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Natural Gas Processing in Canada

1.       Introduction

Natural gas, is also called “the prince of hydrocarbons,” is an energy game changer which top ranked among growing energy sources. It is colorless, odorless, shapeless, lighter than air and contains a mixture of several hydrocarbon gases, which are organic compounds consisting of some combination of hydrogen and carbon molecules.

The first contact of human beings with natural gas is a mysterious one, nevertheless there is no doubt that it is known and used in almost all of ancient countries such as Greeks, India and Persia since around 1,000 BC [37]. The Chines have been using natural gas since around 500 BC, they were transporting the gas which was produced from shallow wells in bamboo pipes in order to produce salt from brine in gas-fired evaporators [3]. In the late 17th century, natural gas produced from coal was commercialized in Britain and was used to light streets and houses. In the early 18th century same concept was adapted in the North America. The major boom in natural gas usage happened after World War II, when engineering advances allowed the construction of reliable, safe and long-distance pipelines for natural gas transportation [3].

First time in Canada, natural gas was discovered in New Brunswick in 1859 [10], since, a vast endowment of natural gas resources was discovered and Canadians were skilled in extracting, processing and transporting of natural gas. The natural gas industry not only has been providing hundreds of thousands of direct and indirect jobs but also has a vital role in every aspect of the Canadian lifestyle and a key economic driver.

Canada is the fifth largest natural gas producers after United States, Russian Federation, Iran and Qatar [2]. All of Canada’s natural gas exports go to the United States, making it the largest foreign source of U.S. natural gas imports. Canada had 76.7 Tcf of proven natural gas reserves at end of 2016 [2]. The country produced 152 Bcf of natural gas in 2016 and is the second largest producer of natural gas in the Western Hemisphere, after the United States [2]. Whereas Canada exports more natural gas than it imports, the gap between the two is shrinking as a result of decreasing Western Canadian exports to the United States and Eastern Canada through an integrated pipeline network.

In Canada, the primary use of natural gas are in industrial (54.1%), residential (26.6%), and commercial (19.3%), respectively [12]. Natural gas can generate directly power and heat or can chemically altered to produce a wide range of useful products. In contrast with other fossil fuels, it burns cleaner with more efficiently, while producing significantly fewer harmful pollutants than other fuels into the atmosphere. Best of all, it can do all of this at very competitive costs.

Just as coal gave way to oil in last century, inevitably the era of oil is poised to give way to natural gas. That may seem extreme, after all the greatest challenge of this shift is natural gas transportation. Unlike other fossil fuels, natural gas cannot be loaded on a ship or train for transportation from its source to the end user. It requires expensive pipelines, which are uneconomic over very long distances, or complicated conversion systems that either cool the gas into liquid form or compress the gas to higher pressures. Technology advances and declining associated costs have finally allowed gas to economically overcome these challenges to become the fuel of the future. It has come frontline of the international energy debate due to increasing demand in many countries and the worldwide consumption of natural gas is forecasted to double by 2035 [1].

Herein, in this article we show, in the big picture perspective, the principles of natural gas processing, in terms of formation, exploration, production, transportation, consumption, principal products and components. Also, some common jargons such as conventional, unconventional, sweet or sour natural gas are explained. Then, the evolution history of Canadian natural gas industry is briefly reviewed and major natural gas consumers are analysed and also future outlook of Canadian natural gas industry is discussed in terms of economic as well as environmental impacts.

2.       What is natural gas?

Natural gas is the cleanest burning primary fossil fuel and it is known as a hydrocarbon which made up of the elements hydrogen and carbon, plus impurities. Depending on type and location of reservoir, the natural gas composition can vary. Typically, raw natural gas contains primarily methane (C1H4, commonly written as CH4) with decreasing quantities of ethane (C2H6), propane (C3H8), butane (C4H10), pentane (C5H12) and heavier hydrocarbons(C5+) also known as condensate. Furthermore, it could contain non-hydrocarbon gases such as carbon dioxide (CO2), hydrogen sulphide (H2S), nitrogen (N2), oxygen (O2), mercaptans (methanethiol, ethanethiol, etc.) and traces of rare gases such as helium (He) or argon (Ar) as well as water. Collectively, the gas composition depends on the geological area, as well as the reservoir location, deposit type and depth.

Methane is the main component of natural gas, usually accounting for 65%–95% of the total volume produced. If natural gas contains more than 95% methane, it is so called lean gas, and it will produce few liquids when brought to the surface. Natural gas containing less than 95% methane and more than 5% of heavier hydrocarbon molecules is so called rich gas [25]. Moreover, methane is the simplest hydrocarbon component in natural gas and because it is lighter, containing the fewest number of carbon atoms, it produces less energy when burned than heavier components, such as ethane and LPGs. The heavier, the hydrocarbon component, the more carbon molecules are present, and the more heat generated when it is burned.

Because the value of the gas is proportional to the heat and energy the gas can produce, thus the value of the hydrocarbon increases as the proportion of heavier non-methane components increases.

All of impurities, especially CO2 and H2S, must be removed from the natural gas stream prior to sale. CO2 and H2S can corrode pipelines and are significant components of air pollution. Also, natural gas mixture may contain inert gases such as argon, nitrogen and helium. These gases are neither toxic nor corrosive, but their presence reduces the overall heat energy contained in the natural gas.

