted on a steel platform Stimulation Stimulating the formation by physical or chemical
just above the rig floor which rotates the drill string and turns the bit. means so that hydrocarbons can move more easily to the wellbore
through the pores or fractures in the reservoir.
Royalties The owner’s share of production or revenues retained by
government or freehold mineral rights holders. The royalty is usually Straddle plant A gas processing plant located on or near a gas
based on a percentage of the total production and the rate may vary transmission line that removes natural gas liquids from the gas and
according to the selling price. returns ‘dry’ gas to the line.
Stratigraphic test well A well drilled to obtain information
about subsurface geology or structure and not necessarily to find
S hydrocarbons.
Secondary energy A form of energy that has been transformed from Submersible pump A bottom-hole pump that is submerged in an oil
another form of energy, e.g. when natural gas is used as fuel for well to pump oil to surface.
electricity generation, natural gas is a form of primary energy and Substrate A layer or layers of earth and rock beneath the surface.
electricity is a form of secondary energy.
Sulphur (S) An element found as an impurity in hydrocarbon
Sedimentary rocks Rocks formed by the accumulation of sediment. production. Canada is one of the world’s largest producers and
Sedimentary rocks contain porous spaces capable of creating exporters of elemental sulphur, which is used for making fertilizers,
hydrocarbon reservoirs. pharmaceuticals and other products.
Seismic surveys Studies done to gather and record patterns of Sulphur dioxide (SO2) A gas formed when hydrogen sulphide (H2S)
induced shock wave reflections from underground layers of rock: used is flared. Like H2S, SO2 is toxic; however, it disperses more effectively,
to create detailed models of the underlying geological structure. resulting in lower ground-level concentrations.
Service rig A truck-mounted rig, usually smaller than a drilling rig Surface casing The first string of casing put into a well; it is
that is brought in to complete a well or to perform maintenance, cemented into place and serves to shut out shallow water formations
replace equipment or improve production. and as a foundation for well control.
Shale gas Natural gas found in reservoirs composed primarily of shale. Surface lease The agreement between an oil and gas company and
Shale oil Conventional crude oil found in reservoirs composed the land owner that sets out compensation for the use of the land.
primarily of shale. Surface rights The rights to access areas to conduct seismic surveys,
Shot point The ground location where seismic energy is directed into build roads, prepare well-sites and install pipelines.
the subsurface. Surveys See: Geophysical surveys
Sidetrack A part of a well deviated around a problem area.

143
Sustainable development The 1987 publication of the United Upgrading Using temperature, pressure and catalysts to break
Nations report ‘Our Common Future’ defines sustainable development large hydrocarbon molecules into smaller ones. Adding hydrogen or
as ‘development that meets the needs of the present without removing carbon then creates molecules found in lighter oil.
compromising the ability of future generations to meet their own
Upstream The sector of the petroleum industry that includes
needs.’ This concept calls on companies to address the long-term
exploration, drilling and production.
environmental, economic and social aspects of their development
activities. Commonly known as ‘sustainability.’
Sweet crude oil Crude oil containing little or no sulphur, hydrogen
V
sulphide or other sulphur compounds. Sweet crude oil generally
contains less than 0.5 per cent sulphur. Vapour extraction The use of solvents such as ethane, propane and
butane instead of steam in in situ oil sands production.
Sweet natural gas Raw natural gas with a relatively low
concentration of sulphur compounds. Natural gas containing less Vibroseis Producing seismic shock waves by striking the ground with
than one per cent hydrogen sulphide is considered sweet. heavy metal plates attached to specialized vehicles.
Synthetic crude oil A mixture of hydrocarbons similar to a light crude Viscosity The resistance to flow or ‘stickiness’ of a fluid.
oil created by upgrading bitumen to an API gravity of 31° or higher. Volatile organic compounds (VOCs) Gases and vapours, such as
benzene, released by petroleum refineries, petrochemical plants,
plastics manufacturing and the distribution and use of gasoline.
T VOCs include carcinogens and chemicals that react with sunlight and
nitrogen oxides to form ground-level ozone, a component of smog.
Tailings The waste material from oil sands mining and processing,
consisting of water, clay, sand and residual bitumen.
Tar sands See: Oil sands
W
Template A structure that is cemented in place on the sea floor to
Waterflooding Injecting water into a reservoir to maintain pressure
establish a connection between an offshore rig and the wellbore. It
and push the oil to production wells.
contains blowout preventers, so the well can be sealed off if there are
problems on the platform or the rig has to be moved. Wellbore A hole drilled or bored into the earth, usually cased with
metal pipe, for the production of gas or oil.
Tight gas Natural gas found in sandstone reservoirs having very
low porosity and therefore needing more sophisticated technology Wellhead Equipment used to maintain surface control of a well.
to produce. Wildcat well A well drilled in an area where no oil or gas production
Toolpusher The rig manager or drilling supervisor. exists nearby.
Top drives Hydraulic or electric motors that are suspended in the Wireline logging tools Specialized tools or equipment, such as
derrick above the rig floor to rotate the drill string and bit. packers or measuring devices, designed to be lowered into the well
on a small-diameter steel cable called a wireline. Logging tools record
Transmission pipelines Pipelines that transport oil and natural gas
depth-related details of an oil or gas well such as thickness, porosity,
within a province and across provincial or international boundaries.
permeability and fluid type.
Trap Impermeable rock that halts the migration of oil and gas,
causing them to accumulate.
Tripping The process of removing the drill string from the hole to
change the bit and running the drill string and new bit back into
the hole.
U
Unconventional crude oil Degraded oil, such as bitumen, that
cannot be pumped to the surface without heating or dilution and that
requires upgrading prior to refining.
Unconventional natural gas Natural gas found in unconventional
reservoirs such as shale or tight sand.
Unconventional reservoirs Reservoirs other than porous and
permeable sandstone and limestone, such as shale and tight sands
that require hydraulic fracturing.
Underbalanced drilling Drilling where the hydrostatic pressure of
the drilling fluid is less than the reservoir pressure of the formation
being drilled, preventing drilling fluids from entering and possibly
damaging the formation.

