1 - Energy Fact Book + Why Are Fossil Fuels so Hard to Quit?

Primary Energy Source

A source of energy in its original, unused state (e.g., coal)

Methods of Measuring Energy Production from Primary Energy Sources

1. The amount of uranium produced and exported by Canada (as a baseline for primary energy sources)

2. The domestic electricity production by nuclear energy (not including energy stored in uranium itself)

Total Energy Supply (TES)

Production + Imports + Stock Changes - Exports

Production: Energy produced in Canada

Stock Changes: Otherwise unaccounted for changes in energy (e.g., losses)

In 2022: 77% of Canada's TES was fossil fuels, 16.8% was renewables

Global TES

81% Fossil fuels

14& Renewables

5% Nuclear

Types of Energy Contributions

Direct Usage: Energy produced where it's used (e.g., fossil fuels in steel-production ovens)

Indirect Usage: Energy generated and transported to site of use (e.g., most electricity)

- Supplies more jobs than direct!

Energy Trade

2023, Canada and US have strong trade relations

More than 97% of Canada's exports of crude oil, natural gas, and electricity are transported to the US

Almost all of US natural gas imports (99%) come from Canada

Crown Land Sales

Government-owned portions of land are sold to private companies for a specific use, usually to obtain resources from it

Crown Royalty

Resources harvested on government land require a portion of the revenues to be paid to the Crown (government)

Government Revenues

Canada, federal and provincial governments receive revenue from the energy industry

This can be in the form of corporate taxes, crown royalties (majority, 73%), and crown land sales

GHG Emissions from Energy Production

2021, 78% of global GHG emissions were caused by energy production and consumption

Canada, 82% of emissions are from energy production and consumption

- Greater than global average because of Canada's colder climate!

End-Use Energy

The energy consumed by the user (e.g., electricity)

Canada, between 2000 and 2022...

GDP increased by 52%

Emissions decreased by 38% per dollar of GDP, and 25% per capita

Emissions increased slightly after COVID recovery

Electricity production emissions decreased by 63%, tied to Ontario's success in phasing out coal

Oil and gas resource production increased by 67%, emissions consequently increased by 21%

Heavy industry emissions decreased by 19% while industry output increased, due to improvements in energy efficiency and switching fuel resources

2023, Expenditures in Energy Industry

Reached $92 billion

Decreased 22% from 2014

Capital expenditures (on infrastructures to harvest natural resources) were less during COVID but have since rebounded

Largest in the sector, $39.2 billion in the oil and gas industry

Second largest, $27.6 billion in electrical power generation and distribution

2023, Employment Statistics

Fuel, energy, and pipeline infrastructures support:

140,100 jobs

$12.8 billion in employment income

$23.5 billion in GDP

Canada's Energy Projects

233 planned in 2023, 120 under construction

Most funding: Oil and gas sector

Most projects: Electricity (182 total)

Most projects each year: Hydroelectric

Clean technology projects (hydroelectricity, biomass, solar, carbon-capture, etc.) increasing yearly

Nuclear projects decreasing over time

Canadian Energy Assets (CEA)

Reserves of energy-producing resources located on Canadian land (e.g., oil sands, natural gas)

- Abundant compared to rest of world!

Canadian Direct Investment Abroad (CDIA)

Investments by Canadian companies into businesses or operations in another country

Provides benefits for Canadian research and development by facilitating increased operations and integration into other countries' markets

E.g., Canadian company can create a production facility in Chile after establishing an export market for Canadian products there

2023, CDIA was $180 billion, with $39 billion within the oil and gas extraction sectors

Foreign Direct Investment

Funds invested from a foreign company into a Canadian one to increase production, exports, etc., expecting a profitable return

2022/23, Energy industry comprised around 10% of Canadian FDI

Research and Development

2022/23, Federal spending increased by 6% compared to previous year

1/3 of total federal expenditures are invested in energy efficiency, an increase

Mission Innovation (MI)

Global initiative invested in research and development of clean, affordable, widespread energy

Canada's participation in MI resulted in 2x the investments of the MI goal

Federal investments have reached $500 million, on track to meet the 2026 MI commitment

Environmental Protection Expenditures

2021, 41% of total expenditures of all environmental protection industries were in energy at $4.3 billion

Within energy industry, oil and gas had the largest expenditures at $3.2 billion

Electric power generation, transmission, and distribution invested $689 million on environmental protection measures

Petroleum and coal manufacturing invested $435 million in protection, with 84% on pollution abatement and control

Petroleum

Crude oil and all of its refined products (e.g., gasoline, diesel, etc.)

Petroleum and the Economy

Canada is the 4th largest oil producer globally, 5th largest gas producer globally

Oil and gas sector represents 31% of Canada's GHG emissions

Petroleum directly employs 181k people, indirectly employs 265k (through supply chain)

Refined Petroleum Products (RPPs)

Gasoline, diesel, bitumen, etc.

Refinery Activities: crude oil distillation, additional processing, product blending

Refinery Outputs: transportation fuels, liquid petroleum gases, kerosene, lubricating oils, etc.

