Natural gas is the most affordable option for meeting Ontario's growing energy needs.
Abundant supplies equal low prices
Access to new, massive deposits of natural gas in North America has translated into affordable natural gas prices for consumers. In fact, natural gas prices are at their lowest level in a decade, and experts predict that prices will remain affordable until at least 2025.
Billions in Savings for Ontario Households and Industry
The typical Ontario homeowner has spent $4001 less on natural gas in 2012 than they did just five years ago. The savings are even greater for businesses and industry that use more gas. This translates into average annual energy savings of an astounding
$4 billion2 dollars for Ontario households and industry.
And, when it comes to home and water heating in Ontario, natural gas has been on average less than half the cost of electricity and oil for home and water heating over the last five years. Today heating with natural gas costs about 70 per cent less than electricity and oil.2
1 Based on comparison of average annual bills for typical residential customers using 2,600 cubic metres of natural gas in Union Gas and Enbridge Gas Distribution service areas.
2 Based on consensus forecast information, gas prices have declined by $3.50 - $5.50 mmbu from 2008. Multiplied by Ontario’s annual consumption of 1 Tcf = $3.5 - $4.5 billion savings.
Savings based on standard home in the Union Gas service area with four people per home, mid-to-high-efficiency equipment and fuel rates at Oct. 2012 (natural gas $0.2046 per m3, electricity $0.1263 per kWh, fuel oil $1.0124 per litre, propane $0.7770 per litre).
Switching to natural gas could save homeowners about $1,700 per year or more on home and water heating. And businesses would save even more.
In fact, Canadians are spending less on their natural gas bill today. Statistics Canada shows that natural gas represents only one per cent of the total cost of the typical basket of goods and services an average Canadian household consumes – down 10 per cent from 2009.
Using natural gas in your home, to generate electricity, power our industries and in other applications offers a number of significant environmental benefits.
A Smaller Carbon Footprint
Natural gas is the cleanest of the conventional fuels, producing only about 45 per cent of the emissions of coal and oil*. It can substantially reduce Ontario’s carbon footprint and is the ideal complement to intermittent renewable energy sources such as wind and solar for power generation. Using natural gas in place of coal or oil as an energy source only makes sense in the battle against global climate change.
Source: Natural Resources Canada - Canada's Energy Outlook - The Reference Case 2006, Appendix IV, p. 142: residential emission factors used for natural gas, propane, light fuel and power plant emission factors for coal.
*CO2 emissions from natural gas are approximately 45 per cent less vs. coal and approximately 30 per cent less vs. oil.
Natural gas produces significantly lower emissions of nitrogen oxides (NOx) - a precursor to smog - and virtually no particulate matter.
Less Acid Rain
Natural gas produces significantly lower emissions of the acid rain-causing pollutant sulfur dioxide (SO2).
Source: EIA - Natural Gas Issues and Trends 1998
A Smaller Footprint
Production of natural gas needs the smallest footprint of any energy source. Wind and solar require six acres to produce enough electricity to serve 1,000 households a year. That’s 20 times more than what natural gas needs.
Put simply, using natural gas rather than coal or oil will further improve the quality of the air we breathe, while reducing our contribution to climate change.
Source: R.W. Beck and Black and Veatch
Natural gas works hard for North America, generating electricity, powering our manufacturing plants, providing raw material for a range of products, heating homes and fuelling transportation.
There have been some very significant changes taking place in the natural gas market over the last four to five years. Right now, we’re in the midst of a natural gas renaissance that is being driven largely by an advancement of horizontal drilling technology that has allowed the development of natural gas from shale formations.
There’s now over 150 years worth of continental supply between Canada and the U.S. alone, and, as a result, natural gas prices have declined significantly. Only a few years ago, prices were in the $7 to $8/GJ range, compared to prices today which are around $3/GJ. As a result, consumers, business and industry are paying some of the lowest prices for natural gas in the last decade – a huge economic “home field” advantage.
The current low price environment is directly related to the development of shale gas reserves, and with a very robust supply outlook, prices are expected to remain very affordable and stable for many years to come.
What This Means For Ontario
Ontario has access to these resources and needs to take the steps necessary to fully embrace and promote the benefits of this extraordinary opportunity for its economy.
The following Ontario industries stand to benefit most from the combination of abundant, affordable and clean natural gas supplies that are already being embraced in surrounding jurisdictions like Michigan, Ohio, Pennsylvania and New York:
Natural gas is the second largest source of electricity supply in Ontario’s energy mix, and it will continue to play an important role as the province works toward its goal of removing all coal from the supply mix. With low fuel costs, lower carbon emissions and lower capital investment costs, natural gas can affordably and reliably replace coal power generation while backing up renewable power and backstopping nuclear shutdowns, refurbishments and long lead times needed for new nuclear development.
