Natural Gas

Frequently Asked Questions

Is natural gas safe?

Natural gas, when used properly, is a safe and convenient energy source. The natural gas industry is highly regulated to ensure the safe design, construction, operation and maintenance of natural gas pipelines and distribution systems.

An important safety feature for residential and commercial natural gas is the addition of an odorant so people can detect it by smell.

Natural gas is neither poisonous nor harmful if inhaled for short periods.  Because it is lighter than air, it also disperses quickly if it leaks in an open space. However, natural gas is highly flammable and can ignite easily if it mixes with air in small concentrations.  If there is a build-up of gas in an enclosed space, an explosion can occur.

Gas lines can leak or rupture if construction, posthole digging or other activity cuts these lines. As such, it is important that these facilities be located before doing any activity that creates a ground disturbance. Most utilities are members of Alberta One Call, a company that co-ordinates location activities of buried facilities. Those involved in ground excavation should call Alberta One Call (1-800-242-3447) and ask that a 'locate' be performed in the area of the proposed excavation. This service is free of change to callers.

Does production or use of natural gas affect the environment?

Exploration activities, processing facilities and pipelines can have significant effects on the environment in areas where natural gas is produced. Processing the raw gas for market has the largest impact. Processing removes carbon dioxide, hydrogen sulphide, natural gas liquids and water vapour. On average, processing plants in Canada recover almost 99 per cent of the sulphur compounds in raw gas, but the remaining amount is released into the atmosphere as sulphur dioxide. Processing facilities use energy and may also release volatile organic compounds (VOCs). Other concerns arising from natural gas production include sour gas odours, groundwater contamination, waste management, land use, and impacts on wildlife habitat in producing areas.

Natural gas is one of the cleanest-burning fossil fuels; complete combustion produces mainly water vapour and carbon dioxide. The amount of greenhouse gas released from natural gas is significantly lower than emissions from wood, coal and oil. When natural gas is used in place of these other fuels greenhouse gases (GHG) emissions are significantly reduced.

The methane in natural gas is a greenhouse gas and is more potent, per tonne, than carbon dioxide; however, the actual methane releases in the natural gas industry are small, less than one per cent of all the methane handled by the industry.

Who regulates the natural gas industry?

The Alberta Utilities Commission (AUC) and the Alberta Energy Regulator (AER) regulate exploration, production, processing, transmission and distribution of natural gas within the province. The federal National Energy Board (NEB)external link icon regulates interprovincial trade in natural gas, approves transportation charges for interprovincial transportation and issues long-term licences and short-term orders (up to 24 months) authorizing exports from Canada.

What is the role of the AUC in setting natural gas rates and where can I find rate information?

The AUC regulates investor-owned natural gas utilities in Alberta, ensuring that the rates consumers pay are just and reasonable and that the service provided is safe and adequate. The AUC is also required to regulate these utilities in ways that allow them to earn sufficient revenues to recover their costs, which includes a fair return on their investments. Therefore, in setting rates the AUC must balance the needs of consumers, along with the needs of utility companies.

A utility company must apply to the AUC on a regular basis for approval of its distribution rates. Distribution costs are approved either through General Rate Applications, a thorough review which involves many financial aspects of the company, or through a negotiated settlement process.

Gas supply costs are dealt with as a separate component but are also approved by the AUC. Utilities are not allowed to make a profit on the supply cost of gas. It is a flow-through cost that is passed on to consumers.

In Alberta, the default regulated rate that consumers pay for their natural gas is called the gas cost flow-through rate (GCFR) for Direct Energy Regulated Services North and South, and the gas cost recovery rate (GCRR) for AltaGas Utilities Inc. The AUC regulates these rates.

Direct Energy Regulated Services North and South, and AltaGas Utilities Inc. are investor-owned. The Board does not set rates for municipally owned gas utilities, rural gas co-ops, or competitive natural gas retailers.

Recent natural gas rates for residential services of the three major natural gas utilities regulated by the AUC can be found on the Utilities Consumer Advocateexternal link and AUCexternal link icon website. The site also offers information on how consumers can shop wisely when choosing electrical or natural gas suppliers.

What is sour gas and what is it used for?

Sour gas is natural gas containing more than one percent  hydrogen sulphide (H2S), and in low concentrations is identifiable by a strong 'rotten eggs' smell. It is commonly found in deep, high-pressure natural gas deposits such as those in the foothills of Alberta's Rocky Mountains region.

Almost 99 per cent of the sulphur in Western Canada sour gas is recovered and converted into elemental sulphur, which is used in the manufacture of fertilizers, paper, pharmaceuticals, steel and other products. Canada is one of the world's leading producers of sulphur and a global leader in the technologies for safely handling and developing the resource.

What is shale gas?

Shale is one of the most common sedimentary rocks in the world and it is primarily composed of clay and fragments of other minerals such as quartz and calcite. Shale can be the source, reservoir and the seal for natural gas. Shale formations normally have low permeability (limited ability for gas or fluids to flow easily through the shale formation) and normally require stimulation techniques (such as fracturing) to economically produce shale gas. Shale gas is natural gas that is attached to, or "adsorbed" onto, organic matter or is contained in thin, porous silt or sand beds interbedded in the shale.