Natural Gas & Ontario: A Key Energy Source

Ontario relies on natural gas to support basic household needs, such as heat and hot water. But natural gas is also used as a raw material by industry, and is an ingredient in the production of plastics, fertilizers, pharmaceuticals and fabrics. In addition, it’s used to produce various chemicals.

Natural gas provides about 15% of the electricity generated within the province. There are approximately 3.5 million residential, commercial and industrial natural gas customers in Ontario.

Natural Gas Sources

Nearly all of Ontario’s natural gas comes from outside the province and is delivered by pipelines, which are under federal jurisdiction.

In Ontario, the Ontario Energy Board (OEB) regulates the natural gas sector by approving distribution rates and commodity prices, as well as licensing gas marketers.

Although Ontario is not a major natural gas producer, its geographic location and natural gas infrastructure put it in a strategic position to take advantage of North America’s evolving natural gas market.

Storing Ontario’s Natural Gas

The Dawn and Tecumseh underground natural gas storage facilities play a critical role in the delivery of natural gas within Ontario. The facilities also support the delivery of natural gas to consumers in Quebec and the northeastern United States.

The Union Gas Dawn hub in southwestern Ontario is the largest underground storage facility in Canada, with 155 billion cubic feet of storage. The Enbridge Gas Distribution Tecumseh facility has 100 billion cubic feet of storage and is located next to Dawn. Both natural gas storage facilities are regulated by the OEB.

Storage facilities can keep large quantities of natural gas on hand and deliver it to customers on demand. This allows natural gas to be bought and stored when prices are low, and sold when demand, and therefore prices, are higher. Subsequently, price volatility is minimized and there is enough natural gas available to meet peak demand.

The Dawn and Tecumseh facilities will likely increase in strategic importance as U.S. pipeline infrastructure expansion allows for increased delivery of U.S. shale gas to southwestern Ontario.

Fuel for Ontario Drivers

While oil continues to be the primary source for vehicles in Ontario, there is increasing interest in the use of compressed or liquid natural gas as a fuel for corporate car and truck fleets, to reduce costs and lower greenhouse gas emissions. Natural gas is the cleanest-burning fossil fuel, producing fewer carbon dioxide emissions than diesel or gasoline.

In 2018, energy firm Enbridge opened three natural gas filling stations along Ontario’s Highway 401 in London, Windsor and Napanee. The stations will ultimately be part of a planned natural gas fuel network along Canada’s busiest highway. There are already nearly 50 compressed natural gas stations in various Ontario locations.

As for the future, it’s believed there will be amply supply of natural gas from the United States to cope with demand in Ontario. In fact, it’s estimated that North America now has a 100-year stock of natural gas.