What is Natural Gas?

Natural gas is mostly methane, but also contains other compounds such as ethane, propane, butane and pentanes – these are called natural gas liquids (NGLs). Natural gas may also contain sulphur compounds, nitrogen, carbon dioxide, water and other substances.

Schematic Geology of Natural Gas Resources

International Energy Agency

Where Does Natural Gas Come From?

Natural gas was formed millions of years ago when heat and pressure transformed decaying plant and animal matter buried in sedimentary rock layers. Normally, natural gas is trapped under layers of rock that prevent it from flowing easily to the surface.

Watch how natural gas was formed in our Virtual Tour!

Types of Natural Gas

Natural gas is extracted from beneath the earth’s surface using a variety of methods depending on geology. Natural gas resources are known as either conventional or unconventional.

  • Conventional natural gas is trapped in reservoirs in porous rock such as sandstone. This natural gas is easy to produce using traditional drilling methods. Most conventional reserves in Canada have been extensively developed.
  • Unconventional natural gas is found in tight (non-porous) rock formations, such as shale. These resources are recovered through a combination of horizontal drilling and hydraulic fracturing. Using these methods to produce natural gas that was previously inaccessible with traditional drilling has greatly increased Canada’s recoverable natural gas reserves. Another benefit is the ability to drill multiple wells from the same well pad on the surface, allowing for greater resource recovery on a reduced land footprint.

Canada Energy Regulator, Canada’s Energy Future 2015

Where is Natural Gas Found in Canada?

Conventional natural gas production in Canada is mainly from the Western Canada Sedimentary Basin (WCSB) in British Columbia, Alberta, and Saskatchewan, with smaller volumes produced in Ontario and New Brunswick. Unconventional natural gas is primarily located in northeast British Columbia and northwest Alberta.

Natural Gas Production in Canada’s Offshore

Nova Scotia produced natural gas until late 2018. Two natural gas projects – the Sable Offshore Energy Project and Deep Panuke – finished producing in 2018 and the projects are being decommissioned.

However, Nova Scotia’s resource potential is significant. The Government of Nova Scotia estimates there is a potential 120 trillion cubic feet of natural gas and 8 billion barrels of oil offshore.

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Economic Benefits of Natural Gas

Natural gas development is an important part of Canada’s economy.

Did You Know?

65% of total natural gas consumed in Ontario and Quebec in 2018 was imported from foreign sources.

The industry contributes to Canada’s overall economic health through jobs, taxes and royalties paid to provincial and federal governments. In turn, this revenue helps governments pay for health care, education, infrastructure and social programs.

While the natural gas market has been challenged by a number of factors including growing US production and a lack of pipeline infrastructure in the Western Canadian Sedimentary Basin (WCSB), Canada’s natural gas industry has a bright future if we are able to build a liquefied natural gas (LNG) industry to supply Canadian natural gas to Asian markets. Based on 2018 CAPP data, the economic impacts of supporting a Canadian LNG industry are significant and estimates include:

  • Generate $2.4 billion toward Canada’s GDP in direct or indirect activity
  • Employment growth on a national level increases by 10,000 direct or indirect jobs
  • Annual government revenues (corporate, personal, indirect taxes and royalties) for the provincial and federal governments