Northern Ontario has large deposits of rare minerals like gold and chromite. These minerals have increased in price recently and these prices are expected to remain high in the near future. Consequently it has become economical to mine these deposits which has made this a major area for mining growth. Natural gas has a number of significant benefits as energy for both mining and processing. It’s affordable, significantly cleaner than fuel oil or diesel, reliable, fast to build, and can be used to generate electricity or to directly power industrial processes.
Low natural gas prices paired with higher oil and gasoline prices have renewed interest in liquefied (LNG) and compressed (CNG) natural gas as a transportation fuel. This presents opportunities in the citing of LNG production facilities in Ontario.
Multi-billion dollar investments are being made in new plants, expansion of existing facilities and re-opening shuttered plant in the U.S. Similarly, Ontario based petrochemical businesses in areas like Sarnia can access natural gas liquids from Marcellus (NY) and Utica (NY) to drive new opportunities.
Fertilizer plants, which use natural gas as a raw material, are looking once again to be located in North America to take advantage of current and projected low natural gas prices. These are savings that could be passed on to farmers which could then reduce the cost of food and ethanol production.
Growth in the number and size of greenhouses in Ontario is being encouraged by affordable and stable natural gas prices.
Increased gas exploration is creating demand for steel products including pipes, tubes and joints used in gas drilling equipment. At the same time, natural gas is replacing coal in the steel industry’s blast furnaces, reducing operating costs. Where natural gas is already feeding these furnaces, incredible savings are being realized and passed on in the prices of the many things steel is used for.
Greater access to natural gas will be a huge economic win for Ontarians. Delivering the benefits of affordable and clean natural gas to new communities currently not served provides superb value by allowing more households and businesses to switch to natural gas from electricity.
Natural gas can help build a brighter future for Ontario. It’s time for all of us to seize the opportunities that are out there.
Natural gas from shale formations refers to gas that is trapped naturally within very fine sedimentary rocks called shale or mudstone.
Millions of years ago mud and silt that contained plant and animal debris washed into ancient oceans and lakes. Over time, shale and mudstone rock formed and the organic material generated oil and gas. The oil and gas largely migrated into sandstones and limestones, forming conventional oil and gas reservoirs. The natural gas that stayed within the shale rock is referred to as shale gas.
A drilling technique called hydraulic fracturing (fracking) is used to unlock this gas by creating tiny fractures that allow the gas to flow to the surface through wells. This process has been used since the 1950s.
Shale gas plays an important role in lowering customers’ gas bills by increasing available supply.
Shale gas is expected to represent a large portion of future natural gas production in North America as it now accounts for more than 50% of new exploration. Ontario is fortunate to be located close to two large shale gas basins – Marcellus and Utica.
There has been some controversy about the method of extraction (fracking) used to obtain shale gas. Industry, regulators, governments and NGOs are working collaboratively to ensure that the extraction process is clearly understood. ONGA supports the development and continuous improvement of existing regulations to ensure the protection of the environment. It is paramount that natural habitats remain undisturbed at every stage of the process.
Fracking and drinking water
When done properly fracking has no effect on our drinking water. Most natural-gas producing shale rock formations are 3000 to 4500 metres underground. Domestic use water aquifers are usually less than 300 meters underground. Since there is no natural physical path between the shale formations and the aquifers it is not possible for fresh water to be contaminated through fracking. As well, groundwater is protected during drilling through proper well-bore design: a combination of a protective casing and cement. Stringent provincial, state and territorial regulations are in place to prevent groundwater contamination during the fracking process.
Fracking and water use
Fracking of a single well consumes 11 to 19 million litres of water, depending on specific geology and fracturing requirements. However, when compared with how much water it takes to produce other forms of energy, fracking requires significantly less water. Oil, coal, nuclear and biofuels all use significantly more water in the production process. In addition, the sourcing and use of water is heavily regulated.
Industry is developing advancements in technologies that are greatly reducing water use rates, a development that makes natural gas from shale formations even more attractive.
Fracking and chemicals
Fracking fluid (used to create pressure to produce mini fractures in the shale rock) is typically comprised of more than 99.5% water and sand, and 0.5% chemicals. Typical fracture treatment will use 3 to 12 additive chemicals, depending on the characteristic of the water and the shale formation being fractured. Many of those chemicals are present in common household commercial applications. Those that are considered adverse are used in extremely low concentration.
