Petroleum industry in Canada
Petroleum production in Canada is a major industry which is important to the economy of North America. Canada has the third largest oil reserves in the world and is the world's fourth largest oil producer and fourth largest oil exporter. In 2017 it produced an average of of crude oil and equivalent. Of that amount, 64% was upgraded and non-upgraded bitumen from oil sands, and the remainder light crude oil, heavy crude oil and natural-gas condensate. Most of Canadian petroleum production is exported, approximately in 2015, with almost all of the exports going to the United States. Canada is by far the largest single source of oil imports to the United States, providing 43% of US crude oil imports in 2015.
The petroleum industry in Canada is also referred to as the Canadian "Oil Patch"; the term refers especially to upstream operations, and to a lesser degree to downstream operations. In 2005, almost 25,000 new oil wells were spudded in Canada. Daily, over 100 new wells are spudded in the province of Alberta alone. Although Canada is one of the largest oil producers and exporters in the world, it also imports significant amounts of oil into its eastern provinces since its oil pipelines do not extend all the way across the country and many of its oil refineries cannot handle the types of oil its oil fields produce. In 2017 Canada imported 405,700 bbl/day and exported 1,115,000 bbl/day of refined petroleum products.
History
The Canadian petroleum industry developed in parallel with that of the United States. The first oil well in Canada was dug by hand in 1858 by James Miller Williams near his asphalt plant at Oil Springs, Ontario. At a depth of he struck oil, one year before "Colonel" Edwin Drake drilled the first oil well in the United States. Williams later went on to found "The Canadian Oil Company" which qualified as the world’s first integrated oil company.Petroleum production in Ontario expanded rapidly, and practically every significant producer became his own refiner. By 1864, 20 refineries were operating in Oil Springs and seven in Petrolia, Ontario. However, Ontario's status as an important oil producer did not last long. By 1880 Canada was a net importer of oil from the United States.
which stretches from southwestern Manitoba to northeastern BC. The basin also covers most of Alberta, the southern half of Saskatchewan and the southwest corner of the Northwest Territories.
Canada's unique geography, geology, resources and patterns of settlement have been key factors in the history of Canada. The development of the petroleum sector helps illustrate how they have helped make the nation quite distinct from the United States. Unlike the United States, which has a number of different major oil producing regions, the vast majority of Canada's petroleum resources are concentrated in the enormous Western Canadian Sedimentary Basin, one of the largest petroleum-containing formations in the world. It underlies of Western Canada including most or part of four western provinces and one northern territory. Consisting of a massive wedge of sedimentary rock up to thick extending from the Rocky Mountains in the west to the Canadian Shield in the east, it is far distant from Canada's east and west coast ports as well as its historical industrial centres. It is also far from American industrial centres. Because of its geographic isolation, the area was settled relatively late in the history of Canada, and its true resource potential was not discovered until after World War II. As a result, Canada built its major manufacturing centres near its historic hydroelectric power sources in Ontario and Quebec, rather than its petroleum resources in Alberta and Saskatchewan. Not knowing about its own potential, Canada began to import the vast majority of its petroleum from other countries as it developed into a modern industrial economy.
The province of Alberta lies at the centre of the WCSB and the formation underlies most of the province. The potential of Alberta as an oil-producing province long went unrecognized because it was geologically quite different from American oil producing regions. The first oil well in western Canada was drilled in southern Alberta in 1902, but did not produce for long and served to mislead geologists about the true nature of Alberta's subsurface geology. The Turner Valley oil field was discovered in 1914, and for a time was the biggest oil field in the British Empire, but again it misled geologists about the nature of Alberta's geology. In Turner Valley, the mistakes oil companies made led to billions of dollars in damage to the oil field by gas flaring which not only burned billions of dollars worth of gas with no immediate market, but destroyed the field's gas drive that enabled the oil to be produced. The gas flares in Turner Valley were visible in the sky from Calgary, away. As a result of the highly visible wastage, the Alberta government launched vigorous political and legal attacks on the Canadian Government and the oil companies that continued until 1938 when the province set up the Alberta Petroleum and Natural Gas Conservation Board and imposed strict conservation legislation.
