What is natural gas?

One fuel, many uses

Natural gas is one of Canada’s most important forms of energy, an essential part of our daily lives and a pillar of our economy. Its use makes economic, environmental and technological sense.

Versatility is the hallmark of natural gas. In Canada, it is now the leading source of heat for homes and businesses, and continues to be adopted by more and more homebuilders and enterprises each year. High-efficiency furnaces, water heaters, clothes dryers, stoves, fireplaces, barbecues, heat pumps and integrated heating-cooling devices also operate on natural gas. The use of natural gas to generate electricity is one of the fastest growing uses of this fuel.

Natural gas is a naturally occurring petroleum. Petroleum is the general term for solid, liquid or gaseous hydrocarbons. Hydrocarbons are a class of organic compounds consisting of only carbon and hydrogen — the basis of crude oil, natural gas and coal.

Natural gas is mostly methane (CH4), although it can occur in nature as a mixture with other hydrocarbons such as ethane(C2H6), propane (C3H8), butane (C4H10) and pentane (C5H12) and with other substances such as carbon dioxide, nitrogen, sulphur compounds and/or helium. Methane remains in a gaseous state at relatively low pressures, while ethane, propane, butane and pentane condense into liquids at different but relatively low temperatures and pressures. These condensed gases are known as natural gas liquids (NGLs). Natural gas containing more than one per cent hydrogen sulphide is known as sour gas and must be processed to remove the hydrogen sulphide before it can be used. Processing also removes most of the NGLs, condensate and non-energy components such that pipeline-ready natural gas is more than 95 per cent methane.

How is natural gas used?

Many factors contribute to the widespread use of natural gas as a fuel source. It is clean, efficient, convenient, safe, abundant and economical. Natural gas is an energy source for

• electricity generation
• steam heat production
• co-generation
• industrial uses such as processing forest products and manufacturing steel, fertilizers and cement
• domestic uses such as fuel for space and water heating, climate control systems, appliances and vehicles
• raw materials in the manufacture petrochemicals and as a source of hydrogen in heavy oil and bitumen upgrading

Economic contribution of natural gas

Canada’s natural gas sector continues to expand, offering prospects for industrial development and increased government revenues. Together with the oil sector, it provides an estimated 750,000 direct and indirect jobs for Canadians. As well, the oil and gas industry invested $50 billion in 2007.

Since the federal and provincial governments hold most of the rights to minerals in Canada, oil and gas production companies must pay those governments an owner’s “royalty” as well as fees for land rentals and land sale bonuses. In 2007, this amounted to $24 billion.

Royalties are a significant source of revenue for provincial and territorial governments. This is particularly true in Alberta and British Columbia, the two largest natural gas producers, and in the Atlantic provinces. Natural gas exploration and production are also on the rise in the Yukon Territory and the Northwest Territories. Additional reserves have been found in the Arctic Islands, most of which are now part of the territory of Nunavut.

The development of new gas supplies is important because demand is growing due to population growth and the resulting demand for natural gas as a source of energy. Demand is also increasing since gas has become the fuel of choice for generating electrical power. Not only is it highly efficient and cleaner than other energy sources, it is relatively easy to receive regulatory approval to build small gas-powered generating facilities around cities and towns.