Fracking and land use
Shale gas production requires a drastically smaller land-use footprint than conventional natural gas drilling and other forms of energy production, such as solar and wind power. This is possible due to the use of sub surface horizontal drilling in combination with vertical drilling. This new horizontal drilling technology has allowed for up to 20 horizontal wells to be drilled in a single vertical well which greatly reduces the on surface land-use footprint. Vertical drilling is a well-established practice and millions of wells have been safely drilled through aquifers with no significant issues.
Fracking and seismic activity
Just as other industrial activities cause noise or vibrations, hydraulic fracturing can cause seismic activity. However, the intensity of seismic activity of fracking is typically 100,000 times less than levels detectable by human beings. A remote possibility of a relatively minor seismic event does exist depending on an areas specific geology. To date nothing has registered on the Richter scale. Industry uses real time microseismic monitoring technology to monitor seismic activity instantly on site.
The report of the Government of Ontario’s proposal to spend $1.32 Billion to switch homes heated by natural gas to electric heating is ill-conceived and prohibitively expensive.
The Ontario Natural Gas Alliance (ONGA) is a partner in Ontario’s low carbon future that combats climate change. The industry has made collaborative and cost-effective proposals to meet Ontario’s emission reduction targets including increased conservation spending, moving to more renewable natural gas, and using natural gas in medium- and heavy-duty trucking. However, using Cap and Trade proceeds to switch Ontarians to electric heat would be disruptive and will not allow us to achieve our emission reduction goals.
Ontarians should continue to have choice, and not be forced to adapt a single electric solution for home heating—one that will entail expensive equipment costs upfront and is six times more expensive to operate than natural gas.
Bottom line: Ontario households will pay up to $3,000 more each and every year to heat their homes if this policy proceeds.
Spokesperson, Ontario Natural Gas Alliance
We hear a lot in the news about the need to create jobs and fight climate change. Although the problem is well identified, you may be left wondering what is happening across the province that provides solutions. Let me introduce you to Markham District Energy (MDE).
MDE relies on clean natural gas to provide heating, cooling, and electricity in Markham with unrivalled reliability. This provides a competitive advantage to the community, fosters new business opportunities, and at the same time reduces emissions to combat climate change. The City of Markham in part credits the founding of Markham District Energy with bringing major employers like IBM to the community. Additionally, the recent growth of Downtown Markham, a new, residential and commercial development in the heart of the city, was enabled in part because of existing natural gas and district energy infrastructure.
Check out this short video to learn how they do it:
This advanced network means incredible reliability for Markham District Energy customers. Even during the worst storms and inclement weather customers have the peace of mind to focus on what they do best — whether it is providing a strong education, best-in-class hospitality, or leading healthcare services.
Markham District Energy customers and the broader community benefit in two key ways: Natural gas prices are competitive and stable due to an existing strong supply and existing distribution infrastructure and using a district energy system reduces overall emissions. In 2015 alone, MDE reduced greenhouse gas emissions in Markham by 17,000 tonnes — the equivalent of taking nearly 4,000 cars off the road. As more in the community recognize district energy’s potential the impact can be even greater.
It is great to see local leaders like Mayor Scarpitti and Markham Stouffville Hospital’s Jo-anne Marr champion the important role that natural gas is playing in their community.
Richard Cunningham at the Markham Board of Trade believes the community should look to expand MDE to encourage business growth. ONGA agrees and we are proud to be a part of the solution.
Watch the video and let us know what you think on Twitter at @NaturalGas_ON or you can reach me @jellerton.
Natural gas is one of the most versatile, reliable, clean and affordable sources of energy available in Ontario. For this reason and more, I’m proud to join the team at the Ontario Natural Gas Alliance (ONGA) as spokesperson.
Challenges that are top of mind to ONGA members are expanding access to natural gas access to reduce energy bills overall, and ensure the continued success of Ontario’s agriculture sector. And of course, helping confront the challenge of climate change.
Ontario has millions of existing natural gas distribution customers, ranging from home owners to electricity generation facilities, small businesses, public transportation systems, farms and agri-businesses, a variety of industrial consumers and legions of backyard barbeque enthusiasts. What each of these segments have in common is that they enjoy access to a reliable supply of clean and affordable natural gas. Unfortunately, not all Ontarians enjoy access to natural gas, and this puts some people at a competitive and economic disadvantage.