The status of Canada as an oil importer from the US suddenly changed in 1947 when the Leduc No. 1 well was drilled a short distance south of Edmonton. Geologists realized that they had completely misunderstood the geology of Alberta, and the highly prolific Leduc oil field, which has since produced over of oil was not a unique formation. There were hundreds more Devonian reef formations like it underneath Alberta, many of them full of oil. There was no surface indication of their presence, so they had to be found using reflection seismology. The main problem for oil companies became how to sell all the oil they had found rather than buying oil for their refineries. Pipelines were built from Alberta through the Midwestern United States to Ontario and to the west coast of British Columbia. Exports to the U.S. increased dramatically.
Most of the oil companies exploring for oil in Alberta were of U.S. origin, and at its peak in 1973, over 78 per cent of Canadian oil and gas production was under foreign ownership and over 90 per cent of oil and gas production companies were under foreign control, mostly American. This foreign ownership spurred the National Energy Program under the Trudeau government.
Major players
Although around a dozen companies operate oil refineries in Canada, only three companies – Imperial Oil, Shell Canada and Suncor Energy – operate more than one refinery and market products nationally. Other refiners generally operate a single refinery and market products in a particular region. Regional refiners include North Atlantic Refining in Newfoundland, Irving Oil in New Brunswick, Valero Energy in Quebec, Federated Co-operatives in Saskatchewan, Parkland in British Columbia, and Husky Energy in Alberta, BC, and Saskatchewan. While Petro Canada was once owned by the Canadian government, it is now , which continues to use the Petro Canada label for marketing purposes. In 2007 Canada's three biggest oil companies brought in record profits of $11.75 billion, up 10 percent from $10.72 billion in 2006. Revenues for the Big Three climbed to $80 billion from about $72 billion in 2006. The numbers exclude Shell Canada and ConocoPhillips Canada, two private subsidiaries that produced almost 500,000 barrels per day in 2006.- Encana Corporation
- Canadian Natural Resources Limited
- Husky Energy Inc.
- ConocoPhillips
- Devon Canada Corporation
- Suncor Energy
- Cenovus Energy
Divisions
Alberta
is Canada's largest oil producing province, providing 79.2% of Canadian oil production in 2015. This included light crude oil, heavy crude oil, crude bitumen, synthetic crude oil, and natural-gas condensate. In 2015 Alberta produced an average of of Canada's of oil and equivalent production. Most of its oil production came from its enormous oil sands deposits, whose production has been steadily rising in recent years. These deposits give Canada the world's third largest oil reserves, which are rivaled only by similar but even larger oil reserves in Venezuela, and conventional oil reserves in Saudi Arabia. Although Alberta has already produced over 90% of its conventional crude oil reserves, it has produced only 5% of its oil sands, and its remaining oil sands reserves represent 98% of Canada's established oil reserves.In addition to being the world's largest producer of oil sands bitumen in the world, Alberta is the largest producer of conventional crude oil, synthetic crude, natural gas and natural gas liquids products in Canada.
Oil sands
Alberta's oil sands underlie of land in the Athabasca, Cold Lake and Peace River areas in northern Alberta - a vast area of boreal forest which is larger than England. The Athabasca oil sands is the only large oil field in the world suitable for surface mining, while the Cold Lake oil sands and the Peace River oil sands must be produced by drilling. With the advancement of extraction methods, bitumen and economical synthetic crude are produced at costs nearing that of conventional crude. This technology grew and developed in Alberta. Many companies employ both conventional strip mining and non-conventional methods to extract the bitumen from the Athabasca deposit. About of the remaining oil sands are considered recoverable at current prices with current technology. The city of Fort McMurray developed nearby to service the oil sands operations, but its remote location in the otherwise uncleared boreal forest became a problem when the entire population of 80,000 had to be evacuated on short notice because of the 2016 Fort McMurray Wildfire which enveloped the city and destroyed over 2,400 homes.Oil fields
Major oil fields are found in southeast Alberta, northwest, central, and northeastStructural regions include: Foothills, Greater Arch, Deep Basin.
