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Energy 101

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For further industry related information:


  • What is natural gas?
  • How is natural gas used? 
  • How is natural gas formed?
  • How is natural gas produced?
  • What is unconventional natural gas?
  • How is natural gas measured?
  • How is natural gas marketed?
  • What is Alberta's marketing hub?
  • What drives pricing?
  • What is storage and how does the market use it?
  • AECO vs. Henry Hub
  • What are the upward/downward pricing pressures?
  • What is LNG? How is it produced, shipped and delivered?


  • What is crude oil?
  • How is crude oil used?
  • How is oil formed?
  • What are the different types of oil?
  • What is refining?
  • How are oil sands and heavy oil produced?
  • What is upgrading?
  • How are crude oil prices determined?


What is natural gas?

Natural gas is a naturally occurring petroleum. Petroleum is the general term for solid, liquid or gaseous hydrocarbons. Hydrocarbons are a class of organic compounds consisting of only carbon and hydrogen - the basis of crude oil, natural gas and coal.

Natural gas is mostly methane (CH4), although it can occur in nature as a mixture with other hydrocarbons such as ethane (C2H6), propane (C3H8), butane (C4H10) and pentane (C5H12) and with other substances such as carbon dioxide, nitrogen, sulphur compounds and/or helium.

Methane remains in a gaseous state at relatively low pressures, while ethane, propane, butane and pentane condense into liquids at different but relatively low temperatures and pressures. These condensed gases are known as natural gas liquids (NGLs). Natural gas containing more than one per cent hydrogen sulphide is known as sour gas and must be processed to remove the hydrogen sulphide before it can be used. Processing also removes most of the NGLs, condensate and non-energy components such that pipeline-ready natural gas is more than 95 per cent methane.

Natural gas liquids (NGLs) should not be confused with liquefied natural gas (LNG). Liquefied natural gas is super-cooled natural gas that is maintained as a liquid at or below -160°C. LNG occupies 1/640th of its original volume and is therefore easier to transport in ships if pipelines cannot be used.
Natural gas can be found by itself or in association with oil. As pure methane, it is both colourless and odourless. The fact that natural gas is combustible and burns more cleanly than some other energy sources helps reinforce its position in the future energy supply chain.

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How is natural gas used?

In Canada, natural gas is the leading source of heat for homes and businesses, and continues to be adopted by more and more homebuilders and enterprises each year. High-efficiency furnaces, water heaters, clothes dryers, stoves, fireplaces, barbecues, heat pumps and integrated heating-cooling devices also operate on natural gas. The use of natural gas to generate electricity is one of the fastest growing uses of this fuel.

Natural gas is an energy source for:

  • domestic uses such as fuel for space and water heating, climate control systems, appliances and vehicles
  • steam heat production
  • electricity generation
  • co-generation
  • industrial uses such as processing forest products and manufacturing steel, fertilizers and cementraw materials in the manufacturing of petrochemicals and as a source of hydrogen in heavy oil and bitumen upgrading.

Natural gas is also used by the oil and gas industry itself. For example, producers use natural gas as a fuel in processing facilities, while pipeline companies use natural gas to fuel the compressors that push the natural gas along the pipeline. Oil producers use natural gas in processing facilities, particularly in heavy oil secondary recovery schemes and in situ bitumen production and oil sands mining operations.

Many industries can switch to natural gas when the price of oil goes up, thus raising the price for natural gas. Higher crude oil prices have prompted large consumers to switch fuel sources - from crude to natural gas - increasing demand and tightening supply.

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How is natural gas formed?

There are two theories as to how natural gas is formed. The most widely accepted theory, the biogenic theory, maintains that natural gas formation begins with photosynthesis, where plants use energy from the sun to convert carbon dioxide and water into oxygen and carbohydrates. The remains of these plants and the animal forms that consume them are buried by sediment and as the sediment load increases, heat and pressure from burial converts the carbohydrates into hydrocarbons. Natural gas formation takes place in source rocks, usually fine-grained black shales. Continued pressure from burial forces the natural gas to migrate from source rocks into more porous and permeable rock such as sandstone and limestone, which, if overlain by impermeable strata such as shale, form reservoirs that contain the gas.

The other theory of natural gas formation, the abiogenic theory, speculates that hydrocarbons were trapped inside the earth as it formed and are migrating to the surface.

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How is natural gas produced?