3.       How is natural gas formed?

There are contrary theories on the origin of hydrocarbons, the organic and the inorganic theories are more widely held and scientifically studied. Though, it is commonly accepted that natural gas has been generated from organic matters (marine fossils, from the simplest plankton and single-celled life forms to the more complex crustaceans and fish species) contains carbon molecules that have been deposited in geologic periods and embedded along with inorganic matter at a considerable depth below today earth’s surface [27]. Over millions of years, because of high temperature, pressure and compaction, the organic material gradually degrade into hydrocarbon compounds and sufficient volumes of accumulations may form natural gas reservoirs over time [25].

The evolution and nature of a specific reservoir has a direct correlation with the history of the reservoir. Basically, the same organic matter could have evolved into coal, heavy oil, light oil and natural gas [25]. The difference is the age of the reservoir which has direct correlation within depositional history, history of temperature and pressure, and certainly increase with depth.

There may exceptions to the following, but typically depths of 1,000 meters or less are likely to contain heavy oil with nearly no gas. Oil becomes lighter as the depth increases, which means that gas coexists with oil. Gas can be in dissolved in the oil or it can be in the form of a gas-cap on top of the oil zone. As depth increases, more gas is expected. Around 3,000 to 4,000 meters depth mostly light oil coexist with substantial quantities of gas, which, when separated from oil at the surface, will evolve into 500 to 1,000 scf/stb (standard cubic feet per stock tank barrel). Reservoirs contain almost exclusively natural gas at greater depths such as 5,200 meters and certainly over 6,100 meters [27].

Regardless of popular belief, natural gas is not found in vast underground pools. This hydrocarbon (oil and/or gas), along with natural water, are found inside sedimentary rock volumes in between the grains of the rock. A classic example could be a kitchen sponge, which appears to be solid, but once it is squeezed, liquid drains out. In the same way, rocks may appear solid, but contain liquids inside the void spaces between rock grains.

As explained, hydrocarbon reservoirs, are the result of sedimentary processes that happened over an extensive geological history. A substantial portion of all hydrocarbons found on earth are embedded in sedimentary rocks. Sedimentary rocks are much more likely to have possessions that allow natural gas formation (source rock) and be stored (reservoir rocks) between their grains.

As a result of density differences, oil will accumulate above the water layer, and gas will accumulate in the highest part of the trap, which formed a gas cap above the liquid layers. Natural gas components may also dissolved within the oil layer, segregating on the surface when the pressure is reduced.

4.       How is natural gas resources found and produced?

The best way to settle this question is properly described in below sections as exploration, drilling and production.

Exploration

The exploration processes for oil and gas resources are the same. Until 1970s, successful drilling more or less was a hit-and-miss operation. Even in presumably abundant areas new wells, were termed “wildcat” with only 10% discovery ratio. In another word, one good well and nine dry holes for every ten drilled wells was considered very attractive [27].

Early natural gas explorer simply looked for areas where gas was seeping to the surface or had been encountered accidentally when drilling water wells. This unsophisticated but locally effective technique led to the discoveries Eastern Alberta natural gas in 1883, Turner Valley crude oil and natural gas in 1914 [9].

Later on, geophysicists were using physical properties measured either on the surface or inside wells to determine the property and structure of rocks below the surface. Geophysics has vividly changed the way reservoirs are discovered. Simple gravity and magnetic surveys on the surface were the first geophysical methods and due to methodology’s inaccuracy, companies found commercial quantities of hydrocarbons less than one-half of the.

The understanding of geological structures also grew as the industry expanded. Underground mysteries were gradually unravelled by explores and each waves of exploration was based on an improved understanding of the complex geology and hydrocarbon distribution. Each time, a larger reservoir was found at a greater depth than the previously discovered producing pool.

Modern exploration methodology and production technology have been playing very critical role in developing the industry as we know it today. The development of seismic technology may be the most significant development in the hydrocarbon industry since the discovery of the first oil wells. The seismic survey is originated from attempts during the First World War to locate enemy artillery by measuring sound waves traveling through the ground.

Seismic measurements involve the generation of a seismic event, somehow a mini-earthquake that is transmitted downwards from the surface. The first Canadian seismic survey was conducted in the Turner Valley field in 1929 [19]. In the early days of the technology, several thousand kilograms of explosives were used. More accurate recording instruments, developed during the World War II, made geophysics a full partner in petroleum exploration. A seismic survey led to Shell Canada’s major natural gas discovery at Jumping Pound, west of Calgary, in 1944 [10,19]. Presently, instead of explosives, heavy-duty thumper trucks create vibrations by hammering the ground which produce a repeatable and reliable range of frequencies [27].

Drilling

The objectives of drilling are to reach the target zone with minimum time and associated cost, in order to deliver a safe, firm and usable borehole for further usage. When promising features have been identified, either by magnetic or by surface observation, or seismic interpretation, an exploration well may be drilled in order to confirm the reservoir discovery or more likely a non-discovery. Besides, drilling is among the most important and complex operations in the oil and gas industry.

The process of drilling exploration and production wells are deceptively simple and very identical. However, the amount of information known before drilling is the main difference between the two types of wells. Basically, exploration drilling is very risky due to limited information about the well and reservoir conditions. Commonly, drilling involves a lot of equipment and instrumentation (e.g., drill bits and pipes/strings, casings, etc), fluids (e.g., drilling fluids/muds, completion fluids, cement slurries, formation fluid, etc), and movements (e.g., equipment movement, fluids and solids/rock cutting movement, and circulation). The drilling process can be operated in a drilling rig that contains all the necessary equipment.