144
Index Page Page
A Page Page
Abandonment 42, 113 Canadian Oil Sands Network for Research and Development 56, 101
Aboriginal relations 29, 30, 33, 103, 116, 117 Carbon capture and storage (CCS) 49, 102
Acid rain 69 Carbon dioxide 11, 13, 49, 69, 79, 110, 112
Acidizing 47 Careers 22, 23
Air drilling 38 Case studies 101–104, 109, 110, 113, 114, 116, 117
Air guns 33 Casing failures 56
Air quality See: Emissions Casings 35, 40, 56
Alberta 8, 15, 20, 28–30, 42, 44–46, 48–50, 52–54, 56, 61, 67, 69, Catalytic reforming 83
72, 78, 85, 91, 97, 98, 101, 102, 103, 107, 109, 110, 113, 114, 116
Centre for Oil Sands Innovation 102
Alberta Energy Resources Conservation Board 44, 56, 69
Chemistry Industry Association of Canada 98
Alberta Environment and Sustainable Resource Development 107
Circulating System 39, 125
Alkylation 83
Climate change 99, 110
American Petroleum Institute 8
Coalbed methane (CBM) 11, 15, 61
Annulus 39, 40
Coiled tubing 38
Anticlines 12
Coking 65
Associated gas 65
Completion 40
Condensates 69
B Conventional crude oil 8, 10, 15, 18, 47, 49, 65
Benzene 67, 86 Conventional natural gas 8, 11, 15, 19, 58
Bibliography 123 Core samples 27, 42
Biodiversity 109 Cracking 65, 83
Bitumen See also: Oil sands 8, 13, 15, 50–58, 65, 101, 113 Crown rights 28–30
In situ 54, 56, 101, 113, 114 Crude oil 7, 8, 10, 12, 13, 15, 17, 18, 20, 21, 41, 42, 47–54, 56,
Mining 48, 50–54, 56, 85, 89, 113 61–63, 65–67, 69, 71, 72, 76, 78–80, 83, 84, 88, 101, 116, 117
Upgrading 8, 48, 50, 65–67, 69, 83 Battery 65, 66
Blowout preventers 35, 40 Conventional 8, 10, 15, 18, 47, 49, 65
Distribution 71, 72, 76, 78, 80
Blowouts 40, 45 Extra heavy oil See: Bitumen
British Columbia 15, 20, 29, 30, 42, 44, 45, 58, 60, 61, 67, 72, 76, Fields 18, 61
86, 91, 103, 107, 110, 117 Heavy oil 8, 65, 66, 76
Butane 11, 83, 85 Light oil 8, 10, 76
Marketing 72, 76
Medium oil 8, 10
Origins 12, 13
C
Pipelines 20, 50, 63, 71, 72, 76, 78, 79, 116, 117
Canada’s Oil Sands Innovation Alliance 56, 101 Prices 8, 76
Canada’s resources 15 Processing 65–67, 69
Production 17, 20, 47, 49, 50, 52–54, 56, 57, 61–63, 80
Canadian Association of Petroleum Producers 44, 49, 60, 98, 103, 105
Products 7, 8, 10, 20, 65–67, 83–85
Canadian Centre for Energy Information 103 Refining 83–86
Canadian Energy Pipeline Association 78, 107 Reserves 8, 15, 18
Canadian Fuels Association 109 Resources 14, 15
Spills 69, 71, 76, 78, 79, 86, 96, 114, 116
Canadian Gas Association 102 Synthetic 65–67
Traps 12