Natural gas generally flows to the wellbore under its own pressure. As a result, most natural gas wells are equipped only with chokes and valves to control the flow through the wellhead into a pipeline. When wellhead pressure is less than the pipeline pressure, a compressor is installed to boost the low-pressure natural gas into the pipeline.

In many natural gas wells (and crude oil wells), one additional step is required - stimulating the formation by physical or chemical means so that hydrocarbons can move more easily to the wellbore through the pores or fractures in the reservoir.

One form of stimulation is acidizing - the injection of acids under pressure into the rock formation through the production tubing and perforations. Hydrochloric acid, for example, is particularly effective in dissolving portions of the limestone and dolomatic formations. This creates channels for natural gas (or crude oil) to flow back to the well. Acidizing is often followed by fracturing.

Fracturing or fracing is another common method of stimulation. A fluid such as water or an oil product is pumped down the hole under sufficient pressure to create cracks (fractures) in the formation. Proppant - a hard substance such as sand, ceramics or resin-coated material - is injected with the fluid. As the fluid disperses, the material remains to prop open the fracture.

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What is unconventional natural gas?

Natural gas from coal (also known as coalbed methane), tight gas sands (reservoirs with low permeability that require special treatment for the gas to flow), gas shales and gas hydrates are often referred to as unconventional gas resources. Methane is the main component of unconventional natural gas, but other constituents vary and may have to be removed to produce sales grade natural gas. Sales grade natural gas is the cleanest burning fossil fuel.

Unconventional gas is the same substance as "conventional" natural gas. It is the unusual characteristics of the reservoirs that contain unconventional gas that lead to the unconventional designation. The common characteristic of the different types of unconventional gas resources is that they contain large quantities of natural gas, but it is usually more difficult to produce this gas as compared to conventional reservoir rocks. New technologies are continually being developed to allow more accurate estimations of the amount of gas in these unconventional reservoirs and to stimulate these rocks to produce the gas.

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How is natural gas measured?

Natural gas can be measured in a variety of ways, although the most common unit of measurement is the gigajoule (GJ), which signifies one billion joules, the metric measure of heat or energy. Other measures are; thousand cubic feet (Mcf) and British thermal unit (Btu).

Natural Gas Equivalents:

  • 1 cf 1 MBtu
  • 1 Mcf 1 MMBtu
  • 1 Mcf 1.054615 GJ
  • 1 MMBtu 1.054615 GJ
  • 6 Mcf 1 Bbl

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How is natural gas marketed?

Natural gas pricing is based on supply and demand. Supply is dependent upon production, which in turn depends upon the natural decline of producing gas reserves and the amount of gas from newly developed resources being brought on stream. Pipeline capacity is also a factor that affects supply. Because residential heating is a large market for natural gas, seasonal temperatures have a significant impact on pricing. As well, the prices of competing energy sources such as oil, coal and electricity affect pricing of natural gas.

Because an intricate network of pipelines makes it quite easy to ship natural gas from buyer to buyer, natural gas is a widely-traded commodity in North American markets. Those markets are becoming increasingly more integrated as gas supplies from several large producing regions compete with each other for buyers. Consequently, the commodity price of natural gas (before transportation costs) is essentially the same everywhere in North America.

Price differences still exist to some degree, reflecting the fact that certain fixed costs vary by region. Costs related to production, shipment by pipeline, storage, distribution, and consumer taxes can all make a difference. Pipeline transportation is a significant cost for natural gas - much more than for liquids such as oil and gasoline.

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What is Alberta's marketing hub?

Alberta is home to AECO, one of the largest natural gas hubs in North America. Through Alberta's network of pipelines, gas is gathered from inside and outside Alberta and is then transported through numerous export transmission lines to many high-demand markets. The TransCanada mainline is Canada's main inter-provincial pipeline, which extends from eastern Alberta to Montreal. Major exporting systems connect Alberta with markets across the U.S. from California to New England. Alberta also has a large amount of storage capacity, which aids in the functioning of the hub.

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What drives pricing?

North American prices for natural gas are driven by the interaction of natural gas supply available from North American natural gas and oil fields, and demand. They are determined competitively on spot and futures markets reflecting current and expected supply and demand conditions.

Over the course of a year, natural gas prices rise and fall for a variety of reasons. Consumer and industry demand for natural gas, and the supply available to meet their needs, are the fundamentals to understanding short-term natural gas prices. When the demand is higher, the price tends to rise, and when there is more supply than needed, the price lowers. The key factors affecting natural gas prices are:

  • Availability of North American supply relative to demand
  • Global supply/demand balance for LNG

Natural gas prices are also affected by the strength of the economy and the availability of pipelines to move enough gas to meet consumers' changing needs.