The most well-known drilling method is rotary drilling where a roller-bit is attached to a drilling string or pipe. While rotating the drill string, the drill bit penetrates the ground, drill pipes are continuously added to the surface joint, extending the reach of the drill string and keeping the drill bit at the end of the assembly. Wells may reaches different depths, as deep as 4,500 to 6,500 meters, and eventually hits the targeted pay zone. At the same time, drilling mud is pumped down through the drilling pipe in order to stabilize exposed formation, control the pressure, provide hydraulic impact, prevent fluid loss, and bring the rock cuttings to the surface through the annulus formed between the drill pipe and the created hole [27]. During this process, different sizes and types of drilling bits might be needed depending on the formation rock hardness and borehole size requirements. Typically the drilling bit size is smaller when the drilling depth is deeper. Similarly, mud weight has to be changed along with the drilling depth, because at different geologic layers and depth, the formation pressure and permeability are different and typically, the higher pressure is required the heavier mud weight. To prevent sections of well from collapsing (structural integrity) after drilling and also to provide isolation between different zones, heavier pipes, so called casings, are lowered into the wellbore and cemented in place. Typically, different types of casing (e.g., surface casing, conductor, intermediate casing, etc) are placed in the hole and cement is placed between the outside of the casing and the borehole.

In summary, better technologies have increased chances of natural gas discovery and also, market has been changed due to advancements in drilling technology. Collectively, from 1955 up to 2016 over 210,000 natural gas wells were drilled and completed in Canada. However, it may or may not find commercial quantities of natural gas, and by end of 2016 about 136,800 of operated gas wells were in western Canada, including conventional and unconventional reservoirs [8].

Production

Once the well is drilled and completed successfully, it is ready to produce fluids. Basically, natural gas production methodology is a function of the production stage in the life of the particular reservoir as well as the type of gas reservoir. The produced hydrocarbons in the gaseous phase are from two main conventional sources [2, 25, 27];

  1. Gas is found in association with oil. Almost all oil reservoirs will produced some natural gas, which is produced at the surface with oil and then separated in appropriate surface facilities.
  2. Gas is produced from reservoirs that contain primarily gas. Historically, such reservoirs are considerably deeper and hotter than oil reservoirs.

Likewise, natural gas can produced from unconventional sources such as, Coalbed methane (CBM), tight gas as well as Shale gas [15, 22, 24].

In Canada, the upstream gas industry comprises have been engaging in activities such as exploration, drilling and production of raw natural gas. Some upstream companies also own and operate gathering pipelines as well as field processing facilities.

The midstream natural gas industry companies have been operating, gathering pipelines, natural gas processing plants which remove impurities and natural gas liquids such LPG and NGL and natural gas storage facilities [12]. Purified natural gas is then transported from processing plants through pipelines to transmission pipelines or consuming areas.

The downstream natural gas industry comprises have been distributing natural gas through transmission pipelines and distribution companies. Eventually, local distribution companies (LDCs) receive gas from pipelines and then distribute it to consumers via extensive networks of local distribution pipelines.

5.       What is natural gas processing and principal products?

So the purpose of raw natural gas processing and conditioning primarily is not only for producing pipeline quality natural gas for distribution to residential, commercial and electricity sectors as fuel intake, but also number of components in natural gas are often separated from the bulk gas and sold separately as a petrochemical, refinery and oil sands feed-stocks. In another word, the natural gas processing is the separation of constituents from natural gas for the purpose of making salable products and also for treating the residue gas to meet required specifications.

Thus, any natural gas processing facilities is typically designed to meet the sales quality standards specified by customers such as certain compositional and pressure specifications. Those quality standards vary from pipeline to pipeline and are classically a function of a pipeline system’s design, downstream interconnecting pipelines, and end users base.

The processing of raw natural gas into pipeline-quality natural gas can be quite complex and usually involves several processes. The type and extent of processing depend on the raw natural gas composition and the specifications of the consumer. Typically, any processing facility equipped with three basic type of raw natural gas processing units as follow;

  1. Purification: Removal of impurities, valuable or not, such as water, carbon dioxide (CO2), hydrogen sulfide (H2S), helium, nitrogen, mercury and solids (such as sand, clay, wax and asphaltenes) that hinder the use of the gas as an industrial or residential fuel. CO2 and H2S, known as acid gases, are highly corrosive compounds, and they have to be removed before further processing to prevent corrosion. Besides, H2S is poisonous, so it has to be removed for safety reasons. In addition, CO2 and H2S amount in natural gas must be controlled due to gas market specification limits. Water removal (dehydration) is an essential in any natural gas processing facility, not only because of corrosion issue but also the formation of hydrates (ice-alike compounds of hydrocarbon and water) in natural gas systems which can block and damage processing units as well as pipelines.
  2. Separation: Splitting out of components that have greater value as petrochemical, refinery and oil sands facility feed-stocks (e.g., NGL, C5+), stand-alone fuels (e.g., LPG).
  3. Liquefaction: Increase of the energy density of the gas for storage or transportation. The amount of LPG and NGL extracted from the natural gas stream before transportation is a function of pipeline specifications. Besides, NGL, LPG and Condensate can be recovered as liquids in the processing units and sold separately.

Depending on the conditions, a process may be categorized as either purification or separation. For example, if a small amount of acid gas(H2S+CO2) is removed, incinerated or vented to the atmosphere, the process is purification, but if large amounts of acid gas are removed and converted to elemental sulphur(low-priced commodity), the process is considered separation.

Removing NGLs from natural gas is typically achieved by first segregating methane from the liquids, continued by separating the remaining into ethane, propane, butanes, and condensate. The most common method of removing methane is refrigeration.