Oil upgraders
There are five oil sands upgraders in Alberta which convert crude bitumen to synthetic crude oil, some of which also produce refined products such as diesel fuel. These have a combined capacity of of crude bitumen.- The Shell Canada Scotford Upgrader at Fort Saskatchewan, Alberta has a capacity of of crude bitumen.
- The Suncor Energy upgrader near Fort McMurray, Alberta has a capacity of of crude bitumen.
- The Syncrude Mildred Lake upgrader near Fort McMurray has a capacity of
- The China National Offshore Oil Corporation Long Lake upgrader near Fort McMurray has a capacity of
- The Canadian Natural Resources Ltd Horizon upgrader near Fort McMurray has a capacity of
Oil pipelines
Major pipelines carrying oil from Alberta to markets in other provinces and US states include:
- The Interprovincial Pipeline System was built in 1950 to transport crude oil from Edmonton, Alberta to Superior, Wisconsin where it supplies the Midwestern United States. In 1953 it was extended to Sarnia, Ontario to supply the Ontario market, and in 1976 to Montreal, Quebec.
- The Trans Mountain Pipeline System was built in 1953 to transport crude oil and refined products from Edmonton to Vancouver, BC. It also supplies feedstock to large US oil refineries in the state of Washington. Only crude oil and condensate are shipped to the United States.
- The Norman Wells Pipeline was built in 1985 to carry crude oil from Norman Wells, NWT to Zama City, Alberta, where it connects with the Alberta pipeline network.
- The Express Pipeline was built in 1997 to carry oil from the Alberta pipeline hub at Hardisty, Alberta to the US states of Montana, Utah, Wyoming and Colorado.
- The Keystone Pipeline was built in 2011 to carry oil from Hardisty, Alberta to the major US pipeline hub at Cushing, Oklahoma, where it connects to pipelines to Texas, Louisiana, and many of the Eastern United States.
Oil refineries
- The Suncor Energy refinery near Edmonton has a capacity of of crude oil.
- The Imperial Oil Strathcona Refinery near Edmonton has a capacity of.
- The Shell Canada Scotford Refinery near Edmonton has a capacity of. It is located adjacent to the Shell Scotford Upgrader, which provides it with feedstock.
- The Husky Lloydminster Refinery at Lloydminster, in eastern Alberta has a capacity of. It is located across the provincial border from the Husky Lloydminster Heavy Oil Upgrader at LLoydminster, Saskatchewan, which provides it with feedstock.
Other oil-related activities
While Edmonton is the provincial capital and is considered the pipeline, manufacturing, chemical processing, research and refining centre of the Canadian oil industry, its rival city Calgary is the main oil company head office and financial centre, with more than 960 senior and junior oil company offices. Calgary also has regional offices of all six major Canadian banks, some 4,300 petroleum, energy and related service companies, and 1,300 financial service companies, helping make it the second largest head office city in Canada after Toronto.
- Oil and gas activity is regulated by the Alberta Energy Regulator and the Energy and Utility Board ).
Saskatchewan
Oil fields
All of Saskatchewan's oil is produced from the vast Western Canadian Sedimentary Basin, about 25% of which underlies the province. Lying toward the shallower eastern end of the sedimentary basin, Saskatchewan tends to produce more oil and less natural gas than other parts. It has four major oil-producing regions:- The Lloydminster area in west-central Saskatchewan has very large reserves of very heavy crude oil.
- The Kindersley area in south-central Saskatchewan produces light crude oil using hydraulic fracturing from Saskatchewan's portion of the Bakken Formation, which also produces most of North Dakota's oil.
- The Swift Current area in southwest Saskatchewan produces mostly conventional oil.