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What is storage and how does the market use it?

Natural gas storage can be held in inventory underground, under pressure, in three types of storage reservoirs: 1) depleted reservoirs, 2) aquifers, and 3) salt cavern formations.

Most of the 400 active underground storage facilities in the U.S. are in depleted natural gas or oil fields due to their abundance, lower capital conversion costs, and tendency to be located close to market regions.

In its simplest form, the owner of a gas storage facility makes a profit from injecting gas and then withdrawing it and selling it at a higher price, typically through a contract to forward-sell in the future.

Owners/operators of storage facilities may not be the owners of gas held in the ground. Most gas in storage is held under longer-term storage obligations to shippers willing to take the spread risk, local distribution companies who use their gas to meet regional demand requirements, and producers looking to take advantage option of the value of the asset.

Gas traders/marketers closely follow the Energy Information Administration (EIA, http://www.eia.doe.gov/) on a weekly basis as they are in charge of collecting a variety of data and publishing that data on a weekly (Thursday 8:30 am MST), monthly and annual basis.

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AECO vs. Henry Hub

In Alberta, two prices are quoted and spoken of frequently, Henry Hub and AECO. Henry Hub is the American natural gas price, which is quoted in million British thermal units (MMbtu) and is traded on the New York Mercantile Exchange (NYMEX). It is often referred to as the NYMEX price. AECO is the Alberta natural gas price, which is quoted in gigajoules (GJ) and is traded on the Natural Gas Exchange (NGX).

Converting Henry Hub to an AECO equivalent is not as simple as converting the quoted prices from U.S. dollars to Canadian dollars, or vice versa. There are numerous factors which affect this conversion including foreign exchange rates, basis differential calculations which generally include the cost to transport gas through pipelines to other physical hubs, and unit conversions from million British thermal units (MMBtu) to gigajoules (GJ) to list a few.

Natural gas produced domestically in Canada is often sold to markets worldwide. For this reason, the currency conversion factor strongly affects the realized price for natural gas.

As a general rule, a $0.01 change in the Canadian exchange rate (holding Henry Hub and Basis Differential constant) results in a $0.065 change in the AECO Spot price. The relationship between these two factors is a negative correlation, meaning that if the Canadian dollar gains $0.01 against the U.S. dollar, the AECO natural gas price will decrease by $0.065.

It is often deceiving to witness one price increasing while its counterpart decreases, however the above mentioned factors are the cause of such movements.

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What are the upward/downward pricing pressures?

Upward Pressures

  • Production: Many factors can influence production worldwide. Ultimately, if production in any way declines, supply in essence declines causing the price of natural gas to rise.
  • Economy: Strong economic growth in North America causes demand to increase, resulting in an increase in natural gas prices.
  • Hurricanes: Strong hurricanes can result in large amounts of production being shut-in, usually temporarily, which in turn lowers supply and increases demand, causing prices to rise. Hurricanes can also negatively impact demand.
  • Oil Prices: Elevated crude oil prices decrease the demand for oil, causing users to switch to natural gas, increasing demand and therefore price.
  • Weather: Extremely cold weather in winter and hot weather in summer can significantly increase natural gas demand which causes prices to rise.

Future Upward Pressures

  • Demand: North American natural gas demand is expected to increase in the future. Gas for clean power generation and for industrial processes, particularly for Alberta oil sands developments, accounts for most of the expected increases in demand. Further demand increases are expected as North America moves towards more environmentally friendly fuels and clean energy alternatives.
  • Production: Despite increased drilling, conventional natural gas production and well productivity will continue to decline in the future as North American sedimentary basins reach increasingly mature levels of development. Unconventional sources of natural gas, like shale gas, are coming to the fore through technical advancements. Multi- stage fracture technology has significantly improved the economics of unconventional shale and tight gas, or gas extracted from coal known as coalbed methane.

Downward Price Pressures

  • Storage: Typically, natural gas prices and storage levels are inversely related.
  • Demand: Reduced demand normally results in lower natural gas prices.
  • Exchange Rate: Canadian natural gas prices and the Canadian exchange rate are inversely related.
  • Weather: A cold winter will see larger volumes withdrawn from storage to meet demand for heating. As storage is drawn down, large volume buyers can become concerned about having adequate supply, which typically increase prices. Likewise, a hot summer will increase demand for air-conditioning and can boost prices. However, the market can be quick to reverse direction. As prices rise, demand can decline. Lower demand means more gas remains in storage and, with no concerns about access to supply, prices can fall back.

