Ontario is a significant consumer of natural gas, representing 24% of total Canadian demand, making it the second largest consuming province after Alberta, according to the National Energy Board. Natural gas is used for space heating and hot water in homes and businesses and steam and process heat in industry, providing approximately 15% of the electricity generated within Ontario.
The largest sector that consumed natural gas in 2017 in Ontario was the industrial sector, at 55% of the total gas consumed. According to NEB statistics, the residential industry represented 25% of gas consumed, followed by commercial, at 18%.
The industrial sector uses natural gas as a fuel for process heating, in combined heat and power systems, and as a raw material to produce chemicals, fertilizer, and hydrogen, says the U.S. Energy Information Administration. In 2017, the industrial sector accounted for about 35% of U.S. natural gas consumption, and natural gas was the source of about 31% of the U.S. industrial sector's total energy consumption.
The commercial sector also uses natural gas to heat buildings and water and to operate refrigeration and cooling equipment. About 3.5 million homes and 130,000 businesses currently use Ontario natural gas south.
Last year, the Ontario government announced plans to expand natural gas access to families and businesses throughout rural and Northern Ontario via a partnership with local communities and the private sector. The first such expansion came to the Chatham-Kent region in March 2019 and included the construction of two new transmission pipelines and supporting distribution mains.
World Demand for Natural Gas Increases
According to the International Energy Agency (IEA), demand for natural gas jumped by 4.6% in 2018. The United States led the growth last year, with the switch from coal to gas responsible for nearly half the increase. Weather also significantly impacted gas demand in Canada and the United States, with a colder-than-average winter and hotter-than-average summer driving up demand in buildings and for power generation.
Gas demand in China increased by almost 18% as the country accelerated efforts to reduce local air pollution.
The IEA expects the Asia Pacific region to drive gas demand in the next five years. This region is forecast to account for almost 60% of the total consumption increase by 2024. China will be the primary driver of gas demand growth, expected to account for about 40% of the total gas demand increase by 2024.
Although coal-to-gas switching, residential use, and power generation all play a significant role in the growing global demand for natural gas, the industrial sector is expected to account for almost half of the increase in natural gas consumption globally, covering energy for processes and chemical feedstock.
With natural gas use increasing in both the industrial and residential sectors, it's little wonder that demand has also strengthened. Although the Asia-Pacific region will mainly drive future growth, the United States and Canada will continue to play critical roles as natural gas producers and consumers.
Natural gas demand has been increasing in Ontario and globally due to several factors. Here's a detailed look at the situation:
Ontario
Electricity Generation:
- Natural gas is increasingly used for electricity generation due to its reliability and lower emissions compared to coal.
- Ontario phased out coal-fired power plants, increasing reliance on natural gas to meet electricity demands.
Heating:
- Natural gas remains a primary source for residential and commercial heating.
- Population growth and urbanization have contributed to higher natural gas consumption.
Industrial Use:
- Industries in Ontario use natural gas for processes and as a feedstock in chemical production.
- Economic growth and industrial activities have driven up demand.
Policy and Environmental Factors:
- Policies supporting cleaner energy and reducing greenhouse gas emissions favor natural gas over more polluting alternatives.
- Investments in infrastructure, like pipelines and storage facilities, have facilitated greater use of natural gas.
Global Trends
Transition from Coal:
- Many countries are transitioning from coal to natural gas for power generation to reduce carbon emissions and air pollution.
- Natural gas is seen as a bridge fuel in the transition to renewable energy sources.
LNG (Liquefied Natural Gas) Market:
- The global LNG market has expanded, with countries like the United States, Qatar, and Australia becoming major exporters.
- Increased LNG trade allows countries without natural gas reserves to access it easily.
Economic Growth:
- Developing economies, particularly in Asia, are seeing rapid industrialization and urbanization, leading to higher energy demands.
- Natural gas is often chosen for its efficiency and lower environmental impact compared to coal and oil.
Environmental Regulations:
- Stricter environmental regulations globally are pushing for cleaner energy sources.
- Natural gas, being the least carbon-intensive fossil fuel, is benefiting from these regulations.
Technological Advancements:
- Advances in natural gas extraction, such as hydraulic fracturing (fracking) and horizontal drilling, have increased supply.
- Improvements in LNG technology have made transport and storage more efficient and cost-effective.
Outlook
- Short-term: Demand is expected to continue rising as more regions switch to natural gas for power generation and heating.
- Long-term: The role of natural gas might evolve as renewable energy sources become more prevalent. However, natural gas is likely to remain a significant part of the global energy mix for the foreseeable future.
In summary, the demand for natural gas in Ontario and globally is driven by its role as a cleaner alternative to coal, its efficiency, and the growing LNG market. Environmental policies, economic growth, and technological advancements further bolster this trend.