After purification stage, the raw natural gas stream is dropped to the temperature at which the heavier natural gas components liquefy and separate from methane, which liquefies at much lower temperatures. This technique can separate more than 95% of butane and heavier components from methane. After methane removal, the remaining mixture stream is sent to fractionation units where the temperatures are increased, letting the different hydrocarbon components to reach their boiling point in distinct stages. Each stage in this process is named for the component that boils off, starting with the removal of lighter ethane, propane, butanes and condensate; respectively. The individual fractionators are typically used in the following order:

  • Deethanizer to segregate ethane from the stream
  • Depropanizer to segregate propane from the remaining mixture
  • Debutanizer to segregate butanes from the condensate

By proceeding from the lightest hydrocarbon component to the heaviest, it is relevantly easy to extract the different by-products. Gas marketing companies or LNG facilities then purchase methane for sale to its customers, while petrochemical and other consumers purchase the separate hydrocarbons. Typically, principal products (by-produces) of a sweet gas processing plant are as following:

  • Methane: the component can transported by pipeline as gas product for end consumers or converted to LNG or GTL. Liquefied natural gas (LNG) is the light hydrocarbon portion of natural gas, predominantly methane, which has been liquefied [26]. LNG is super-cooled methane that is maintained as a liquid at or below -161°C at 1 atm. LNG occupies 1/600th of its original volume and therefore easier to transport (usually by special ships). Also, methane could be converted to liquid fuels through gas to liquids (GTL) processes.
  • LPG:liquefied petroleum gas (LPG) refers to primarily propane or butane, either separately or in mixtures, which is maintained in a liquid state under pressure within the confining vessel [26].
  • NGL: Natural gas liquids (NGL) are those hydrocarbons liquefied at the surface in field facilities or in gas processing plants. Natural gas liquids include ethane, propane, butanes, and condensate, some of these hydrocarbons are liquid only at low temperatures or under pressure.
  • Condensates: condensates are low density liquid mixer of pentanes and other heavier hydrocarbons, and they have to be stabilized before sell. By definition, stabilized condensate is the condensate that has been stabilized to a definite vapor pressure in a fractionation system [26].

6.       What is conventional and unconventional natural gas production?

More attention have been paid to what are so called “unconventional” natural gas supplies as the conventional sources of natural gas in Canada become more depleted. Basically, conventional natural gas is more or less the same as unconventional gas in terms of quality and composition. Mainly, unconventional natural gas is differentiated by its location. Thus, unconventional natural gas is found in places that previously could not be accessed, and indeed, new advanced exploration and drilling techniques have opened a new era in the natural gas exploitation.

Generally, conventional gas is relatively difficult to find but easy to produce, while unconventional gas is easy to find but relatively difficult to produce.

Conventional Natural Gas

Large initial capital investments is typically required for a conventional gas field development compared to the low operating expenses. Conventional natural gas reservoirs are generally found at greater depth, either associated with crude oil (associated gas) or in reservoirs that contain little or no crude oil (non-associated gas).

Almost all oil reservoirs except those classified as extra heavy oil or oil sand have been producing some associated gas at the surface facility. All associated gas has to be stripped from the crude oil at atmospheric pressure prior to a commercial pipeline or a tanker shipping. The gas produced in this fashion is known as “associated gas”.

Unconventional Natural Gas

When the term unconventional gas was coined, it was referred to the rock type and geological setting rather than the gas itself. Presently, it is implied to a reservoir that offers more operational and economical obstacles compared to a conventional reservoir. Collectively, shale gas, tight gas sands, along with coal bed methane (CBM) are called commercialized unconventional natural gas resources. Despite, massive gas hydrates resources in Canada, due to production complication and high production cost, these unconventional natural gas resources are untapped yet.

  • Shale gas

Shale gas potential revealed due to advances in horizontal drilling technology as well as hydraulic well fracturing (fracking). It is mostly found trapped in layers of ultra-low permeability organic sedimentary shale rocks and considered unconventional because it is trapped within reservoir rock whose pores are not well connected, making it hard for the gas to flow through the rock to a well.

Combination of technological advancements in drilling (long-reach horizontal well bores) and completion techniques (multistage hydraulic fracturing) have been enabled commercial production from shale gas unconventional sources. In this method after a horizontal well was drilled, the reservoir rocks will be fractured by pumping pressurized water, mixed with small amounts of sand and additives, to open pathways through and then release natural gas.

Natural gas production from shale is one of the most quickly growing trends in energy exploration and production. Canada has been producing shale gas since 2008, reaching 4.1 Bcf/d in 2015, and currently among the United States, China, and Argentina have commercial shale gas production [20]. In addition, Canada has about 8% of the World technically recoverable shale resources [12]. Shale gas resources are found in Alberta, British Columbia, Manitoba, New Brunswick, Nova Scotia, Ontario, Quebec, Saskatchewan and the territories.

  • Tight gas

Tight gas is a term commonly used to refer to low-permeability reservoirs that produce mainly dry natural gas [25]. Nonetheless, the definition of a tight gas reservoir is a function of many economic and physical parameters. The most common “tight gas” is formed and found trapped in sandstone, limestone or carbonates formations with very low permeability.

Tight gas potential exposed due to advances in horizontal/vertical drilling technology and hydraulic well fracturing (fracking). In order to produce natural gas economically from a tight natural gas reservoir, a large hydraulic-fracture treatment is required. Also, the number and locations of wells to be drilled, as well as the drilling and completion procedures for each well have to be optimized.

In contrast of an individual-well basis, a well in a tight natural gas reservoir will produce less gas over a longer period of time than a well in a conventional reservoir. Also, many more wells (closer well spacing) must be drilled compared with a conventional reservoir.

