Oil

Oil, also called petroleum, is a naturally occurring liquid that originates in deep rock formations in the earth. Due to its age, oil is called a fossil fuel. Oil is composed of various liquid hydrocarbon molecules (combinations of hydrogen and carbon atoms). Depending on which molecules are present, oil can appear from an amber colour to dark black, corresponding from low density and low viscosity (light oil) to high density and high viscosity (heavy oil).

Oil, when initially extracted, is referred to as “crude oil”. Industrial refineries process crude oil by removing impurities and separating component products, which range from, automotive gasoline and home heating oil, to road paving tar.

Oil is produced, transported and sold on a global scale. Oil is priced on a per barrel measurement. Oil prices are quoted based on the reference point of the production location. The world uses approximately 100 million barrels of oil per day.

Natural Gas

Natural gas, often just called “gas”, is a naturally occurring gas that originates in deep rock formations in the earth. For similar reasons, natural gas is also called a fossil fuel. Natural gas is composed of various hydrocarbon molecules (hydrogen and carbon atoms), but primarily methane. Methane is also generated by numerous sources in the global natural environment by organic digestion, from bacteria to mammals.

Natural gas is colourless and odourless, called “sweet gas”. “Sour gas” contains natural and toxic sulfur compounds, giving it a strong odour.

Natural gas, when first extracted, is referred to as “raw natural gas”. Natural gas processing plants remove impurities and separate the gas into components that result in products used for home heating, methane and propane, as well as products ethane, butane and pentanes that are valued for petrochemical uses.

Natural gas was historically limited to transportation and sales markets via continental pipeline connections. However, commercial scale plants to cool natural gas to liquid (NGL) form for tanker ship transportation has made it a global commodity. Gas is priced based on the location of various trading hubs in Canada and the U.S., which factor in pipeline transportation costs and the heating energy value of the particular gas. Various underground storage centres meet seasonal peak demand periods from consumers for assured supply.

Natural Gas Liquids

Some natural gas deposits contain only methane. Such production is called “lean gas” or “dry gas”. Often natural gas production will also contain other by-product hydrocarbon molecules (hydrogen and carbon atoms). Produced gas with significant amounts of heavier compounds - ethane, propane, butane, and pentane - is called “rich gas” or “wet gas”. These hydrocarbons are called natural gas liquids. The heavier components – propane, butane, and pentane - can be held in a liquid state in a tank with limited pressure.

Where are B.C.'s hydrocarbon resources?

The north-east portion of British Columbia is part of a geologic area called the Western Canadian Sedimentary Basin, which also extends through Alberta and Saskatchewan. The site of a vast sea millions of years ago, this basin is rich in oil and gas deposits in sedimentary rock layers, at various depths, from several hundred to several thousand metres below the surface. The B.C. portion of this basin contains mostly natural gas, with limited oil deposits.

Gas and oil production in B.C. began in the mid 1950s. Vertical wells targeted highly porous formations which would flow gas and oil. These are now referred to as “conventional resources”. Since around 2005, development activity has been predominantly in “unconventional resources”. Wells are now drilled vertically down to the formation and then turned 90 degrees to drill horizontally for several kilometres within the formation horizon. Due to the low natural permeability of the formation, hydraulic fracture stimulation is required to create pathways for oil and gas to flow at an economic rate into the well.

In total, almost 28,000 wells have been drilled in Northeast B.C. for oil and gas. A limited number of exploration wells have been drilled in other locations in the province, including offshore, however, no commercial production resulted from these other efforts.

How were they formed?

Oil and natural gas are present in many sedimentary rock layers, called formations, in the earth. Where an accumulation of oil and/or gas is of sufficient size, and there is a technical ability to economically extract, the deposit is termed a “pool”. Oil and natural gas pools are fluid locked between rock grain openings, called pore space, that are naturally present in many sedimentary rock types.

How much is left?

British Columbia has been producing oil and natural gas since the mid 1950s. Data from wells in each accumulation (pool) permits the calculation of the remaining amount of producible oil and natural gas, termed reserves. As known pools are depleted, exploration activity by industry has found new pools to replace reserves. Also, advancing technical abilities have led to improvements in the recovery of oil or gas from known pools. For many decades, the rate of new discoveries and associated reserves additions has equaled or exceeded annual provincial production, providing security of supply. The provincial reserves to production ratio (the number of years that production could occur with no new discoveries) has remained a steady number at around 20 years.

More recently, the size of unconventional resources, which have become economically developable with horizontal drilling and hydraulic fracture stimulation, now far exceeds historic conventional discoveries. The total resource estimate of remaining natural gas is immense, supporting the opportunity for a liquefied natural gas export industry.

The BC Energy Regulator calculates and publishes an annual report of provincial production and reserves. These are available on our Reports page.

Oil & Gas: What We Regulate