Majority of RPPs (42%) are gasoline for combustion engine vehicles

Bitumen (Asphalt)

A thick, viscous petroleum

Bitumen Upgrading

Synthetic crude oil: Crude product from oil sands which have undergone a process to produce a lighter form

Conventional Method of Crude Oil Extraction

Retrieves naturally liquid oil by drilling a well into the ground

Oil Sands Method of Crude Oil Extraction

Via oil sands, exceeded conventional production since 2010

Mining Method of Crude Oil Extraction

Subsection of Oil Sands Method, oil sands scooped up by trucks, transported to extraction plants where bitumen is separated from the sand by steam (20% of oil sands resources, 48% of production)

2 barrels of water per barrel of bitumen, with 80% of water recycled

In Situ Method of Crude Oil Extraction

Subsection of Oil Sands Method, a well is dug into the ground and steam is injected to separate the sand from the oil (80% of oil sand resources, 52% of production)

0.16 barrels of water per barrel of bitumen, 90% of water recycled

Environmental Effects of Oil Sands Extraction

2022, Oil sand emissions were 12% of Canada's total

2000-2022, Oil sands' CO2 emission intensity per barrel produced has decreased by 36%

West Texas Intermediate (WTI)

Benchmark for North American crude oil pricing

References USD price for light crude oil delivered at Cushing, Oklahoma

Western Canadian Select (WCS)

Benchmark for Canadian heavy crude oil

Representative of CAD oil prices from oil sands delivered at Hardisty, Alberta

WTI/WCS Differential

US price differences between the two models

WTI typically more expensive than WCS because Canadian crude oil more difficult to process, needs specialized equipment at refineries

Typical difference of USD $10-15/barrel

Difference reached a high of over $50 in 2018 due to insufficient pipeline capacity

Oil prices dropped during pandemic, recovered during Russian invasion of Ukraine

Prices peaked in June 2022, decreased due to expanding global inventory

Harvesting Natural Gas

Done by drilling deep wells to reach porous rock formations where the gas is trapped

Conventional Method of Harvesting Natural Gas

Wells are vertically drilled

Unconventional Method of Harvesting Natural Gas

Wells are vertically drilled, then horizontally drilled

AECO Hub

Canada's largest natural gas trading hub

AECO Price...

Is a benchmark for Alberta's wholesale natural gas transactions

Similar to the AECO

The Dawn Hub (Southwestern Ontario) and Henry Hub (Louisiana)

Price Spikes in Natural Gas

2013 Polar Vortex: the need to heat homes, delays and issues with production

Russia's invasion of Ukraine

2000-2022, Oil and Gas Environmental Impacts

GHG emissions increased by 21%, particularly due to in situ extraction methods

Production emissions more than tripled

Conventional emissions decreased by 15%

Hydrocarbon Gas Liquids (HGLs)

A more usable state of natural gas

Produced from Natural Gas Liquids (NGLs), processed by Alberta (most, 84%), British Columbia, and Saskatchewan

NGLs used mostly by Alberta (41%) and Ontario (30%)

Metallurgic Coal

66% of coal, used for steam manufacturing

Thermal Coal

34% of coal, used for electricity

Coal Statistics

2010-2022, electricity produced from (thermal) coal decreased by 67%

BC produces most of Canada's coal at 64%

Alberta uses the most coal for electricity generation (41% of coal) with Saskatchewan in second place (35%)

Fossil Fuels

Generated from decomposition of ancient plant and animal matter over millions of years

Biomass

Plant material including leaves, stalks, and woody masses that can be directly processed or burned to create biofuels

Natural Gas

A fossil fuel that occurs in a gaseous form, found in underground deposits, valued for its lack of CO2 production, but it requires specific infrastructure to reach customers due to its gaseous state

Electricity

A method for delivering and using energy that emerged in the 20th century, considered efficient, flexible, clean, and quiet, technically entirely comes from the sun

Energy Production Methods Over Time

Pre-1700s: burning wood (biomass)

1700s-1900s: coal took over, mainly for ships and locomotives

1964: oil entered the market, mainly used in transportation sector

Later: fossil fuels for electricity generation (rather than Direct Usage)

2020, Energy Production

63% of coal worldwide used for electricity generation

Oil mostly used for transportation, very little in energy production

Fossil fuels generate 64% of today's global energy supply

Historical Significance of Energy Production Methods

British and American Navies switched from coal to oil before WWI, allowed ships to travel farther than coal-fired German ones

Oil allowed for greater speed at sea and did not require manpower to move (pipelines instead)

In WWII, US produced nearly 2/3 of the world's oil supplies, lack of oil field supplies in Germany and Japan meant they could not keep up with demand, lead to Allied forces winning

Energy Density of Materials

Coal has 3x the energy density of wood

Oil has 2x the energy content of coal by weight

Modern Technology

Wind turbines and solar photovoltaic cells are very different from burned biomass

Nuclear energy and hydroelectricity similarly do not emit CO2

Operational costs dropping due to usage becoming mainstream

2018, 27% of US GHG emissions come from energy generation

Combustion vs Electric Vehicles

Gasoline and Diesel fuel contain ~40x more energy than electric batteries

EVs are more efficient and simpler than internal combustion engines

EVs require a much heavier battery to move the same distance as gasoline-based vehicles, making a substantial difference in plane, boat, and long-haul trucking implementations

Flaws in the Plan to "Electrify Everything"

Does not work for all sectors

E.g., the exothermic property of fossil fuels are difficult to replicate, so they are still needed in industrial processes (steel blast furnaces at 1,100C, cement kilns at 1,400C)

Solutions to Sectors the Require Exothermic Energy

Biofuel is an option but competes with arable land, also emits similar levels of CO2 as fossil fuels

Crop or municipal waste fuel has been considered, but supplies are limited

Hydrogen energy production, requires a lot of energy to complete hydrolysis reaction

Hydrogen Energy Production

The hydrolysis (splitting) of water results in oxygen and hydrogen, and hydrogen can be used as a zero-carbon fuel (requires a lot of energy)

Dealing with Heavy-Industry Emissions

Carbon capture storage and usage is a cheap method

Enhanced oil recovery most common

Enhanced Oil Recovery

Most common use of Cos capture, pressurized (captured) CO2 injected into oil reservoir to produce more oil