- The Weyburn area in southeast Saskatchewan produces oil using carbon dioxide flooding in the Weyburn-Midale Carbon Dioxide Project, the world's largest carbon capture and storage project.
Oil upgraders
- The NewGrade Energy Upgrader, part of the CCRL Refinery Complex in Regina, processes of heavy oil from the Lloydminster area into synthetic crude oil.
- The Husky Energy Bi-Provincial Upgrader on the Saskatchewan side of Lloydminster processes of heavy oil from Alberta and Saskatchewan to lighter crude oil. In addition to selling synthetic crude oil to other refineries, it supplies feedstock to the Husky Lloydminster Refinery on the Alberta side of the border.
Oil refineries
- The CCRL Refinery Complex operated by Federated Co-operatives in Regina processes into conventional refinery products. It receives much of its feedstock from the NewGrade upgrader.
- Moose Jaw Asphalt Inc. operates a asphalt plant in Moose Jaw.
Newfoundland and Labrador
is Canada's third largest oil producing province, producing about 4.4% of Canada's petroleum in 2015. This consisted almost exclusively of light crude oil produced by offshore oil facilities on the Grand Banks of Newfoundland. In 2015 these offshore fields produced an average of of light crude oil.Oil fields
- The Hibernia oil field is located approximately east-southeast of St. John's, Newfoundland. The field was discovered in 1979 and has been producing since 1997. The Hibernia Gravity Base Structure is the world's largest oil platform by weight since it has to withstand collisions by icebergs.
- The Terra Nova oil field is located off the east coast of Newfoundland. The field was discovered in 1984 and has been producing since 2002. It uses a Floating Production Storage and Offloading vessel rather than a fixed platform to produce oil.
- The White Rose oil field is located off the east coast of Newfoundland. The field was discovered in 1984 and has been producing since 2005. It uses a FPSO vessel to produce oil.
Oil refinery
British Columbia
produced an average of oil and equivalent in 2015, or about 1.4% of Canada's petroleum. About 38% of this liquids production was light crude oil, but most of it was natural-gas condensate.British Columbia's oil fields lie at the gas-prone northwest end of the Western Canadian Sedimentary Basin, and its oil industry is secondary to the larger natural gas industry. Drilling for gas and oil takes place in Peace Country of north-eastern British Columbia, around Fort Nelson, Fort St. John and Dawson Creek
Oil and gas activity in BC is regulated by the Oil and Gas Commission.
Oil refineries
BC has only two remaining oil refineries.- The Husky Energy Prince George Refinery in Prince George, BC processes of light oil produced locally in northeastern BC.
- The Chevron Canada Burnaby Refinery in the Vancouver suburb of Burnaby processes of light oil received from Alberta via the Kinder Morgan Trans Mountain Pipeline System.
In June 2016 Chevron put its oil refinery in Burnaby, BC up for sale, along with its fuel distribution network in British Columbia and Alberta. “The company acknowledges these are challenging times and we need to be open to changing market conditions and opportunities as they arise,” a company representative said. The refinery, which started production in 1935, has 430 employees. Chevron's offer to sell follows Imperial Oil's sale of 497 Esso gas stations in B.C. and Alberta. It is unclear what will happen if Chevron fails to sell its BC assets.
Manitoba
produced an average of of light crude oil in 2015, or about 1.2% of Canada's petroleum production.Manitoba's oil production is in southwest Manitoba along the northeast flank of the Williston Basin, a large geological structural basin which also underlies parts of southern Saskatchewan, North Dakota, South Dakota and Montana. Unlike in Saskatchewan, very little of Manitoba's oil is heavy crude oil.
- A few rigs drilling for oil in South western Manitoba
Northern Canada (onshore)
The Northwest Territories produced an average of of light crude oil in 2015, or about 0.2% of Canada's petroleum production. There is an historic large oil field at Norman Wells, which has produced most of its oil since it started producing 1937, and is continuing to produce at low rates. There used to be an oil refinery at Norman Wells, but it was closed in 1996 and all of the oil is now pipelined out to refineries in Alberta.- Drilling for tight oil in the Canol shale play near Norman Wells by Husky Energy and others.
