Oil and Gas Services Sector Profile

Executive Summary

Energy is fundamental to the personal and economic well-being of all Canadians, but a critical component of the energy picture — the Canadian upstream oil and gas equipment and services (OGS) Sector — is not well recognized or understood by those outside the industry.

The OGS Sector is a substantial national business:

• In 2006, the OGS Sector generated $65 billion of GDP, paid $9 billion in taxes and employed 800,000 people directly or indirectly, right across the country.

• The Canadian rig fleet consists of close to 800 drilling rigs and almost 1,100 service rigs.

• Canadian pipeline transmission companies operate more than 100,000 kilometres of pipelines in Canada and the United States.

The OGS Sector is made up of the many varying businesses that support exploration and production (E&P) activities. The needed products and services are provided by companies that are categorized into several interconnected sector segments: geophysical; drilling; service, supply and manufacturing; and pipelines.

In Canada, OGS companies have been working for more than six decades in three main regions:

• Western Canadian Sedimentary Basin, which covers almost all of Alberta, as well as parts of British Columbia, Saskatchewan, Manitoba, Northwest Territories and Yukon

• East coast, including offshore and onshore areas of the four Atlantic provinces, and

• Parts of Ontario and Quebec

Internationally, a number of larger Canadian OGS companies operate successfully in the United States, Mexico, Europe, Russia, South America, Australia and other key oil and gas areas. Instead of exporting goods, this sector exports technology and expertise — or more correctly the application of technology and expertise to solve problems.

In fact, one of the Sector's key strengths is its technology; within the oil and gas industry, it is the OGS Sector, not the E&P customers, that is developing, testing and applying innovative technologies. There are good business reasons for such innovation: OGS companies need to develop and use technologies to contain costs, increase safety, enhance production and diversify operations.

One of the Sector's greatest challenges is managing the seasonality and cyclicality inherent in the Canadian oil and gas business. While E&P companies can simply slow down operations and rely on cash flow from production to get them through a slow economy, the OGS Sector cannot. With their cash flow dependent on workflow, OGS companies have little to no ability to maintain full staff and services throughout slow seasons and economic downtimes.

The OGS Sector's growth drivers are strong commodity prices, E&P customers’ profitability, secure energy demand, public and government support, and technology to access new resources. Because OGS companies are dependent on the financial viability of their E&P customers, fiscal and policy decisions that target the E&P sector can send deep and lasting repercussions through the OGS Sector.

Overall, the forecast for the industry as a whole and this sector in particular is favourable. Opportunities abound for OGS companies, both at home and internationally, as a result of the sector's entrepreneurial spirit, enduring resilience, timely innovations and problem-solving expertise. Consideration of the OGS Sector in decision making, and promotion of the sector and its many capabilities, will help ensure Canada’s recognized OGS Sector remains a strong contributor to the nation’s economy.

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The Canadian petroleum industry arose in parallel with that of the United States. Because of Canada's unique geography, geology, resources and patterns of settlement, however, it developed in different ways. The evolution of the petroleum sector has been a key factor in the history of Canada, and helps illustrate how the country became quite distinct from her neighbour to the south.

Although the conventional oil and gas industry in western Canada is mature, the country's Arctic and offshore petroleum resources are mostly in early stages of exploration and development. Canada became a natural gas-producing giant in the late 1950s and is second, after Russia, in exports; the country also is home to the world's largest natural gas liquids extraction facilities. The industry started constructing its vast pipeline networks in the 1950s, thus beginning to develop domestic and international markets in a big way.

Proved world oil reserves, 2009.
Despite billions of dollars of investment, her bitumen - especially within the Athabasca oil sands - is still only a partially exploited resource. By 2025 this and other unconventional oil resources - the northern and offshore frontiers and heavy crude oil resources in the West - could place Canada in the top ranks among the world's oil producing and exporting nations. In a 2004 reassessment of global resources, the United States' EIA put Canadian oil reserves second; only Saudi Arabia has greater proved reserves.

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Athabasca oil sands

The Athabasca oil sands, historically known as the Athabasca tar sands due to perceived similarities with actual tar, are large deposits of bitumen or extremely heavy crude oil, located in northeastern Alberta, Canada - roughly centred on the boomtown of Fort McMurray. These oil sands, hosted in the McMurray Formation, consist of a mixture of crude bitumen (a semi-solid form of crude oil), silica sand, clay minerals, and water. The Athabasca deposit is the largest known reservoir of crude bitumen in the world and the largest of three major oil sands deposits in Alberta, along with the nearby Peace River and Cold Lake deposits.

Together, these oil sand deposits lie under 141,000 square kilometres (54,000 sq mi) of sparsely populated boreal forest and muskeg (peat bogs) and contain about 1.7 trillion barrels (270×109 m3) of bitumen in-place, comparable in magnitude to the world's total proven reserves of conventional petroleum. Although the former CEO of Shell Canada, Clive Mather, estimated Canada's reserves to be 2 trillion barrels (320 km3) or more, the International Energy Agency (IEA) lists Canada's reserves as being 178 billion barrels (2.83×1010 m3).

With modern unconventional oil production technology, at least 10% of these deposits, or about 170 billion barrels (27×109 m3) were considered to be economically recoverable at 2006 prices, making Canada's total proven reserves the second largest in the world, after Saudi Arabia's. The Athabasca deposit is the only large oil sands reservoir in the world which is suitable for large-scale surface mining, although most of it can only be produced using more recently developed in-situ technology.

Ultimate Oil Sands Mine

Petroleum in Canada
By Victor Ross (1917) (pdf)

The Petroleum Field of Ontario .
By Robert Bell, B. A. Sc., M. D., LL. D. (pdf)

Petro-Canada
Annual Report for 1978 (pdf)

Canadian Energy Fact Book 2021-2022
By Natural Resources Canada (pdf)

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Northern Gateway and energy infrastructure in the 21st Century

Energy Review from US Energy Information Administration
Canada is one of the world's five largest energy producers and is the principal source of U.S. energy imports. Report from September 2014 (pdf).

A Canadian Achievement
The Delivery of Alberta Crude Oil at Sarnia, Ontario, April 24th, 1951. The delivery of western crude oil to Ontario brings many benefits to Canada. It lessens our dependence on outside sources of oil. It saves foreign exchange. It means that money which once went elsewhere for oil is now being spent in our own west. It makes Canada surer of its essential oil supplies in peace or war. (pdf)

The $25B Oil Pipeline That Could Make or Break Canada’s Economy