Oil Industry in Canada
The oil industry in Canada is an important sector in light of the fact that the country is a major oil exporter and producer and holds some of the largest reserves worldwide. In fact, only Venezuela and Saudi Arabia have larger oil reserves than Canada. Experts predict that the country’s proven oil reserves will increase in volume with technological advancements. Canada is also one of the countries with the largest shale oil resources together with Libya, Argentina, China, the United States, and Russia.
Canada’s Government and Provincial Authorities
The provincial and territorial authorities and the federal government receive revenue from the oil sector and other energy sectors. Revenue is in the form of crown land sales, crown loyalties, indirect taxes, including payroll and sales taxes, and corporate income tax. The gas and oil industry is the largest tax payer in Canada. The government receives revenue from businesses engaged in gas and oil extraction, coal and petroleum manufacturing, utilities, pipelines, and support activities.
The Petroleum Businesses
Petroleum companies are different from other businesses in that they require less labor compared to heavy equipment and machinery. This makes them capital intensive. Another difference is that petroleum businesses face higher financial risks. Profits vary to a high degree, and this can be explained with competition and supply and demand. Due to weak oil prices during the past years, more and more companies consider mergers and acquisitions. The good news is that the petroleum sector shows signs of recovery and some businesses began to redeploy equipment. Raising capital is a major problem for many businesses, however.
Some 97 percent of oil exports go the United States. Imports to Canada come from a large number of states, among which Norway (11 percent), Iraq (12 percent), Algeria (13 percent), and the U.S. (20 percent).
Petroleum businesses in Canada mainly focus on upstream operations such as gas and oil production, drilling, and exploration. Some companies also have downstream operations such as the sale, distribution, promotion, and refining of gas and oil products. The provinces with the largest number of operations include Alberta (76 percent), Saskatchewan (15 percent), Newfoundland and Labrador (7 percent), Manitoba (1.5 percent), and British Columbia (0.6 percent).
Two methods are used for petroleum extraction and namely, the in-situ and mining method. Mining involves a wide variety of activities such as pump tailings, separating sand and oil, ore extraction, and overburden removal, among others. There are several large projects in Alberta - the Imperial's Kearl Mine, Athabasca Oil Sands Project, CNRL Horizon Mine, Suncor Base Mine, and Syncrude Mining Project.
The in-situ method also involves a number of activities, including injecting steam, drilling horizontal and vertical wells, and others. The largest projects using the in-situ method are the Firebag and Cold Lake projects in Alberta. The in-situ method is used in more than twenty projects in Alberta.
Petroleum refineries in Canada are used for product blending, additional processing, and crude oil distillation. A variety of products are manufactured, among which heavy fuel oil, heating oil, diesel fuel, motor gasoline, and aviation fuels. Heavy fuel oils are mainly manufactured for electricity production and marine transportation. Petroleum refineries also produce petrochemical products and liquid petroleum gases as well as products such as asphalt, petroleum coke, waxes, greases, lubricating oils, kerosene, and others.
There are companies engaged in bitumen upgrading to make bitumen lighter. The main companies in this sector include Husky and Nexen-CNOOC, Canadian Natural Resources, Shell, Suncor, Syncrude, and more.
Associations in Canada
Other Energy Industries in Canada
Canada also produces biofuels, hydroelectricity, renewable energy, electricity, and uranium, coal, and natural gas products. Natural gas accounts for 57 percent of production and 100 percent of exports to the United States. Coal accounts for 57 percent of production and 3 percent of exports to the U.S.