145
Page Page
Types 8 Environmental protection 33, 42, 45, 49, 56, 57, 59, 64, 69, 71,
Unconventional 8, 10, 12, 13, 15, 50–58, 65 78, 86, 91, 95–117
Cutlines 33 Air 69, 86, 98, 109
Assessments 33, 71, 107, 113–115
Cuttings 27, 39 Land 33, 64, 69, 71, 78, 91, 109–113
Marine environment 45
Regulation 42, 45, 59, 106
D Spill response 69, 114–116
Deepwater drilling 42–44, 61–63 Water 56, 57, 59, 69, 113, 114
Derrick 35 Ethane 11, 85
Diesel 8, 83–85, 89, 102 Exploration 27–58, 107, 109, 113, 114
Exports 7, 20, 21, 58, 72, 80
Directional drilling See also: Horizontal drilling 38
Extra heavy oil See: Bitumen
Distillation 83, 84
Downstream See: Marketing, Refining
Drilling 35–45, 47, 49, 52, 56, 58, 59, 61, 63, 107, 113, 114 F
Mud 35, 38, 39, 45 Faults 12
Types of rigs 35–38
Federal 28–30, 33, 45, 49, 78, 85, 86, 97–99, 102, 103, 107, 109,
Drillstem testing 42 110, 114
Dry gas 61, 67 Flaring 45, 69
Flowlines 63
E Fracking See: Hydraulic fracturing
Earth Summit 97, 98 Fuel 7, 8, 66, 76, 83–86, 89–91, 102

Diesel 8, 50, 83, 85, 89, 102
ECO Canada 23 Formulation 85, 102
Economics 7, 20, 95, 101, 105 Fuel oil 66, 76, 83–85, 89, 90
Education 22, 23, 103, 116, 117 Gasoline 7, 8, 76, 83–85, 86, 89–91, 102
Natural gas 76, 90, 91
Electricity 89
Propane 11, 12, 49, 53, 63, 65, 67, 78, 85, 91
Emissions 11, 13, 45, 49, 69, 78, 79, 86, 98, 99, 109, 110, 112, 114
Canada’s emissions 112
Carbon dioxide 11, 13, 49, 69, 79, 110, 112
G
Emissions intensity 110
Greenhouse gases 110, 112 Gas hydrates 11, 58, 61, 134
Sulphur dioxide 45, 69, 109 Gas transmission system 72, 91
World emissions 112 Gasoline 7, 8, 76, 83–85, 86, 89–91, 102
Employment 7, 20, 22, 23, 117 Gasoline prices 89, 90
Energy literacy 103, 105 Geophones 33
Energy policy 103 Geophysical surveys 28
Energy Policy Institute of Canada 103 Government agencies 42, 56, 107, 127
Enform 116 Greenhouse gases 110, 112
Enhanced oil recovery (EOR) 49, 110
Environment 23, 33, 44, 45, 56, 59, 69, 71, 78, 86, 91, 95–117
Exploration 33 H
Marketing 91 Health and safety 102
Processing 69
Heavy oil 8, 65, 66, 76
Production 56, 59
Refining 86
Transportation 71, 78

