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Natural Gas Liquids - The Canadian Industry

Figure 1 - Canadian Propane Supply and Disposition - 2009

Figure 1 - Canadian Propane Supply and Disposition - 2009

Green blocks show production
White blocks show regional propane demand
Orange blocks show United States regions that receive Canadian exports of propane
Red block shows imports into Canada
PADD: Petroleum Administration for Defense District that defines a market area in the U.S.
Source: NEB

Since NGLs are mostly extracted from natural gas, natural gas producing regions are also NGL producing regions. (See section on How Canadian Natural Gas Markets Work.) Natural gas production from conventional supplies is expected to remain flat, so NGL production is also expected to remain flat. Growing natural gas production from coal contains no liquids, while potential natural gas supplies from the north have relatively low liquids content.

Western Canada accounts for the majority of NGL supply, but there is some production at the Point Tupper, Nova Scotia facility, which processes natural gas from Sable Island. Natural gas liquids are initially extracted from natural gas at field plants. There are almost 700 active plants in Canada and over 600 are located in Alberta. The other provinces with field plants are British Columbia, Saskatchewan and Nova Scotia. In Western Canada, nine facilities called straddle plants extract incremental amounts of ethane and propane from natural gas. They are located on the major gas pipeline systems. The initial products from all plants are usually NGL mixes. These mixes are usually sent to fractionation plants to be separated into individual products such as ethane, propane and butane. In 2009, NGL production, excluding pentanes plus, from field plants and straddle plants, was 79 148 m³/d (498 Mb/d).

Once extracted, NGLs are usually transported from Alberta to Sarnia, Ontario and to the U.S. via three major pipelines: Cochin, Enbridge and Alliance. Cochin transports individual products such as ethane, propane and butane, while Enbridge is mainly an oil pipeline, but also transports an NGL mix. In the high pressure Alliance natural gas pipeline, NGLs are transported in the natural gas and are extracted at the end of the pipeline near Chicago, Illinois.


Nearly all of the ethane produced in Canada is extracted at plants located in Alberta, and in 2009, this amounted to an estimated 40 494 m³/d (255 Mb/d). Most of this is used in Canada as a feedstock for the petrochemical industry to make ethylene, an important building block in the manufacture of chemicals, particularly plastics. The majority of Canada's petrochemical industry is located in Alberta and is ethane-based, while the rest of the industry is located in Ontario. With the increase in ethylene demand and expected flat natural gas production, Alberta ethane supply is currently considered fully used. A small amount of ethane in Canada is also used as a solvent to improve oil recovery from mature producing fields. The last export of ethane from Canada was January 2001.


In 2009, propane extracted from natural gas was estimated at 24 730 m³/d (155 Mb/d), while refineries produced 4 241 m³/d (27 Mb/d) of propane. Total Canadian propane demand was 13 139 m³/d (83 Mb/d). Fifty-five percent of Canadian propane production was exported to the U.S.

Figure 2 - Canadian Propane Demand - 2008 Estimates

Figure 2 - Canadian Propane Demand - 2008 Estimates

Sources: Statistics Canada and NEB

Figure 2 shows Canadian demand for propane. Residential and commercial sectors use propane for space heating, water heating and cooking. Of the 12 million households in Canada, propane is used by about 93,000 households, or about one percent. These residences are typically located in areas beyond the natural gas distribution systems. An average household that requires about 100 gigajoules of energy to heat their home will use about 3 900 litres of propane.

Aside from space heating, industrial uses for propane include fuel for furnaces, heat treating of metals, and heating for ovens, kilns and dryers. Propane has the largest share of the auto fuel market after gasoline and diesel, but its use in Canada and the U.S. has been falling because of the cost of conversion, requirement for large storage tanks, fewer refueling stations than for gasoline and the restriction against propane vehicles in underground parking. Propane's use as a petrochemical feedstock is growing in Canada in light of the tight ethane supply situation. Propane used in agriculture is mainly for crop drying.


In 2009, butane extracted from natural gas was 13 924 m³/d (88 Mb/d) or 61 percent of total production. About 8 959 m³/d (56 Mb/d) of butane came from refineries. While condensate is the primary blending agent for diluting heavy oil and bitumen for transportation through pipelines, butane may also be used. Butane is also used in the production of alkylate, an octane enhancer for gasoline. The petrochemical industry uses butane to produce vinyl acetate, a chemical commonly used in water-based paints and adhesives, in safety glass interlayers and in hairspray.


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