Thank you very much, Mr. Chairman and honourable members.
As mentioned, my name is Dave Simpson, and I'm the general manager of sales and marketing and customer care for Union Gas, which is based in Chatham, Ontario. On behalf of Union Gas, I would initially like to thank the committee for inviting us to present our perspective on technological innovation in the natural gas sector.
Over the next few minutes, l'm going to touch on a few key innovations that have helped us move our product more efficiently and others that are helping our customers use it more efficiently. I'm also going to talk about a few of the most promising areas we see for future innovation.
I did provide a few slides.
If you would turn to slide 2, I would point out that Union Gas is owned and operated by Spectra Energy. Spectra Energy operates a diversified portfolio among four different business lines: western Canada transmission and processing; Union Gas; DCP Midstream, which is a natural gas liquids joint venture with ConocoPhillips; and Spectra Energy Transmission.
As you can see from the bullets on the slides, Spectra Energy is deeply invested in Canada. In fact, the majority of our employees are here. We have made significant investments, paid millions in federal taxes every year, and our Spectra CEO, Mr. Greg Ebel, a former president of Union Gas, is a Canadian. Greg was actually born in Ottawa and worked for a time as a senior adviser on Parliament Hill.
I draw your attention to the third slide just to call out that Union Gas is essentially two businesses in one. We are a distribution company delivering natural gas to about 1.4 million homes and businesses across Ontario. We have more than 67,000 kilometres of pipeline in the ground, and we deliver not just to residential customers but also to industrial and power generation customers. As well, Union Gas is a storage and transmission company. We own and operate the largest underground storage facility in Canada, one of the largest in North America, at Dawn, which is a town just southwest of Sarnia, Ontario.
Natural gas already makes an important contribution to Canada and Ontario. It's plentiful and affordable, cleaner, and we believe with new technology applications, it will play an increasingly important role in the future of the Canadian and global energy supply mix.
One important note is that natural gas is filling the gap as the province of Ontario closes its remaining coal-fired power plants. As Ontario moves toward more renewables such as wind and solar, which represent about 4.8% of our energy needs, natural gas is the on-demand power source that is responding when the wind isn't blowing or the sun isn't shining. My point is that natural gas has a foundational role to play in any energy plan.
The last slide, slide 4, shows that we've seen some innovations in the natural gas sector that have definitely moved us along. For example, on the transmission side, over the past two decades we've seen compressor improvements in the stations that compress and move the gas through our pipeline system—noise reduction, efficiency improvements, pipeline coatings, and the use of plastic pipe.
From an end-use perspective, we've seen tremendous innovations to the residential building envelope—insulation, windows, and high-efficiency furnaces and water heaters—driven in part by a steady evolution in building codes and standards. This is reflected in lower average gas consumption. For example, consumption for our residential customers has dropped by 30% in the last 20 years. This reflects not only the significant improvements in building envelope and space heating efficiencies, but also customers' continuing energy conservation activities.
Union Gas has played a significant role in driving energy conservation and market transformation in all of our customer market segments through our demand side management, DSM, programs.
Union's programs span all of our customer segments, from the smallest low-income residential applications to the very largest industrial process improvements.
Since 1997, when we first began offering demand side management programs, Union Gas has helped deliver more than 5.5-billion cubic metres of natural gas savings, and reduced carbon emissions by the equivalent of removing effectively two million cars from Ontario's roads for a year.
In other words, gas utilities like ours are key players in the continuing drive to use energy more efficiently and deliver better environmental outcomes, higher productivity, and affordability for Canadians.
l'd like to spend my last few minutes talking about what we see as some prime areas for innovation. In a side note, I am going to focus on taking a few technological innovations more deeply into the implementation and commercialization phase. These specific applications have made some early technological progress; however, they have not migrated to full-scale application.
Much of the innovation that I'll mention revolves around LNG, or liquefied natural gas, and CNG, which we've heard mention of, which is compressed natural gas.
LNG is natural gas that is supercooled to extreme, extreme low temperatures and then stored in a highly concentrated liquid form. It takes considerable energy to manufacture LNG, but the versatility and the possible applications of this fuel are quite diverse.
Compressed natural gas, as the name implies, is compressed through the compression process under higher pressures and stored in cylinders.
There are three main items I'd like to mention.
The first is LNG for heavy trucks. Canada was an early leader in natural gas vehicles, or NGV, developing innovative vehicles and station technology, as well as codes and standards. Today, with the lowest natural gas prices in a decade, LNG is more economical, at about 40% to 50% cheaper than diesel, and has up to 30% fewer emissions than diesel.
We're seeing a growing trend toward LNG for heavy trucks in the United States. You may have heard of America's natural gas highway initiative. This is where more than 100 fuelling stations are already in place or under way across the country. Here in Canada, we're seeing pilot projects in Quebec, Alberta, and British Columbia start to emerge.
Areas ripe for continued innovation include technologies that enable traditional diesel-powered engines to run on liquefied natural gas, incorporating LNG technology into transport truck manufacturing, and updating vehicle standards, siting of LNG plants, and refuelling depots.
The second item I will mention is LNG or CNG for communities that are difficult to reach by traditional pipelines. These communities are what we call “off pipe”. They are typically remote applications that it would be cost prohibitive to connect by pipeline, but LNG and CNG are now giving us new ways to think about fuelling these communities, which are often located near or right next to such industrial sites as mining operations, which also require heating and power generation.
Currently Union and other utilities across Canada are working with the Canadian Gas Association to identify some pilot projects to utilize these applications. The federal government in fact spends a significant amount of money to aid in the transport of diesel fuel up to many of these communities.
We believe CNG and LNG could be more cost-effective and better for the environment. The Canadian Gas Association is pursuing efforts to better define this opportunity. We believe there's merit in having government engaged in such efforts to help identify the economic, environmental, and social benefits that might be realized.
To put the savings opportunity into perspective, in 2012 Union Gas was able to successfully construct and run a pipeline to a rather remote community in Red Lake, Ontario. This community is located closest to, but fairly far north still, of Thunder Bay, Ontario. The potential savings for residential customers who are converting their equipment to natural gas could be upwards of $2,000 to $3,000 per year. This project of running the gas distribution system to the municipality and the mine in the area was supported by Union Gas, the municipal, provincial, and federal governments, and the Goldcorp mine itself. It's a great success story for a northern community that's been trying to get clean and affordable natural gas to their town for over 25 years.
The third and last technology I would mention is combined heat and power. This technology exists and there are small applications where it typically ranges from 500 kilowatts to about 5 megawatts of power production. Combined heat and power refers to the process that utilizes fuels like natural gas to generate electricity through a turbine or a reciprocating engine. Now the waste heat that is a byproduct of the power generation process is captured and used as useful energy for heating applications. The result is higher energy efficiency and lower emissions. There are several applications that can leverage this technology, including commercial and industrial processes, greenhouse operations, and, even at the local level, models for district heating and cooling systems.
Those are my comments, and again I would like to thank you for your attention and your interest.