I am pleased to join an organization like ONGA that treats the expansion of natural gas distribution service in Ontario for what it is – an important public policy measure. It can increase economic growth, foster agricultural competiveness and reduce energy bills in the winter months, especially when compared to electricity for home-heating. In fact, ONGA has done great work highlighting the benefits of natural gas expansion in Red Lake, Ontario and the need for access for agri-business in Bruce County. As spokesperson for ONGA, I want to keep highlighting the need for increased access to natural gas distribution – it is too important for our economy to ignore.
For much of the past year, climate change has been front and centre in the news. The government of Ontario has introduced legislation that would, if passed, create a cap-and-trade system and join Ontario with the Western Climate Initiative.
Everyone at ONGA can agree on one thing: we are long passed the time to debate the merits of taking action to confront climate change and that now is the time to tackle the problem head-on. Having the resolve to confront climate change is one thing, but the approach must be constructive and done in a meaningful way that recognizes Ontario is already a leader in this fight.
The closure of coal-fired power plants dramatically reduced emissions in Ontario –the largest climate change mitigation measure in North America to date. Just as natural gas played a major role reducing emission from electricity generation, natural gas is similarly positioned to reduce overall emissions in the transportation sector.
The transportation sector is by far the largest source of greenhouse gas emissions in the province today. The opportunity of shifting more of the sector to natural gas would be of tremendous benefit to Ontario’s environment and economy, something decision-makers should examine and an issue I look forward to sharing more about.
In the coming weeks and months, I look forward to speaking about the role that natural gas can play for Ontarians, for the benefit of our climate and our economy.
I also want to hear what you have to say. You can reach out to ONGA through this website, on Twitter (@NaturalGas_ON) or you can reach me directly here: @jellerton.
Working together, anything is possible, including addressing one of the great challenges of our time: climate change. The Green Investment Fund is the latest example of partnership between Ontario Natural Gas Alliance members and the Ontario government. This recently announced fund is part of the Ontario government’s Climate Change Strategy and will see $100 million invested to create jobs and help homeowners save energy, reducing monthly energy bills.
The government estimates the fund will help about 37,000 homeowners conduct energy efficiency audits and then complete retrofits, such as replacing old furnaces and water heaters or upgrading windows and insulation. Homeowners know that making these changes can have a real positive impact on their bottom lines, and it’s a great investment that can pay dividends down the road. In the past, for every dollar invested in natural gas efficiency, savings of $1.50 to $4.00 have been realized for natural gas consumers.
In many ways, the launch of the Green Investment Fund represents a vote of confidence from the government of Ontario for something that companies such as Enbridge Gas Distribution and Union Gas have been doing for decades: working with customers of all scopes and sizes to reduce monthly bills and lower greenhouse gas emissions. Between 2005 and 2013, natural gas conservation programs resulted in 47 million tonnes of lifetime greenhouse gas reductions, while the price of natural gas remained competitive.
Clean, reliable and affordable natural gas is an ally in the fight against climate and with the announcement of the Green Investment Fund; it shows the government of Ontario recognizes this important fact. As Glen Murray, the Minister of Environment and Climate Change said with the release of the program: “Improving energy efficiency in the home is one of the most important actions we can take in the fight against climate change.”
Evolution rarely happens overnight. And in the case of natural gas as a way to power transport, for Fiat Chrysler Automobiles, it’s happening one big truck at a time. As reported by Truck News, Fiat Chrysler Automobiles (FCA) announced the complete conversion of its private fleet of 179 trucks to compressed natural gas. This fleet is based near Detroit, Michigan and hauls parts and supplies for Chrysler operations between company plants throughout the Midwest of the United States and Ontario.
The Ontario Natural Gas Alliance (ONGA) advocates of using clean, reliable and affordable natural gas for transportation and it is encouraging to see business around North America embrace compressed natural gas for their fleets.
FCA’s conversion represents a major investment of resources and confidence in compressed natural gas technology by Chrysler. The conversion itself took two years and US$40 million to complete, not counting the infrastructure investments needed for fuelling and a maintenance facility.
But while the capital investment was significant, the returns are similarly sized. The company expects to reduce costs on fuel by 35 per cent compared to diesel and perhaps most importantly, reduce CO2 emissions by more than 16,000 tonnes.
Truck News reports that company officials will monitor the conversion project in the United States before making such a transition in Ontario. ONGA would encourage Chrysler, and indeed all transportation businesses, to explore the myriad benefits of clean, reliable and affordable natural gas for transportation. Here in Ontario, companies like Groupe Robert have experienced both environmental and cost benefits by availing themselves of natural gas technology.
Take a moment to see first hand how clean, reliable and affordable natural gas is making a positive impact in Ontario: