This article was published by the Canada Energy Regulator on June 30, 2021.
Prior to 2008, demand for natural gas in Quebec and Ontario was largely met with domestic production from western Canada transported on the northern Ontario line (NOL) of the TC Canadian Mainline(1). In recent years, the NOL has been supplying less gas to eastern Canada, despite growing demand.
Figure 1: Natural Gas Demand in Ontario and Quebec and Pipeline Flows on the NOL Segment of TC Canadian Mainline
The decline in flows on the NOL since 2006 is largely attributable to growing US Northeast gas production and increased imports of US gas into eastern Canada. Particularly, horizontal drilling and new production technology made gas cheaper to produce and enabled production from the US Appalachian Basin to increase over tenfold between 2010 and 2020, rising from 2.7 Bcf/d (76.5 106m³/d) to 33.7 Bcf/d (954.3 106m³/d).(2) New low-cost drilling methods and the Appalachian Basin’s close proximity to eastern Canadian markets made US Northeast gas more competitive in Canada, leading to more US gas imported and consumed in eastern Canadian markets.
Figure 2 shows the decline of exports and growth of imports at three key points in Ontario: Niagara, Chippawa, and Iroquois. Imports at these key border points increased 31 per cent over the past five years with most of the volumes coming through Niagara. Imported gas at these points is supplied with production from the Appalachian Basin.
Figure 2. Natural Gas Exports and Imports at Key Points in Ontario
In addition to the NOL and imports at Chippawa, Niagara, and Iroquois; Ontario and Quebec are supplied with natural gas from storage. Southern Ontario is home to a series of natural gas storage facilities (known as the Dawn Hub(3)), which is supplied with natural gas from several producing areas in North America, including the Western Canada Sedimentary Basin (WCSB) and the Appalachian Basin. In recent years, the construction of new pipelines in the US (including Rover and Nexus) brought more US production into the Dawn Hub, increasing options for supply for customers in Ontario and Quebec.
Western Canadian gas production grew over the past decade from 14.2 Bcf/d (403.0 106m³/d) in 2010 to 15.4 Bcf/d (436.5 106m³/d) in 2020(4), and flows have been re-adjusted to other markets in response to displacement in Ontario and Quebec. Particularly, more western Canadian gas now meets increased demand in Alberta from the growing power generation and industrial sector. Similarly, exports of western Canadian gas have now shifted and supply more to the US Pacific Northwest(5) after being crowded out of the US Northeast. See the Pipeline Capacity and Utilization section of CER’s Canada’s Pipeline System 2021: Understanding CER-Regulated Infrastructure report for more information.
- TC. Canadian Mainline transports natural gas produced in the Western Canadian Sedimentary Basin to consumers in eastern Canada and the United States (U.S.). Since the mid–2000s, some export points on the eastern portion of the Mainline were reversed to become import points that bring natural gas produced in the Appalachian Basin into Canada. In eastern Canada, the TC Canadian Mainline connects with several U.S. natural gas pipelines, including Iroquois Gas Transmission, Portland Natural Gas Transmission System, Tennessee Gas Pipeline, National Fuel Gas Pipeline and Empire State Pipeline. For more information about the TC Canadian Mainline is available.
- Appalachia Region, Drilling Productivity Report (EIA).
- Dawn Hub storage has approximately 275 billion cubic feet of storage capacity (Union Gas).
- Marketable Natural Gas Production in Canada (CER).
- Kingsgate export point, Foothills Pipeline – Pipeline Profile (CER). See also Natural Gas Annual Trade Summary – 2020 (CER).