Canadian Oil Production Propping Up Gas Demand
Natural gas demand in the energy-rich Canadian province of Alberta is on the rise this year, data analytics firm Enverus said in a March 15 blog, with most of the tug coming from oil sands production.
Enverus said total provincial demand for natural gas averaged 7.7bn ft3/day in February, an all-time high and in stark contrast to the first half last year, when global oil demand destruction in the wake of the Covid-19 pandemic slashed demand for gas in Alberta’s oil sector by 22%. As with much of North America, cold weather in February impacted demand for natural gas, though production trends in the oil sands are also playing a role.
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To coax the viscous bitumen out of the ground, producers in Alberta use a steam-assisted extraction method that relies in part on natural gas. Enverus found that natural gas demand from upstream oil grew some 70% since 2011, while the appetite from the commercial and industrial segment increased 40% over the same period.
Alberta began rivaling Ontario for total provincial gas sales in the latter part of the 2000s, according to data from the Canadian Association of Petroleum Producers. Total gas sales in Alberta in 2019, the last full year for which data is available, reached 64,049mn m3, more than double the sales in Ontario.
Gas consumption, however, faltered last year because of the drain on demand during the pandemic. Between January and June, the Canada Energy Regulator said, gas consumption by the oil sector dropped 22%, to 2.5bn ft3/day from 3.2bn ft3/day, as oil production – mostly bitumen from the oil sands – was cut by nearly 1mn b/d.