146
Page Page
History 97–99, 131–137 Light oil 8, 10, 76
Petroleum industry 131–137 Liquefied natural gas (LNG) 20, 75–77
Sustainability 97–99
Technology milestones 131–136 Logging 42
Hoisting system 38
Horizontal drilling 49, 52, 58, 59 M
Hydraulic fracturing 15, 47, 49, 58–60, 114 Manitoba 15, 61, 67, 85, 91
Hydrocarbons See also: Crude oil, natural gas 7, 8, 12, 13 Maps 16, 18, 19, 29, 48, 74, 75, 80, 81, 87
Hydrocracking 65 Marketing 8, 11, 12, 17, 20, 72, 76, 89–91, 112–114
Hydrogen sulphide 45, 67, 69 Customers 72, 89–91
Hydrophones 33 Natural gas 8, 11, 12, 17, 20, 72, 89–91
Petroleum products 8, 20, 89
Hydrotransport 50, 51
Measurement 120
Hydrotreating 65
Medium oil 8, 10
Methane 11, 61, 67, 85
I Midstream See: Processing, Transportation
Illustrations 8, 10–13, 16–21, 23, 27, 29, 30, 32, 35–41, 48, 51, 52, Mineral rights 28–30
54, 57, 59, 62, 63, 66, 67, 71, 74, 75, 80, 81, 84, 87, 89, 90, 91, 95,
Mining 48, 50, 51, 56, 57, 113
96, 99, 105, 107, 112
Miscible flooding 49
Imports 20, 72, 76, 77
Mud 35, 38, 39, 45
Industry standards 107
Multi-stage hydraulic fracturing 58
Infill drilling 49
Injection wells 52
In-line inspection 73, 79, 114 N
In situ 52–56, 101, 113, 114 Naphtha 66, 83, 84
Isomerization 83 Natural gas 7, 8, 11–13, 15, 19, 20, 45, 58–63, 65, 67–69, 72,
75–79, 81, 85, 88, 90, 91, 112
Coalbed methane (CBM) 11, 61
J Conventional 8, 11, 15, 19, 58
Distribution 72, 76, 78, 81, 90, 91
Jantzi Social Index 101
Fields 15, 19, 61, 63, 76
Gas hydrates 11, 61
Leaks 69, 78, 79, 112
K Marketing 76, 91
Kerosene 89 Origins 12, 13
Pipelines 72, 76–79, 91
Kicks 40
Prices 76, 91
Kyoto Protocol 99 Processing 45, 67–69, 77, 78, 85
Production 17, 20, 45, 58–61
Products and uses 7, 85
L Reserves 15, 17, 19
Labour 22, 23 Resources 11, 14, 15, 61
Sales 20, 76, 91
Land dispositions 29 Sour gas 45, 66–69
Land management 109, 113 Sweet gas 67
Landmen 28 Tight sands 61
Traps 12
Leaks 69, 78, 109, 112, 114, 116
Unconventional 8, 11, 12, 15, 20, 58–61
Lease 29, 30
Natural gas liquids (NGLs) 67, 85, 91