Northern Canada (offshore)
- There is currently no offshore oil production in northern Canada
- There is currently no offshore drilling in northern Canada
Eastern Canada (onshore)
Oil fields
Ontario was the centre of the Canadian oil industry in the 19th century. It had the oldest commercial oil well in North America, and having the oldest producing oil field in North America. However, it reached its production peak and started to decline more than 100 years ago.- Sporadic drilling in southern Ontario
- Sporadic drilling in western Newfoundland
- Sporadic drilling in northern Nova Scotia and western Cape Breton Island
- Sporadic drilling in northern and eastern Prince Edward Island
Oil pipelines
- The Interprovincial Pipeline was built in 1950 to take Alberta oil to US refineries. In 1953 it was extended through the US to Sarnia, Ontario and in 1956 to Toronto. This made it the longest crude oil pipeline in the world.
- The Interprovincial Pipeline was extended to Montreal in 1976 after the 1973 oil crisis interrupted foreign oil supplies to Eastern Canada.
- The Portland–Montreal Pipe Line was built during World War II to bring imported oil from the marine terminal at South Portland, Maine through the United States to Montreal. As of 2016, the pipeline is no longer operational since the only remaining Montreal Refinery, is now owned by Suncor Energy, which produces enough oil to meet its needs from the Canadian oil sands.
Oil refineries
Ontario
- Nanticoke Refinery -,
- Sarnia -,
- Sarnia -,
- Corunna -,
- Mississauga -,
- Montreal Refinery -,.
- Lévis - ),
Newfoundland and Labrador
- North Atlantic Refinery, Come By Chance -,
Eastern Canada (offshore)
- Offshore oil drilling and production at Hibernia, Terra Nova, and White Rose fields off the coast of Newfoundland
- Offshore gas drilling and production on Sable Island fields off the coast of Nova Scotia
- Sporadic drilling along continental shelf off Nova Scotia
- Sporadic drilling in Laurentian fan at southern end of Cabot Strait
- Sporadic drilling in eastern Northumberland Strait
Long-term outlook
Production from the Alberta oil sands is still in its early stages and the province's established bitumen resources will last for generations into the future. The Alberta Energy Regulator estimates that the province has of ultimately recoverable bitumen resources. At the 2014 production rate of, they would last for about 375 years. The AER projects that bitumen production will increase to by 2024, but at that rate they would still last for about 213 years. Because of the enormous size of the known oil sands deposits, economic, labor, environmental, and government policy considerations are the constraints on production rather than finding new deposits.
In addition, the Alberta Energy Regulator has recently identified over of unconventional shale oil resources in the province. This volume is larger than the province's oil sands resources, and if developed would give Canada the largest crude oil reserves in the world. However, due to the recent nature of the discoveries there are not yet any plans to develop them.
Oil fields of Canada
These oil fields are or were economically important to the Canadian economy:- Oil Springs, Ontario
- Turner Valley oil field, Alberta
- Leduc oil field, Alberta
- Pembina oil field, Alberta
- Athabasca oil sands, Alberta
- Peace River oil sands, Alberta
- Cold Lake oil sands, Alberta
- Duvernay Formation, Alberta
- Montney Formation, Alberta, BC
- Hibernia oil field, offshore Newfoundland
- Terra Nova oil field, offshore Newfoundland
- White Rose oil field, offshore Newfoundland
Upstream, midstream and downstream components of Canadian petroleum industry
Upstream
The upstream oil sector is also commonly known as the exploration and production sector.The upstream sector includes the searching for potential underground or underwater crude oil and natural gas fields, drilling of exploratory wells, and subsequently drilling and operating the wells that recover and bring the crude oil and/or raw natural gas to the surface. With the development of methods for extracting methane from coal seams, there has been a significant shift toward including unconventional gas as a part of the upstream sector, and corresponding developments in liquified natural gas processing and transport. The upstream sector of the petroleum industry includes Extraction of petroleum, Oil production plant, Oil refinery and Oil well.
