Normand Mousseau
Professor of Physics and Chair
Université de Montréal

Main points of current energy situation for East Canadian provinces (Normand Mousseau)

Here is a brief summary of various concerns regarding energy among the Eastern Canadian provinces. It does not include everything and I tried to focus on points that would be related to the workshop.

Electricity

Access to cheap and reliable electricity is an issue in all provinces. With the exception of Ontario, which must still decide what to do with its nuclear power plants, most provinces have no issue with production capacity. Production capacity is already in place in Quebec, New Brunswick and Prince-Edward Island; Newfoundland and Labrador and Nova Scotia are counting on the development of Lower Churchill and the Maritime Transmission link (for N.-S.).

Price remains, for all, a dominant issue, especially with the market changes caused by shale cas, as well as the integration of intermittent renewables.

Finally access to market is a concern for Newfoundland and Labrador and Quebec.

Oil

Usage, imports and refining

Except for Newfoundland and Labrador, all Eastern provinces are net importers of oil or refined petroleum products. All provinces save PEI have refineries on their soil:

  • Newfoundland and Labrador (North Atlantic Refining, 115 000 bpd)
  • Nova-Scotia (Imperial Oil, 88 000 bpd)
  • New Brunswick (Irving refinery, 300 000 bpd)
  • Quebec (Valero and Suncor, 405 000 bpd)
  • Ontario (Shell, Imperial Oil (2), Suncor,384 000 bpd)

Most of the imported oil/petroleum products imported in the East come from outside Canada. This situation goes back to the 1980’s when the pipelines running West to East were inverted to give Ontario refineries access to cheaper imported oil.

Newfoundland oil is exported and Ontario petroleum products are Western Oil mostly refined in the USA.

Production

Sizeable oil production is limited to Newfoundland and Labrador, with Nova Scotia and Ontario producing almost anecdotal amounts.

Production in NFL Hibernia and xx fields are falling but new fields, more to the East are being considered.

Quebec has possible oil on its border with NFL in the St-Lawrence Gulf (Old Harry) and two possibly exploitable non-conventional fields. While preliminary discussions have been going one between the two provinces regarding Old Harry, no final MOU has been signed.

Transport/transmission

Since all Eastern provinces have sufficient access to oil, the main transport issue is associated with oil produced in Western Canada.

On the one hand, Eastern refineries, past Ontario, do not have access to the currently cheap Western oil.

On the other hand, with hurdles on Keystone XL and the Northern Gateway, the East appears as the best export direction for Western oil.

Two projects are being considered at the moment:

  1. The inversion of line 9b (Enbridge), that would bright light crude oil to Montreal and Quebec’s refineries. This is in the last steps of approval at the National Energy Board (NEB).
  2. A new pipeline (Canada East, by TransCanada) that would use gaz pipelines in Ontario (see natural gas issues), new constructions through Quebec and New Brunswick to end in St-John’s. This project has not been presented to the NEB. It would carry about 1 million bpd, with a large part being off-loaded in a new harbour in Cacouna, Quebec, with the rest being delivered to New-Brunswick.

While these projects are being discussed, oil is already flowing massively through rail, with all the associated risks for local populations along the path, mostly through Ontario and Quebec.

Natural gaz

Access

In Eastern Canada, natural gas is produced for four fifths in Nova-Scotia, and one fifth in NFL. Small amounts are also produced in New-Brunswick and Ontario.

With the exception of Ontario, where it represents 30 % of all energy used, natural gas is not much used in Eastern Canada (14 % in Quebec, 11 % in New-Brunswick and below 10 % in the other provinces). Nevertheless, with current low prices, this is a very sought after energy source for industrial development.

While access to natural gas is mostly an issue for the heavy industry near Sept-Îles in Québec and in mining regions, the main accessibility issue today is associated with the conversion to an oil pipeline of a gas pipe going through Ontario into Quebec. There are fears that this conversion could limit access to the cheap US gas in both Ontario and Quebec.

Cost of distribution is also an issue, in New Brunswick, for example, which limits its capacity to make full use of the drop in market price.

Exchanging natural gas for hydroelectricity

This point comes back regularly, especially when discussing energy issues between Quebec and Ontario. The idea is that natural gas is more suited for heating than electricty. It should therefore be more ecological for Ontario to buy electricity from Quebec, electricity that could be saved through abandoning electric heating in favor of natural gas.

Efficiency of natural gas furnaces and boilers used to be around 60 %. Mid-efficiency furnaces are around 80 %. Today, new high efficiency furnace and boilers are around 90 % when installed. This compares with the efficiency of combined-cycle gas plants that reaches 55-60 % (still considerably better than conventional gas plants). In the best scenario, 20-30 % of the gas energy is lost when using it for electricity instead of local heating.

On the other hand, electric heating is essentially 100 % efficient, in terms of energy conversion. However, when coming from hydraulic power this electricity has been produced with 100 % efficiency.

If we assume, a 5 % additional energy loss for transporting electricity to Ontario and similar for natural gas to Quebec, then exchanging natural gas for electricity would decrease the demand in natural gas, for the same total heating + electricity service, by about 15 % (all numbers rounded).

Other renewables

Most provinces have put plans in place to develop intermittent renewables, mostly wind turbines. From Prince-Edward-Islands to Ontario, various approaches were taken generally with a guaranteed purchasing price. This has meant that the costs of deployment has been mostly born out by the consumer who has had to pay extra to support this new energy source.

At the moment, both Ontario and Quebec plan to add considerable amounts of intermittent renewable electricity to their grid.

Biomass is also a renewable energy with potentially interesting local economic impacts. This is why it is present in the 2011 energy policy from New Brunswick and is supported in a number of other provinces.

Greenhouse gas emissions

With the exception of Quebec, greenhouse gas emissions are not a major concern in the energy policies of the various provinces. Yet, energy and GHG are closely linked and the latter will have to be at the core of any new energy policy.

Energy efficiency

Remarkakly, energy efficiency is not very high on the list of energy policies except in the last Ontario long-time energy plan. The plan, which focuses almost exclusively on electricity, proposes to offset all growth in electricty consumption by equivalent electricity savings to keep demand constant.

Monday 20 October 2014

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