Thank you very much, Mr. Chairman. I think guess that just goes to show how much work we have yet to do, to get people to get our name right.
This committee has an awful lot of work ahead of it to do. I don't envy you. There's a great many issues to be covered.
For the next six and a half minutes or so, I will talk a little bit about who we are, talk about the propane industry in Canada, discuss some recent changes to supply and demand, and then get right to the issue we've been asked to address, which is the diversification of energy supply sources and where we see some new stuff happening in the industry today that you may or may not be aware of.
We have more than 370 member companies in our organization, and they cover the entire spectrum of the industry: producers, retailers, marketers, and small suppliers from coast to coast. Companies in the propane business from the largest companies to the smallest are members of the Canadian Propane Association.
Canada is the sixth largest propane producer in the world. Canada is the ninth largest consumer of propane in the world. The propane industry's contribution has about $10 billion in impact annually on the Canadian economy. It generates just slightly less than $1 billion a year in taxes and royalties, and supports the livelihoods of more than 30,000 Canadians.
Propane is produced in Canada. It is a commodity that is traded on the open market. Propane exports account for about 43% of our total demand. This is actually down from 65% where it was three years ago, and I'll come back to that in a few minutes.
As just a little bit about storage capacity and what happens to it, here in the province of Ontario, for example, southwestern Ontario has a storage capacity of approximately 7.5 million barrels, to meet demand in this part of the country. This country supplies of about 11 billion litres of propane. In Canada, 82% of the propane comes from natural gas exploration; the balance is produced at refineries; and a small amount—about 2%—comes from imports.
The 43% we export is down by more than 20%. It is down largely because of the supply now being generated out of the United States through shale gas exploration. That's quite a lot. That's a big change. So there is an excess supply of propane in the marketplace today. That's had an obvious downward pressure on price.
But 27% of the propane is used domestically in the mining and oil and gas extraction area, 20% in commercial, 20% in non-energy use such as petrochemical feedstock, 10% in manufacturing, 9% in residential, 7% in transportation, 5% in agriculture, and 2% in construction.
We believe propane is an energy solution. It is safe, it is clean, it is abundant, it is cost effective, and it is portable. Currently, as I said in the outline of uses, industrial, commercial, and residential are three main areas.
In terms of diversification of supply sources, and diversification of its use across the country, the industry gets an awful lot of attention on exploration techniques including fracking. You hear a lot about hydraulic fracking. You don't hear much talk about propane fracking. In fact there is only one company in Canada that does it, just north of Red Deer. It fracks for whatever the customers want—oil or natural gas—using propane. It actually turns the propane into a gel and runs it down the mill, and it can actually recoup 100% of the propane. There is no water used at all, and the company contends that its drill space usage nears 100%.
In addition, there is mining—typically you think of propane use in mining as for heating mine shafts and work camp-related uses like cooking. You can also use it for power generation. There are companies around the world that are actually looking at using more propane for power generation, looking to change out from diesel.
Recently in Alberta one of our larger members, Williams, announced a new propane dehydrogenation facility, the first of its kind in Canada. This facility will convert propane into higher value polymer-grade propylene—it's a petrochemical feedstock used in the manufacturing of plastics.
From diesel to propane is what everyone is talking about these days, looking for lower costs and for greener technology. Right now the Canadian Propane Association is working with the governments of British Columbia and Manitoba to change northern remote communities off diesel to propane.
The largest area of opportunity, perhaps, in the transportation sector rests with fleets. Propane fleets are very much on the minds of our members across Canada. There are light and medium duty, DieselFlex technologies. Propane will reduce greenhouse gas emissions by 26% lower than gasoline. There are more than 21 million propane vehicles worldwide, 40,000 in Canada, and more than 2,000 propane refuelling station sites across the country as well.
Another opportunity for diversification is government policy. One example is right here in the province of Ontario with the Ring of Fire. It's a large potential mining opportunity that I know this government has assigned a lead minister to. We believe that as governments work together to look at energy infrastructure sources, propane deserves an equal opportunity to be an energy resource when it comes to government infrastructure.
We've been talking to the New Brunswick government as well about considering propane, as it tries to solve its challenges with the growth of natural gas in that province. We believe that propane can be that bridge to bringing New Brunswickers a green technology, a wonderful energy source that would make them on par with what the rest of Canada has.
Mr. Chairman, to wrap up, we have a couple of simple asks—though nothing is ever simple. What we ask is that starting today, this government and committee acknowledge that propane is in fact one energy solution. We're not saying it's the only one, but it is one part of the mix. The next one is quite simple: to treat propane and the industry as an equal partner as the government develops energy policy, whatever that may be.
Mr. Chair, thank you very much for the opportunity today. I look forward to the questions.