Midstream
The midstream sector involves the transportation, storage, and wholesale marketing of crude or refined petroleum products. Canada has a large network of pipelines - over 840,000 km - that transport crude oil and natural gas across the country. There are four main pipeline groups: gathering, feeder, transmission, and distribution pipelines. Gathering pipelines transport crude oil and natural gas from wells drilled in the subsurface to oil batteries or natural gas processing facilities. The majority of these pipelines are found in petroleum producing areas in Western Canada. Feeder pipelines move crude oil, natural gas, and natural gas liquids from the batteries, processing facilities, and storage tanks to the long-distance portion of the transportation system: transmission pipelines. These are the major carriers of crude oil, natural gas, and NGLs within provinces and across provincial or international borders, where the products are either sent to refineries or exported to other markets. Finally, distribution pipelines are the conduit for delivering natural gas to downstream customers, such as local utilities, and then further distributed to homes and businesses. If pipelines are near capacity or non-existent in certain areas, crude oil is then transported over land by rail or truck, or over water by marine vessels.The midstream operations are often taken to include some elements of the upstream and downstream sectors. For example, the midstream sector may include natural gas processing plants which purify the raw natural gas as well as removing and producing elemental sulfur and natural gas liquids as finished end-products. Midstream service providers in Canada refer to Barge companies, Railroad companies, Trucking and hauling companies, Pipeline transport companies, Logistics and technology companies, Transloading companies and Terminal developers and operators. Development of the massive oil sand reserves in Alberta would be facilitated by enhancing the North American pipeline network which would transport dilbit to refineries or export facilities.
Downstream
The downstream sector commonly refers to the refining of petroleum crude oil and the processing and purifying of raw natural gas, as well as the marketing and distribution of products derived from crude oil and natural gas. The downstream sector touches consumers through products such as gasoline or petrol, kerosene, jet fuel, diesel oil, heating oil, fuel oils, lubricants, waxes, asphalt, natural gas, and liquified petroleum gas as well as hundreds of petrochemicals. Midstream operations are often included in the downstream category and considered to be a part of the downstream sector.Crude oil
Crude oil, for example, Western Canadian Select is a mixture of many varieties of hydrocarbons and most usually has many sulfur-containing compounds. The refining process converts most of that sulfur into gaseous hydrogen sulfide. Raw natural gas also may contain gaseous hydrogen sulfide and sulfur-containing mercaptans, which are removed in natural gas processing plants before the gas is distributed to consumers. The hydrogen sulfide removed in the refining and processing of crude oil and natural gas is subsequently converted into byproduct elemental sulfur. In fact, the vast majority of the 64,000,000 metric tons of sulfur produced worldwide in 2005 was byproduct sulfur from refineries and natural gas processing plants.Export capacity
Total Canadian crude oil production, most of which is coming from the Western Canada Sedimentary Basin, is forecast to increase from 3.85 million barrels per day in 2016 to 5.12 million b/d by 2030. Supply from the Alberta oil sands accounts for most of the growth and is expected to increase from 1.3 million b/d in 2016 to 3.7 million b/d in 2030. Bitumen from the oil sands requires blending with a diluent in order to decrease its viscosity and density so that it can easily flow through pipelines. The addition of diluent will add an estimated 200,000 b/d to the total volumes of crude oil in Canada, for a total of 1.5 million extra barrels per day requiring the creation of additional transport capacity to markets. The current takeaway capacity in Western Canada is tight, as oil producers are beginning to outpace the movement of their products.Pipeline capacity measurements are complex and subject to variability. They depend on a number of factors, such as the type of product being transported, the products it is mixed with, pressure reductions, maintenance, and pipeline configurations. The major oil pipelines exiting Western Canada have a design transport capacity of 4.0 million b/d. In 2016, however, the pipeline capacity was estimated at 3.9 million b/d, and in 2017 the Canadian Association of Petroleum Producers estimated the pipeline capacity to be 3.3 million b/d. The lack of available pipeline capacity for petroleum forces oil producers to look to alternative transport methods, such as rail.