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Page Page
Natural gas vehicles 91 Pipelines 8, 11, 16, 20, 22, 23, 28, 30, 40, 44, 47–51, 57, 63, 65, 67,
69–79, 81, 90, 91, 99, 102, 103, 107, 108, 110, 112–114, 116, 117
New Brunswick 11, 15, 58, 61, 63, 76, 77
Construction stages 71
Newfoundland and Labrador 15, 20, 22, 23, 33, 44, 61, 63, 107 Crude oil 69, 71, 72, 74, 76, 78–80
Northwest Territories 67, 72, 107 Efficiency 79, 110
Nova Scotia 11, 15, 20, 33, 44, 58, 61, 63, 67, 76, 107 Emissions 78, 79, 110, 112
In-line inspection 73, 79, 114
Nunavut 107 Integrity 73, 78, 79, 102, 114
Liquefied natural gas terminals 20, 75–77, 81
Natural gas 11, 20, 40, 47, 58, 63, 67, 70–73, 75–79, 81, 88, 91,
O 102, 107, 110, 114, 117
Offshore drilling 38, 42–45 Safety 78, 79, 107, 114, 116
Deep water 43, 44 Spill and leak prevention 44, 45, 58, 59, 69, 79, 85, 96, 114
Hebron 61, 63 Prince Edward Island 85
Hibernia 61, 63 Processing 28, 40, 44, 45, 50, 63, 65, 67, 71, 72, 88, 102, 107, 110,
North Amethyst 61, 63 113, 114, 117
Sable Offshore Energy Project 61, 63, 76
Production 7, 8, 11, 12, 15–17, 20, 22, 23, 27–29, 30, 33–35, 38–40,
Shallow water 44, 63
42, 44–50, 52, 54, 56, 58, 59, 61–63, 65–67, 69, 72, 76, 77, 80, 81,
Terra Nova 61, 63
83–85, 93, 99, 107, 110, 113, 114, 117
Oil See: Crude oil
Production casing 40
Oil sands 8, 13, 15, 18, 28, 50–57, 64, 101, 102, 107, 110, 117
Production facilities 23, 27, 61, 65, 110
Cyclic steam generation 54
Generating steam 54 Propane 11, 12, 49, 53, 63, 65, 67, 78, 84, 85, 91
In situ 52–56, 101, 113, 114 Proppant 47, 58
Mining 48, 50, 51, 56, 57, 113 Proved reserves 15
Projects 26, 44, 48, 63, 76, 105, 110
Separation 50 Public consultation 59, 71
Steam-assisted gravity drainage (SAGD) 6, 46, 28, 52–55, 100, 114 Pumps 38, 39, 47, 49, 52, 56, 71, 72, 102, 112
Upgrading 8, 22, 50, 54, 64–67, 69, 83, 110 Pumping 40, 47, 50, 56, 58
Ontario 11, 15, 67, 72, 81, 85, 86, 117
Orphan wells 42
Q
Quebec 11, 15, 16, 20, 59, 61, 72, 76, 85, 91
P
Pentanes 8, 11, 12, 65, 67, 83
Perforation 23, 40, 47, 83 R
Reclamation 23, 42, 45, 51, 52, 69, 71, 107, 113
Petrochemicals 8, 11, 12, 67, 72, 76, 83–85, 98
Recovery methods 28, 49
Petroleum 7, 8, 11–13, 20, 22, 23, 27, 29, 32, 34, 44, 45, 47, 50,
60–62, 64–66, 69–72, 78, 79, 85–87, 89, 91, 95, 97, 99, 101, 102, Refining 10, 12, 20, 22, 76, 82, 83, 85–87, 89, 90, 107, 112–114, 116
105, 107, 109, 110, 112, 113, 116 Distillation 83, 84
Petroleum Administration for Defense Districts (PADD) 80 Downstream 91, 107, 112–114, 116
Petrochemicals 8, 11, 12, 67, 72, 76, 98
Petroleum Human Resources Council of Canada 22
Products 7, 8, 10, 12, 20, 21, 50, 62–72, 76, 79, 96, 98, 102, 105,
Petroleum Industry Human Resources Committee 22, 23 107, 112, 116
Petroleum products 8, 10, 12, 20, 21, 50, 62–72, 76, 79, 83–87, 89, Refineries 20, 65, 67, 69–72, 76, 80, 82, 83, 85–87, 89, 91, 102,
96, 98, 99, 102, 105, 107, 112, 116 109, 113, 114
Regulations 85, 86, 105, 114
Petroleum Services Association of Canada 22
Research and development 56, 61, 79, 101, 105, 116
Petroleum Technology Research Centre 101, 110
Reserves 8, 15, 17–19, 35, 44, 50, 62, 103
Pigs See also: Smart pigs 72, 73, 79, 116

