What is the role of natural gas in Canada's energy economy?

Natural gas is Canada's second-largest energy export after crude oil, generating about $20 billion in revenue annually and supplying roughly 14 per cent of North American natural gas consumption. Canada is the world's fifth-largest producer of natural gas, with output of about 17 billion cubic feet per day, and is the third-largest exporter to the United States after the United States itself becomes the world's biggest export market.

Production is concentrated in Alberta and northeastern British Columbia. The Western Canadian Sedimentary Basin holds the country's largest conventional gas reserves, and the Montney Formation in British Columbia and the Duvernay Formation in Alberta are major unconventional shale-gas plays exploited through hydraulic fracturing since the late 2000s. Major producers include Tourmaline Oil, Canadian Natural Resources Limited, Ovintiv, ARC Resources, and Imperial Oil.

Canada's first liquefied natural gas (LNG) export terminal, LNG Canada at Kitimat, British Columbia, is scheduled to begin shipments in mid-2025 with an initial capacity of 14 million tonnes per year of LNG bound for Asian markets. The $40 billion project is a partnership of Shell (operator), Petronas, PetroChina, Mitsubishi, and Korea Gas. Phase Two could double capacity. Cedar LNG in Kitimat (a partnership with the Haisla Nation), Woodfibre LNG in Squamish, and Ksi Lisims LNG (Nisga'a Nation) are other British Columbia projects under development.

Federal climate policy is reshaping the natural-gas sector. The federal Greenhouse Gas Pollution Pricing Act, the Clean Fuel Regulations, and the proposed methane regulations to reduce emissions by 75 per cent by 2030 (from 2012 levels) all apply to natural gas production. Carbon capture, utilization, and storage projects, including the Quest CCS facility near Edmonton (in operation since 2015) and the Pathways Alliance's planned $16 billion CCS project, are central to the sector's emissions-reduction plan.