Proven tight gas resources are primarily in Alberta and British Columbia and to a lesser extent in Saskatchewan, Quebec and the Maritimes as well as territories.

  • Coal bed methane (CBM)

As the coalification process happened millions of years ago, decomposing organic material formed methane gas that remains trapped within the coal layer. Consequently, the coal bed acts as both the source rock as well as the reservoir rock. Methane gas produced from coal seam beds is called coal bed methane (CBM) and in terms of hydrocarbon components is similar to the gas produced from conventional gas reservoirs [5, 25].

Much of coal occurs close to the surface and this makes exploration and production inexpensive, but less productive. Firstly, CBM was produced to allow safer mining conditions.

Wells drilled in coal seam beds are hydraulically fractured and allow for the production of desorbed methane. CMB is “sweet” because it lacks toxic hydrogen sulfide. Consequently, it requires little processing before it is transported and marketed like conventional natural gas.

CBM resources are found in the three western provinces, Yukon, NWT, and the Maritimes.

  • Gas Hydrates

In simple term, in places like marine subsea floor sediments, gas hydrates could form when water and natural gas combine at high pressure and low temperature. Gas hydrate is a possibly massive, but yet untapped Canadian unconventional energy resource.

Suggestions are that gas hydrate underlies coastal areas off the west, north and east coasts of Canada, and that there are also substantial amounts beneath the permafrost in the Arctic and moreover some estimates suggest that the total amount of gas hydrate may exceed all conventional natural gas resources [24].

7.       What are sour and sweet natural gas?

H2S, CO2 and other sulphur compounds, such as mercaptans, are known as acid gases and may require partial or complete removal in natural gas processing facility in order to meet the regulations requirement in terms of safety and environment as well as corrosion and pipeline required specifications.

Sour Natural Gas

Mainly, it is referring to the sour smell of sulphur and by definition, natural gas containing undesirable quantities of H2S, mercaptans, and/or CO2 are so called sour natural gas [26].

H2S is a highly toxic and flammable gas. At concentrations as low as 10 part per million volume (ppmv) can irritate the nose, eyes and throat. It is heavier than air and may migrate considerable distances to a source of ignition. The human nose can detect H2S in concentrations as low as 0.02 ppmv, but cannot be relied on to detect hazardous concentrations. Also, CO2 is 50% heavier than air and is colorless, odorless and non-flammable.

Sour natural gas usually require treatment to remove acidic components prior to sale and numerous processes have been developed and applied in order to remove acidic components (primarily H2S and CO2) as well as other impurities from sour natural gas.

Sulphur exists in sour natural gas principally as H2S and has to be removed. The process for removing acidic components from a sour natural gas stream is so called sweetening process. Then, the removed acid gas stream can be flared, incinerated, or predominantly fed to a sulphur recovery unit. A sulphur recovery unit is functioning with two main purposes; reducing emission acid gas as well as producing elemental sulphur as a valuable by-product which can be utilized in different industries such as mineral refining, fertilizer and pulp and paper.

In Canada, the very first major sour natural gas reservoirs were found near Turner Valley, southwest of Calgary in 1924. At the same time a sort of sweetening plant was built without any sulphur recovery and the removed acid gas was either vented or flared. Such practices were common in Alberta until the 1950s. In 1944, a major sour gas reservoir is discovered at Jumping Pound in the foothills west of Calgary and in 1952, the very first sulphur recovery plant was built at the same place [10, 30].

Canada is among five top sulphur exporting countries. Just in 2016, the total Canadian sulphur production was about 4,146,492 tonnes which primarily produced in Alberta and British Columbia distributed as 3,741,014 tonnes and 405,477 tonnes; respectively [8].

Sweet Natural Gas

Sweet natural gas has no more than the maximum sulphur content and/or CO2 content defined by;

  1. The specifications for the producing pipeline quality natural gas
  2. The definition by a legal body. Also, the treated gas leaving a sweetening process unit.

8.       How is natural gas transported and stored?

The biggest challenges after natural gas production are transporting and storing the natural gas from production fields to consumers. In fact, transportation networks provide the crucial link between producers and consumers, nonetheless storage facilities have been maintaining the natural gas transmission and distribution system’s reliability with maximum efficiency and without interruption.

Natural gas producers may have the ability to market their own produced natural gas directly to end users, or to sell their natural gas to local distribution companies (LDCs). LDCs are engaged primarily in the retail sale and delivery of natural gas through a distribution system. In addition, the natural gas producers may sell their natural gas to marketers, who in turn transport and sell gas to different types of buyers.

Natural Gas Transport

There are four major feasible types of natural gas transport technologies. In brief, pipeline and compressed natural gas (CNG) transport technologies rely on compression, and LNG technology relies on conversion of natural gas to its liquid form via deep refrigeration, and gas-to-liquids (GTL) relies on the conversion of natural gas to liquid products via chemical reactions. Whereas, pipeline and LNG are the most well established technologies which predominantly have been using to transport natural gas from producers to consumers.

Principally, at the gas processing plant, NGLs are separated from raw natural gas and then methane is transported by pipeline or LNG tanker to gas markets. Usually, pipeline is a fixed long-term investment and the design capacity of a pipeline depends on two key parameters; namely: pipe diameter and the pipeline operating pressure. Presently, the most cost effective and common technology is pipeline over the land. In terms of feasibility, underwater pipelines are viable but very expensive (for the same length could be as much as ten times the cost of on land pipeline).