Crude-by-rail shipments are expected to increase as existing pipelines reach capacity and proposed pipelines experience approval delays. The rail loading capacity for crude in Western Canada is close to 1.2 million b/d, although this varies depending on several factors including the length of the unit trains, size and type of railcars used, and the types of crude oil loaded. Other studies, however, estimate the current rail loading capacity in Western Canada to be 754,000 b/d. The International Energy Agency forecasts that crude-by-rail exports will increase from 150,000 b/d in late 2017 to 390,000 b/d in 2019, which is much greater than the record high of 179,000 b/d in 2014. The IEA also warns that rail shipments could reach as high as 590,000 b/d in 2019 unless producers store their produced crude during peak months. The oil industry in the WCSB may need to continue to rely on rail in the forecastable future, as no major new pipeline capacity is expected to be available before 2019. The capacity - to a certain extent - is there, but producers must be willing to pay a premium to move crude by rail.
Getting to tidewater
Canada has had access to western tide water since 1953, with a capacity of roughly 200,000 - 300,000 bpd via the Kinder Morgan Pipeline. There is a myth perpetuated in Canadian media that Canadian WCS oil producers will have better access to “international prices” with greater access to tidewater , however, this claim does not take into account existing access. Shipments to Asia reached their peak in 2012 when the equivalent of nine fully loaded tankers of oil left Vancouver for China. Since then, oil exports to Asia have completely dropped off to the point at which China imported only 600 barrels of oil in 2017 . With regard to the claim that Canada does not have access to “international prices”, many economists decry the concept that Canada does have access to the globalized economy as ridiculous and attribute the price differential to the costs of shipping heavy, sour crude thousands of kilometres, compounded by over supply in the destinations able to process aforementioned oil . Due to a doubling of a “production and export” model bet on by the biggest players in the tar sands, producers have recently encountered an over supply problem, and have sought further government subsidies to lessen the blow of their financial miscalculations earlier this decade.Preferred access ports include the US Gulf ports via the Keystone XL pipeline to the south, the British Columbia Pacific coast in Kitimat via the Enbridge Northern Gateway Pipelines, and the Trans Mountain line to Vancouver, BC. Frustrated by delays in getting approval for Keystone XL, the Enbridge Northern Gateway Pipelines, and the expansion of the existing Trans Mountain line to Vancouver, Alberta has intensified exploration of northern projects, such as building a pipeline to the northern hamlet of Tuktoyatuk near the Beaufort Sea, "to help the province get its oil to tidewater, making it available for export to overseas markets". Under Prime Minister Stephen Harper, the Canadian government spent $9 million by May 2012, and $16.5 million by May 2013, to promote Keystone XL. In the United States, Democrats are concerned that Keystone XL would simply facilitate getting Alberta oil sands products to tidewater for export to China and other countries via the American Gulf Coast of Mexico.
In 2013, Generating for Seven Generations and AECOM received $1.8 million in funding from Alberta Energy to study the feasibility of building a railway from northern Alberta to the Port of Valdez, Alaska. The proposed 2,440-km railway would be capable of transporting 1 million to 1.5 million b/d of bitumen and petroleum products, as well as other commodities, to tidewater. The last leg of the route - Delta Junction through the coastal mountain range to Valdez - was not deemed economically feasible by rail; an alternative, however, may be the transfer of products to the underutilized Trans Alaska Pipeline System to Valdez.
Port Metro Vancouver has a number of petroleum terminals, including Suncor Burrard Terminal in Port Moody, Imperial Oil Ioco Terminal in Burrard Inlet East, and Kinder Morgan Westridge, Shell Canada Shellburn, and Chevron Canada Stanovan terminals in Burnaby.