148
Page Page
Reservoirs 8, 10–13, 15 26–28, 32, 38, 40, 42, 47, 49, 50, 52–54 Biodiversity 109, 116
58–61, 63–65, 67, 101, 103, 110, 114 Cleaner products 98, 102, 105
Resources 7, 8, 12–16, 20, 26–29, 31, 38, 40, 44, 46–50, 56, 58, 61, Climate change 79, 96, 98, 99, 101, 103, 105, 110, 117
64, 65, 69–71, 86, 88, 95, 96, 98, 99, 102, 103, 107, 109, 113, 114, Compliance 45, 96, 102, 105, 107
116, 117 Cumulative effects 116
Definition 97
Revenues 7, 20, 29, 30, 33, 96
Energy efficiency 45, 79, 85, 86, 98, 99, 102, 105, 109, 110, 112
Rotating Systems 37 Energy literacy 103, 105
Royalties 7, 20, 28, 29, 33, 42, 107 Engaging communities 103, 105
Governance 101, 105
History 97–99
S Key forces 96
Land management 29, 101, 109, 113
Safety 7, 23, 33, 36, 39, 44, 45, 78, 79, 86, 89, 95, 96, 98, 100–102,
Policy 103, 105
105, 107, 109, 114, 116
Regulations 27, 42, 44, 45, 49, 59, 69, 78, 85, 86, 95, 96, 99, 102,
Salt dome 12 105, 106, 107, 113, 114
Saltwater 8, 60, 61, 65, 69 Reporting performance 104, 105
Research and development 56, 61, 79, 101, 105, 116
Sandstone 11–13, 35
Socially responsible investor indexes 96, 101, 105
Saskatchewan 12, 15, 16, 20, 30, 35, 42, 49, 61, 67, 70, 72, 91, 107 Spill and leak prevention 42, 69, 71, 76, 78, 79, 86, 112–114, 116
Sedimentary basins 11, 13, 15, 16, 27, 33, 44, 61 Water management 49, 96, 102, 105, 113
Worker safety 45, 86, 98, 101, 102, 105, 107, 116
Seismic 22, 27, 28, 30, 32, 33, 44, 102, 109, 113
Synthetic crude oil 8, 12, 50, 54, 65, 69, 72
Service rigs 40
Shale gas 7, 11, 15, 19, 20, 38, 40, 41, 44, 46, 49, 58, 59, 61, 62, 77,
81, 93, 95, 99, 103, 114
T
Shale oil 8, 10, 15, 18
Tailings 50, 51, 56, 57, 101, 113
Smart pigs 73, 79, 116
Tailings ponds 50, 56, 57, 113
Smog 86
The Maritimes Energy Association 22
Social licence to operate 95, 96, 102
Topping plants 83
Socially responsible investor indexes 96, 101, 105
Trade 20, 58
Solution gas 65, 66
Training 22, 23, 45, 69, 86, 103, 114, 116
Sour gas 44, 45, 64–69
Transportation 7, 8, 20, 22, 25, 38, 50, 66, 70–81, 83, 85, 86, 88, 89,
Spills 42, 69, 71, 76, 78, 79, 86, 112–114 116 91, 95, 102, 107, 110, 112–114, 117
Stakeholders 28, 71, 95, 98, 99, 103, 105, 116, 117 Pipelines 8, 11, 20, 22, 23, 28, 30, 40, 44, 47–51, 63, 65, 67,
69–79, 90, 91, 99, 102, 103, 107, 108, 110–117
Steam-assisted gravity drainage (SAGD) 28, 52–55, 114
Rail 63, 70–72, 78
Steam injection 47, 52, 54 Truck 50, 63, 65, 70–72, 78, 89
Stimulation 38, 47, 54, 58, 61 Traps 12, 27, 32
Storage 49, 59, 63, 66, 69, 71, 72, 76, 77, 86, 110, 116, Tripping 35
Straddle plants 67
Sulphur 8, 11, 13, 20, 65–67, 69, 76, 79, 85, 102, 109
Sulphur dioxide 45, 69, 109 U
Surface casing 35, 44 Unconventional crude oil 8, 10, 12, 13, 15, 50–58, 65
Surface rights 27, 28, 30, 42 Unconventional natural gas 8, 11, 12, 15, 20, 58–61
Sustainability See: Sustainable development Underbalanced drilling 38, 40, 61
Sustainable development Upgraders 48, 67

Aboriginal relations 23, 29, 30, 33, 103, 109, 116, 117 Upgrading 8, 22, 50, 54, 64–67, 69, 83, 110
Actions and benefits 105
Air quality 45, 67, 69, 86, 98, 103, 109, 116

149
Page Page
Upstream See: Drilling, Exploration, Production
Used oil 91
V
Vibroseis 22, 32, 33
Volatile organic compounds 45, 86, 109
W
Waste heat 101, 110
Water quality 56, 69, 86, 107, 113, 114, 116
Water use 49, 53, 56, 59, 60, 65, 86, 95, 102, 113, 114
Wellbores 35, 38–40, 42, 47, 49, 50, 53, 58, 59
Well completion 40
Well control 40
Western Canada Sedimentary Basin 11, 15, 16, 27, 44, 61
Wildlife 33, 56, 71, 107–109
Wood Buffalo Environmental Association 109
World Business Council for Sustainable Development 98
Y
Yukon 107

150
Notes

Designed and produced by NATIONAL Studio. Printed by McAra Printing using
green printing technologies such as low VOC vegetable-based inks. Printed on
Sterling Premium (cover) and Pacesetter (inside pages) with 10 per cent post
consumer waste. ISO 14001 environmental accreditation.
Our Petroleum
Challenge
Canadian Resources.
Global Markets.
Eighth Edition
Oil and gas development takes

place across Canada, often in
remote areas. In this photograph,
the sun sets on a natural gas
battery in rural Alberta.
ISBN 1-894348-15-X Photo courtesy Brian Harder Photography.
PRINTED IN CANADA | FEBRUARY 2013

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Copyright 2012 Canadian Centre for Energy Information

Canada’s petroleum industry is about connections. In literal terms, its

OUR PETROLEUM CHALLENGE EIGHTH EDITION

OUR PETROlEUM CHAllENGE EIGHTH EDITION

Introduction 95 Upstream – exploration, gas liquids and refined