Also, LNG is a technologically proven and safe method of natural gas transport. Nonetheless, the investment cost is relatively high for either LNG shipping or receiving terminal facilities. Besides, the energy consumed for LNG liquefaction, transportation or regasification is gigantic. Currently, when a pipeline is not economically feasible then LNG is the best alternative choice for natural gas transport. LNG have been dominating the market for body of water transport. However, some studies have suggested that compressed natural gas (CNG) is economically more attractive than LNG for fairly short distances and small loads [11].

Currently, there are some ongoing projects in British Columbia in order to build LNG exporting terminal, beside the fact that since 2008, LNG has been importing through the Canaport LNG regasification terminal at Saint John, New Brunswick. It is also trucked into Canada but only in small amounts and there are two main points of entry/exit in Canada (Port Huron, Michigan; Sarnia, Ontario; Coutts, Alberta; and Sweetgrass, Montana) [5].

In summary, capital cost, energy efficiency and cost inflation continued to hinder the evolution and development of promising natural gas transport alternatives such as GTL or CNG.

In 1853, the first Canadian natural gas pipeline was built in Québec and since an extensive pipeline networks have been developed to carry natural gas, NGL and LPG. Currently, Canada has one of the world’s largest natural gas pipeline networks, moving natural gas from producing areas to end users. According to statistics Canada there were 89,071 kilometers of transport pipelines and 243,500 kilometers of distribution pipelines in Canada in 2015 [21].

Canadian national energy board (NEB) categorised pipeline networks in four main groups of systems [17]as listed below;

  • Gathering Pipelines: move raw natural gas from wellheads to natural gas processing facilities and there are mainly located in western Canada.
  • Feeder Pipelines: transport natural gas, NGL and LPG from natural gas processing facilities and storages to transmission pipelines and same as gathering pipelines there mainly located in western Canada.
  • Transmission Pipelines: transport natural gas within provinces and across provincial or US borders.

 Distribution Pipelines: deliver natural gas to homes, business and industries.

Despite the fact that Canada is the fifth largest natural gas producers after United States, Russian Federation, Iran and Qatar [2], Canada has been importing natural gas, largely in Eastern Canada via an extensive network of pipelines from various points of entry as well as LNG terminal. Besides, all of Canada’s natural gas exports go to the United States, making it the largest foreign source of USA natural gas imports

Natural Gas Storage

The natural gas storage facilities have been playing a critical role in balancing supply and demand and ability to respond to demand peaks year around. Traditionally, natural gas has been a seasonal fuel and the demand fluctuates significantly between summer and winter. In fact, Canadian residential and commercial sectors demand can surpass up to six times at winter peak compare to summer peak. In another word, natural gas can be stored in the warmer summer months and withdrawn for use in the cooler winter months.

Stored natural gas has been playing a dynamic role in ensuring that any excess supply produced and delivered during low demand hours or months is available to make up the short supply during the subsequent high demand periods. Principally, there are two uses for natural gas storage facilities, first daily or inter-day swing which is a shorter term peak load requirements and also seasonal swing which is a longer term base load requirements.

In order to mitigate the severity of spikes and drops in natural gas demand, five common types of natural gas storage facilities are in use as listed below;

  • Depleted Hydrocarbons Reservoirs

Utilizing an underground rock formation reservoir that has already been tapped of its recoverable hydrocarbons. Natural gas can be compressed back into the formation and held there until it is required. This is the most common type of natural gas storage, however injection and recovery occur at a slower rate.

  • Aquifers

Underground aquifers are very similar to depleted reservoirs in terms of geology. Nevertheless, monitoring injection and withdrawal natural gas have to be more precise and relevantly more natural gas should be injected because deliverability rates are affected by the pressure from any residual water in the aquifer.

  • Salt Caverns

These are ideal for managing large and quick swings in natural gas supply and demand. They are built in underground caverns created by mining or dissolving the salt and creating a room that can then be used to store natural gas.

  • LNG and CNG Storage

It is doable to store natural gas in above ground storage as liquefied natural gas (LNG) or compressed natural gas (CNG) and can be used to meet periods of extreme demand. It can be built in areas where the geology does not provide for underground storage and also can be transported to locations beyond the existing pipeline system.

  • Line Pack Storage

It is possible to use the pipeline itself as a peak load storage. Line pack commonly referred to natural gas which is stored inside a pipeline network. A pipeline network may be line packed by injecting additional natural gas during periods when demand is less. The injection volume is depending on the pipeline available free volume, length and maximum safe operation pressure limits of the pipeline system. Obviously, the line pack will be used by consumers during peak load periods.

Primarily, in west of Canada natural gas storage have been managing producer as well as supplying pipelines, and in this region Alberta has greatest capacity volumes with about 472 Bcf [4, 5]. While in east of Canada natural gas storage have been using by local distribution companies (LDCs) and also large consumers in order to meet winter demand and in this region primarily storages are located in southwestern of Ontario.

9.       Who consumes natural gas?

By far, natural gas is the cleanest hydrocarbon energy source, and conventionally in Canada natural gas has been consuming in residential and commercial sectors before expansion into industrial sector such as petrochemical industry, oil sands industry and electricity sector.

A rapid growth opportunity exists for natural gas to increase its share of the power generation market significantly over the coming decade due to cost of the carbon emissions. The trend towards natural gas becoming the premium fuel is not now easily changeable and in respond to this trend, enormous capital investments in infrastructure have been being made in order to increase natural gas production yield. Yet, the significant challenge for the energy industry is how the transition is to be managed.

