Natural Gas in Ontario Canada

Natural Gas in Ontario Canada

 Introduction

Natural gas is a mixture of gases that occur naturally particularly methane and hydrocarbons such as nitrogen and carbon dioxide. Natural gas is considered an important source of energy in several countries worldwide. It used to produce electricity and a source of heat for instance. It also may be used as fuel for cars and in the production of plastic materials. Natural gas is obtained in the rocks located deep in the earths crust in close proximity to the fossils containing petroleum. Before it is ready for use, it must undergo cleaning processes to get rid of the impurities it may have. Natural gas is considered an important source of energy in several countries worldwide. Natural gas is present in several countries all over the world the leading producer being Russia (Fredericks, 2007). It is also found in Canada specifically in Southern Ontario. This is because most of the area was covered by several shallow seas whose living organisms decomposed to give natural gas. Mining in the area began more that 150 years ago and is still taking place.

  1. The intended use of the product and the various requirements to be met by the item purchased

Natural gas in Ontario has several uses both commercially and domestically. The most common function of natural gas is that it is a source of energy used primarily in the provision of fuel. It is used as fuel for vehicles and it is considered a cheaper alternative to petrol, which is prone to shortages. Power generation is another function of natural gas specifically in the industries that require a steady source of energy. In some cases, natural gas may also be used in homes for lighting or cooking in some instances. Apart from the widely known uses, natural gas also has other roles. Petrochemicals from natural gas are important in the manufacture of cosmetics like lipstick. In addition to this, it is also used in the manufacture of roller blades as well. In Canada, the location of such a petrochemical industry is in the area of Sarnia.

  1. Identify the different forms of the product including the various characteristics, the different grades, classifications, and properties, which distinguish one product from another

Natural gas occurs in four main forms, methane, butane, ethane and propane. Each form has slightly different characteristics when compared to the rest. Methane is considered the most combustible and is mostly exploited in industries in power generation. Ethane is mostly employed in the production of polyethylene materials by the process of polymerization. Propane is utilized in cooking and as fuel in most cases. The last component, butane is used as fuel and in the manufacture of refrigerators since it is not as abundant as the rest, it does not have several uses. The most abundant element of natural gas is methane followed by ethane and propane while the least abundant element is butane.

  1. Define the technical terms that are used to specify and inspect the selected product.
  2. a) Internal Line Inspection (ILI) – this refers to the inspection of the interiors of the material used to transport the natural gas for example pipelines. This process involves the use of devices referred to as ILI Devices. Some of these devices are fitted with cameras that take pictures to enable the engineers to view the condition of the pipelines in question.
  3. b) Leak Surveys- these take place often in order to determine if there are any leaks as the gas is transported from the manufacturer to the consumer.
  4. c) Hydrostatic Tests- this process is done to determine how capable the pipeline in question is especially at the existing pressure or in the case of raised pressures. This method is also called the Maximum Allowable Operating Pressure (MAOP) (Alberta, 2008). These tests are important since they identify the weaknesses the pipes may have. By their identification, it is easier to avoid accidents that result from leakages for example.
  5. Identify suppliers (both domestic and international) from which the product can be obtained

Natural gas in London, Ontario is supplied in the Middlesex County by Union Gas Limited. The natural gas company is able to supply natural gas through the Trans Canada Pipeline. Moreover, the firm Union Gas Limited does not limit its supply to Southwestern Ontario but also to other parts of Ontario across the northern, northwestern, southern, Fort Frances and eastern side of the state. Aside from Union Gas Limited, Enbridge Gas Distribution is also another major supplier avails the commodity locally. Internationally, natural gas is obtained from international countries mostly located in Europe and Asia. In Europe, natural gas is supplied by Russia through Kizlyarraigaz, Uchkekenraigaz and Egorevskmezrhaigaz companies. In Asia, Supply is done by Weinan Natural Gas Company in China. Other companies that supply natural gas include Vitogaz in Senegal and Duferco Natural Gas Spa in Italy.

  1. 5. What is the typical way the product is packaged and sold?

Natural gas is stored and at times sold using pipelines. However, this only applies in the case of large-scale buyers like industries for instance. For the small-scale ones like in the case of domestic use like cooking, natural gas is packaged as Liquid petroleum gas (LPG) in gas cylinders of different sizes such as 6Kg, 12Kg and 23 Kg. In other cases, some companies supply natural gas to their customers who pay them based on the amount of gas they utilized during the month; this is the most common way in Ontario.

  1. Pricing trends

The Ontario Energy Board (OEB) is responsible for the regulation of prices in Ontario. The prices of natural gas are prone to changes and are mostly affected by the cost of fuel in the country in question. Prices range between 3.50 to 5 dollars per MMBtu (British Thermal Units) for large-scale buyers. it is almost equal to 1 Kilo Joule. MMBtu refers to one million Btu. They in turn sell it for 6-8 dollars to the customers. This information is based on the estimates provided by the Ontario Energy Board. Regarding natural gas storage, five storage corporations control 35 natural gas storage structures in Ontario. These facilities have a sum useable capacity amounting to 7.3 billion cubic meters. The natural gas stored underground in the storage facilities is mainly distributed by pipeline to consumers throughout southern Ontario. On peak winter, 58 percent of the natural gas used in Ontario is availed from storage reservoirs. Annually, 25 percent of natural gas used is received from storage.

  1. What types of things can affect the pricing or availability of the product?

Availability of natural gas is affected by several factors in the market. The main factor that affects the prices of natural gas is the cost of the production of the commodity. If the cost of production is high, the cost of natural gas will also be high while the reverse is also true.

Another factor that affects pricing is the cost of the substitutes like petrol. If the substitutes are cheaper, the sale of natural products will decrease since the consumers prefer the cheaper substitute. Weather also has an effect on the prices of natural gas. For instance, during winter, the sales increase since the people nee to keep warm while the opposite occurs in summer. Finally, government policies that pertain to the sale of natural gas may also affect the prices of the product. Affordable taxation schedules make the gas cheaper for example (NGD & US, 2005). On the other hand, unfavorable taxation regimes will limit the importation of the commodity resulting in shortages in the country in question.

Conclusion

The use of natural gas has become more prevalent all over the world. This is because it is more reliable than petroleum, which has many shortages. Especially in Ontario, it is the most common source of energy in the area. Therefore, natural gas is a suitable substitute for petroleum as several countries have realized especially Russia.

 

References

Alberta. (2008). Natural gas. Edmonton: Alberta Energy.

Fredericks, C. (2007). Natural gas. Detroit Mich.: Green haven Press.

Natural Gas Symposium (NGS), & United States (US). (2005). Natural Gas Symposium: Symposium before the Committee on Energy and Natural Resources, Washington DC. :United States Senate, One Hundred Ninth Congress, first session, on natural gas, Government Press.

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