Pipeline versus rail debate
The public debate surrounding the trade-offs between pipeline and rail transportation has been developing over the past decade as the amount of crude oil transported by rail has increased. It was invigorated in 2013 after the deadly Lac-Mégantic disaster in Quebec when a freight train derailed and spilled 5.56 million litres of crude oil, which resulted in explosions and fires that destroyed much of the town's core. That same year, a train carrying propane and crude derailed near Gainford, Alberta, resulting in two explosions but no injuries or fatalities. These rail accidents, among other examples, have raised concerns that the regulation of rail transport is inadequate for large-scale crude oil shipments. Pipeline failures also occur, for instance, in 2015 a Nexen pipeline ruptured and leaked 5 million litres of crude oil over approximately 16,000 m2 at the company's Long Lake oilsands facility south of Fort McMurray. Although both pipeline and rail transportation are generally quite safe, neither mode is without risk. Numerous studies, however, indicate that pipelines are safer, based on the number of occurrences weighed against the quantity of product transported. Between 2004 and 2015, the likelihood of rail accidents in Canada was 2.6 times greater than for pipelines per thousand barrels of oil equivalents. Natural gas products were 4.8 times more likely to have a rail occurrence when compared to similar commodities transported by pipelines. Critics question if pipelines carrying diluted bitumen from Alberta's oil sands are more likely to corrode and cause incidents, but evidence shows the risk of corrosion being no different than that of other crude oils.Costs
A 2017 study by the National Bureau of Economic Research found that contrary to popular belief, the sum of air pollution and greenhouse gas emissions costs is substantially larger than accidents and spill costs for both pipelines and rail. For crude oil transported from the North Dakota Bakken Formation, air pollution and greenhouse gas emission costs are substantially larger for rail compared to pipeline. For pipelines and rail, the Pipeline and Hazardous Materials Safety Administration's central estimate of spill and accident costs is US$62 and US$381 per million-barrel miles transported, respectively. Total GHG and air pollution costs are 8 times higher than accident and spills costs for pipelines and 3 times higher for rail.Finally, transporting oil and gas by rail is generally more expensive for producers than transporting it by pipeline. On average, it costs between US$10-$15 per barrel to transport oil and gas by rail compared to $5 a barrel for pipeline. In 2012,16 million barrels of oil were exported to USA by rail. By 2014, that number increased to 59 million barrels. Although quantities decreased to 48 million in 2017, the competitive advantages offered by rail, particularly its access to remote regions as well as lack of regulatory and social challenges compared with building new pipelines, will likely make it a viable transportation method for years to come. Both forms of transportation play a role in moving oil efficiently, but each has its unique trade-offs in terms of the benefits it offers.
Regulatory agencies in Canada
See also Energy policy of CanadaThe jurisdiction over the petroleum industry in Canada, which includes energy policies regulating the petroleum industry, is shared between the federal and provincial and territorial governments. Provincial governments have jurisdiction over the exploration, development, conservation, and management of non-renewable resources such as petroleum products. Federal jurisdiction in energy is primarily concerned with regulation of inter-provincial and international trade and commerce, and the management of non-renewable resources such as petroleum products on federal lands.
Natural Resources Canada (NRCan)
Oil and Gas Policy and Regulatory Affairs Division of Natural Resources Canada provides an annual review of and summaries of trending of crude oil, natural gas and petroleum product industry in Canada and the United StatesNational Energy Board
The petroleum industry is also regulated by the National Energy Board, an independent federal regulatory agency. The NEB regulates inter-provincial and international oil and gas pipelines and power lines; the export and import of natural gas under long-term licenses and short-term orders, oil exports under long-term licenses and short-term orders, and frontier lands and offshore areas not covered by provincial/federal management agreements.In 1985, the federal government and the provincial governments in Alberta, British Columbia and Saskatchewan agreed to deregulate the prices of crude oil and natural gas. Offshore oil Atlantic Canada is administered under joint federal and provincial responsibility in Nova Scotia and Newfoundland and Labrador.