  • Residential Sector

Historically, more locally available energy sources are usually cheaper than other options. In order to heat homes and provide hot water, residential sector have been consuming variety of sources depending on the availability of the energy sources in the region. In Atlantic Canada, Québec and to a certain extend in Manitoba and British Columbia hydroelectricity is found as a heating source due to its availability.

Presently in Canada, the least expensive form of heating fuel available is the natural gas and only logical limits of residential sector consumption expand its infrastructure constraints. In recent decades, wide-ranging of pipeline networks have been developed to transfer natural gas from west to east of Canada and also importing natural gas from the United States.

  • Commercial Sector

Usually, natural gas consumption in Canada’s commercial sector is very similar to residential use patterns. Commercial enterprises such as businesses, restaurants, hotels and schools also use natural gas for water and space heating.

  • Industrial Sector

By far the largest Canadian natural gas consumer is the industrial sector. According to a study which was conducted by the Canadian energy research institute [5], whereas residential and commercial sectors natural gas sales fell, due to so many reasons such efficiency improvement, industrial sector sales have been rising drastically over the past decades.

The natural gas liquids significantly have been using as a feed-stocks in the petrochemical industry to produce product such as plastics, fertilizers, fabrics, methanol, ammonia, chemicals and also utilizing in bitumen upgrading and oil refining. Besides, many manufacturing processes have been consuming natural gas to make products such as steel, glass, cement, and other commodities and also as a fuel for the generation of steam.

In the industrial sector, the oil sands industry is one of the largest natural gas consumer. It is used in bulky volumes in both mining and in-situ oil sands extraction methods and also upgrading crude bitumen to synthetic crude oil [5]. The industry has been using natural gas to generate electricity and steam. The latter utilizes steam in in-situ oil production and also in application of hydrogen production and used it in a refinery/upgrader to reshape bitumen into synthetic crude oil [5].

The industrial sector includes manufacturing, forestry, fisheries, agriculture, construction and mining have been using natural gas as well.

There is an increasing demand for electricity generation, and in foreseeable future, the natural gas will become a larger part of the overall Canadian electricity generation by utilizing modern gas-fired power plants. There are not only more efficient and much cleaner fossil fuel but also cheaper to build, larger, less polluting, less noisy and easier to switch on and off. Whereas the electricity mix varies among Canadian provinces and territories, natural gas-fired generation plays an important role, accounting for 15% of the capacity mix in 2012, and it is expected to increase to 22% by 2035 [5]. As seen, by far Alberta is the biggest natural gas consumer in industrial sector and it is signifying the size of the oil sands and petrochemical industries in the province, and it is followed by Ontario, Saskatchewan, British Columbia and Québec; respectively.

10.   Where is natural gas found in Canada?

Natural gas production is concentrated in the Western Canadian Sedimentary Basin (WCSB), particularly in Alberta with 67.1% and British Columbia with 30.0% of total Canadian production in 2016 [8]. Despite the fact that there have been new conventional natural gas reservoirs discovered in the WCSB, conventional natural gas production in the WCSB has reached its peak.

Future of natural gas production could center only on unconventional deposits in the WCSB as well as offshore fields. Offshore Arctic, Nova Scotia and Newfoundland and Labrador are the center of production on the Arctic and Atlantic coasts, whereas basins offshore British Columbia has large amount of reserved natural gas in the Pacific coast. To this day, no large scale exploratory projects have been undertaken to produce natural gas from beneath the sea on the Pacific coast.

11.   Why using natural gas?

Brighter Future 

There is an explicit relationship between per capita energy consumption and wealth for any nation, and indeed a sustainable energy supply is very essential to economic development and powering the world economy in general and the Canadian economy in particular. In fact, in the nineteenth and early twentieth centuries, coal was the dominant fuel, but after World War II was progressively lost it share to oil. In the same way natural gas has been advancing more share of the energy mix since late 1970s. Collectively, these fossil fuels have more than 85% of the world’s primary energy market in 2015 [1], and this has not changed much since 1965. In contrast, nuclear, hydro and renewables (e.g., wind, solar, geothermal, biomass, and biofuels) play a far smaller role. Nonetheless, half of the growth in energy supplies over the next 20 years is expected from renewables, nuclear and hydroelectric power, and yet fossil fuels remain the dominant sources of energy powering and accounting for more than 75% of total energy supplies in 2035 [1].

New technologies development, investments, and also consumption trends suggest that natural gas is the fastest growing fuel with about 1.6%, with its share in primary energy increasing as it overtakes coal to be the second-largest fuel source by 2035 [1]. In Canada, natural gas resources are adequately available in order to dominate domestic primary energy supply for many decades to come. Best of all, it can do all of this at very competitive costs. In the meantime, fossil fuels in general and natural gas in particular have advantageous properties enabling them to store and deliver large quantities of energy more effectively and consistently than current alternative energies. Therefore, the future of natural gas industry looks promising.

Eco-Friendly

Global warming, reducing greenhouse gas emissions and air pollution have become increasingly important issues. Major greenhouse gases include nitrogen oxides, methane, carbon dioxide, and man-made chemicals such as chlorofluorocarbons (CFCs). Natural gas holds the promise of clean energy, and indeed is the cleanest burning of all fossil fuels. Thus, it offers a number of substantial environmental benefits over other fossil fuels.

CO2 mostly produced as a result of fossil fuels combustion and has high proportion of the total volume of emissions. In comparison, combustion of natural gas emits 44% less CO2 than coal and 29% less CO2 than oil per billion Btu of energy. Worth noting here that methane is another greenhouse gas. However, natural gas is considered more environmentally friendly because of the very negligible amount of un-combusted methane released into the atmosphere compared to other fossil fuels.

