Last time, Michael Holden highlighted some of the information and key findings of the Canada West Foundation’s recently-released publication, State of the West: Energy – 2012 Western Canadian Energy Trends, focusing on the economic impact of energy production in the region. This week, he continues his summary of those findings with a discussion of the intermediate use of raw energy before it is consumed by final end-users.

Even after exporting to other countries and provinces, not all energy available in western Canada is consumed by final end-users. Some is used as an input into the energy-production process; some is used for non-energy purposes and some is refined or otherwise converted to a more useable form. In all three cases, the end result is that some available energy is withdrawn from the overall energy system before it reaches consumers.

In a sense, therefore, the use of energy as an input into other processes represents an intermediate step between production, distribution and trade on the one hand, and energy demand on the other. In State of the West: Energy, we make the distinction between “energy use”—what we do with our raw supply of energy (after net exports)—and “energy consumption,” which refers to the disposition of final energy products and the consumption patterns of end users in the energy system. Direct energy consumption, also known as “final demand,” will be the subject of next week’s blog.

The most common input use for the energy produced in western Canada is in the conversion of raw energy into final energy products. In particular, the vast majority of the coal available for use in the West (more than 95.5% in 2009) is not consumed directly by final end-users, but is first converted to another, more useable form: electricity. The use of coal as an input into electricity production is especially common in Alberta and Saskatchewan. Alberta alone accounts for nearly half of all coal use across Canada, 97.8% of which is converted to electricity. For its part, Saskatchewan accounts for 14.6% of coal use across Canada, 97.0% of which is used in electrical plants. After accounting for other transformations, direct consumption by producers and non-energy uses, only 3.8% of all coal available in western Canada is consumed directly by final energy users.

Natural gas exists in a form which can be consumed directly by end-users. For this reason, the majority of gas available in the West (about 62.2% in 2009) is passed along to final customers, with the remainder used as an input into other activities. For the region as a whole, about 8.5% of all available natural gas in 2009 was converted to electricity; with additional amounts further refined, or used to generate steam. A significant share was used by producers operationally and a small amount went to non-energy uses.

However, there are notable differences in natural gas use across the region. In BC, electricity generation accounts for nearly all input use for natural gas. In Alberta, by contrast, a significant share of available supply (24.0% in 2009) was consumed directly by oil and gas producers to fuel recovery operations before it could be made available on the open market. Although data are not available for Saskatchewan, the same is likely true of that province. Finally, in Manitoba, where natural gas is imported from other provinces, the available supply is consumed almost exclusively by final end-users.

The availability and use of natural gas liquids (NGLs) in western Canada is limited in all provinces except for Alberta, where NGLs are used for a wide range of purposes. Most of the province’s available supply—about 84.6% in 2009—is used for the production of non-energy goods. Specifically, ethane produced in Alberta is used to create petrochemical feedstocks. In addition, a small volume of NGLs in Alberta (about 8.3% of available supply) are refined into other petroleum products. About 2.4% of NGLs are consumed directly by producers operationally. Only about 11.3% of the available supply of NGLs is consumed in the form of final demand products.

All crude oil produced in western Canada and not exported outside the region is refined into useable petroleum products such as gasoline, aviation fuel and diesel fuel oil. For the most part, these refined petroleum products are intended for final demand use, largely as fuels in vehicle transportation. However, in all four western provinces, a portion of available refined petroleum products is used by producers in the refining process and a portion is used to produce non-energy goods such as asphalt, industrial lubricants and petrochemical feedstock. While data are not available for BC, Saskatchewan and Manitoba, in Alberta about 14.6% of available refined petroleum was used for non-energy purposes, while 30.3% was used in the refining process itself. In all four provinces, a small share of available refined petroleum products is used to generate electricity.

Finally, all electricity produced in western Canada is already in a form that can be consumed by final end-users. The only other use for electricity outside of final consumption is in the operation of the electricity-generating facilities themselves. About 12.2% of all electricity produced in the West in 2009 was consumed by generating facilities, with the remainder available for transmission to consumers.

– By Michael Holden