Another environmental concern is acid rain which caused by nitrogen oxides and sulphur dioxide. As an example, replacing coal with natural gas in power plants can reduce nitrogen oxides emissions by 80% and virtually eliminate sulphur dioxide emissions.

Further, the main components of air pollution are nitrogen oxides and particulate matters. Air pollution is a major environmental issue and natural gas produces low levels of nitrogen oxides and particulate matters compared to other fossil fuels.

12.   What is Natural Gas Outlook and Economical Value?

Natural gas is a vital fuel in North America and has a wide range of applications for various end-users. It is expected that natural gas grows faster than other fossil fuels, boosted by the rapid growth of LNG that is increasing the accessibility of natural gas across the globe.

Moreover, coal share of global power generation has been falling recently and will continue to decline. In Canada, federal and provincial government policies are encouraging a major shift from coal and supporting growth in natural gas consumption in order to meet environmental regulations.

In few years, the United States will transform from a net importer to a net exporter of natural gas, with Canada being the main natural gas exporter to the United States. Therefore, it is no-brainer that there are negative impacts for Canadian natural gas producers [6].

Canada is the fifth largest natural gas producer in the world, after United States, Russia, Iran and Qatar. The total world natural gas production was 3551.6 Bcf [2]. Furthermore, Canada has about 1.2% of world proven natural gas reserves. At the end of 2016, the total world proven reserves has been estimated to be 6588.8 Tcf [2].

The oil and gas in 2015 contributed 5.3% directly to the gross domestic product (GDP), and oil and gas domestic exports totaled 93$ billion, of which 98% were to the United States. All Canadian natural gas exports go to the USA, which is about 51% of the whole production. The value of Canadian net exports (exports minus imports) was $7.2 billion in 2015 [12].

The total gross domestic product (GDP) and employment impacts of natural gas development between 2017 and 2027 [7], with 54.7% of effects in Alberta, 36.7% in British Columbia, and the rest across other provinces and territories [7].

Over the period from 2015 to 2040, natural gas becomes more abundance and versatile as technology unlocks resources that were previously considered too costly to produce. North American producers will continue to grow, helping establish the region as a natural gas exporter. Asia pacific and Europe account for about 90% of global natural gas imports [13].

By 2040, it is expected that the global LNG trade rises to more than 2.5 times the 2015 and it will remain economical due to numerous gas resources. Moreover export supplies diversify as demand grows and associated cost will be decreased. Due to growth in unconventional natural gas production, North America becomes the number one LNG exporter. Canada will definitely join the LNG exporter club [13].

Historically natural gas in North America, has been mostly shipped by pipelines from Canada to United States and Mexico. This trend is projected to be increasingly dominated by LNG exports to more distant destinations. Usually, most LNG is traded under oil price-linked contracts, in some way because oil can substitute for natural gas in industry and for power generation. Gradually, as the LNG market expands, contracts are expected to change, weakening their ties to oil prices [38].

Closing thoughts 

Owing to its abundant natural resources and unique low-carbon properties (high H/C ratio), which are different from petroleum-based fuel, natural gas has considerable applications as fuel and feedstock in the future. Canada in particular is the beneficiary of these abundant conventional and unconventional natural gas resources.  Canada has also a history in developing technologies for exploiting these resources. With the stringent environmental regulations on coal and petroleum-based industry for a lower-carbon future, natural gas is emerging as an alternative fuel for the production of heat and power, as well as a feedstock for the production of commodity chemicals like ammonia, methanol, hydrogen and others that traditionally derived from petroleum resources.

New technologies development, investments, and also consumption trends suggest that natural gas is the fastest growing fuel with about 1.6%, with its share in primary energy increasing as it overtakes coal to be the second-largest fuel source by 2035 [1]. In 2016, over 97% of total Canadian natural gas production (Alberta and British Columbia with 67.1% and 30.0%, respectively) was produced in the Western Canadian Sedimentary Basin (WCSB) [8] and future of natural gas production could center only on unconventional deposits in the WCSB as well as offshore fields.

Despite the fact that Canada is the fifth largest natural gas producers [2], Canada has been importing natural gas, largely in Eastern Canada via an extensive network of pipelines from various points of entry as well as LNG terminal. Besides, all of Canada’s natural gas exports go to the United States, making it the largest foreign source of USA natural gas imports. In few years, the United States will transform from a net importer to a net exporter of natural gas, with Canada being the main natural gas exporter to the United States. Therefore, it is no-brainer that there are very negative impacts for Canadian natural gas producers [6]. In Canada, natural gas resources are adequately available in order to dominate domestic primary energy supply for so many decades to come.

In the meantime, fossil fuels in general and natural gas in particular have advantageous properties enabling them to store and deliver large quantities of energy more effectively and consistently than current alternative energies.

Global warming, reducing greenhouse gas emissions and air pollution have become increasingly important issues. Natural gas holds the promise of clean energy, and certainly is the cleanest burning of all fossil fuels. Thus, it offers a number of substantial environmental benefits over other fossil fuels.

Moreover, a rapid growth opportunity exists for natural gas to increase its share of the power generation market significantly over the coming decade due to cost of the carbon emissions. The trend towards natural gas becoming the premium fuel is not now easily changeable and in respond to this trend, enormous capital investments in infrastructure have been being made in order to increase natural gas production yield. Yet, the significant challenge for the energy industry is how the transition is to be managed. Nonetheless, the future of natural gas industry looks very promising.

In summary, collaboration between industry, government and academia are necessary to ensure that natural gas resources are employed wisely to generate economic benefits and low-carbon energy security to Canada.



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