Future Downward Price Pressures

  • Liquefied Natural Gas (LNG): With the construction of liquefication plants globally, incremental increases in the future natural gas supply to North America is possible as imported liquefied natural gas will arrive in the North American marketplace if not purchased and consumed by other global markets.
  • Unconventional Gas Supply: Reduced conventional natural gas supply is expected to be largely replaced by increased unconventional natural gas, particularly shale and tight gas.

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What is LNG? How is it produced, shipped and delivered?

Liquefied Natural Gas (LNG) is natural gas that has been cooled to -160oC, the point at which gas condenses to a liquid. In its liquid state, LNG is a clear liquid with a density about half that of water. This volume reduction permits cost-effective transportation of LNG over long distances. LNG is odourless, colourless, non-corrosive and non-toxic. Therefore, LNG will not pollute land or water resources.

LNG represents an important part of future energy supply within the Untied States. With an abundance of gas reserves worldwide, LNG is one of the fastest-growing segments in the energy industry. Primary suppliers of LNG are Algeria, Nigeria, Egypt, Qatar, Trinidad, Malaysia, Russia and Australia.

LNG has been safely transported across the oceans for more than 60 million miles during the past 40 years. These double-hulled tankers are specially designed and built to carry LNG. On land, LNG is stored at atmospheric pressure in specially engineered and constructed double-walled storage tanks. Most of these tanks have three-foot concrete exterior walls and an inner tank that is constructed from a steel-nickel metal alloy specifically designed to accommodate the cold LNG. Should a leak develop in the inner wall, all of the LNG would be contained in the space between the inner and outer walls. Sophisticated monitoring systems provide constant surveillance for any internal leaks.

LNG is converted back into natural gas by pumping the fluid from the storage tank and heating it to regasify the liquid. The gas is then ready for delivery through natural gas pipelines to homes and businesses.

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What is crude oil?

Crude oil is naturally occurring petroleum. Petroleum is the general term for solid, liquid or gaseous hydrocarbons. Hydrocarbons are a class of organic compounds consisting only of carbon and hydrogen and which are the basis of oil, natural gas and coal.

Crude oil consists of carbon (83 to 87 per cent), hydrogen (10 to 14 per cent), sulphur (up to six per cent), nitrogen (up to two per cent), oxygen (up to 1.5 per cent) and metals (less than 1,000 parts per million). Hydrocarbon molecules range from a single carbon atom with four hydrogen atoms to simple chains of two or more carbon atoms to complex configurations involving chains and rings of carbon atoms. Hydrocarbon molecules are generally grouped in four categories: paraffins, napthenes, aromatics and asphaltics.

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How is crude oil used?

Petroleum products refined from crude oil fuel almost 40 per cent of Canada's total energy needs. Slightly more than 70 per cent of the crude oil produced in Canada is refined into transportation fuels - gasoline and diesel for cars and trucks, kerosene for jet aircraft and fuel oil for ships. Other energy uses include domestic and industrial heating, fuels for industrial purposes and generating electricity.

Each of the thousands of molecules that make up crude oil has particular physical and chemical properties. Hundreds of products are made by separating and sorting these molecules, then re-combining or processing them further.

The range of products varies according to the particular type of crude oil and the refinery design. Processes can be altered to produce more gasoline in summer or more heating oil in winter.

On average, processing light crude oil in a modern refinery yields the following range of products:

  • Gasoline to fuel cars, motorcycles, light trucks, small planes, boats, off-road vehicles, snowmobiles, lawnmowers, chainsaws, leaf and snow blowers, emergency generators, camp stoves, etc. (about 40 per cent of the original crude oil volume).
  • Diesel fuel for some cars, most trucks and buses, railway locomotives, construction and forestry equipment, farm tractors, many boats and ships, larger electric generators, etc. (25 per cent).
  • Light fuel oil for heating homes and buildings, many industrial processes, and the fuel for some ships (8 per cent).
  • Other products including asphalt for road paving and roofing, lubricants such as motor oil and grease, waxes for candles and polishes, and the raw materials for petrochemicals such as polystyrene and synthetic rubber (10 per cent).
  • Heavy fuel oil for electric power generation, large ships and some industrial processes (8 per cent).
  • Aviation jet fuel for airplanes and helicopters (5 per cent).
  • The refining process itself consumes crude oil or an equivalent amount of energy from other sources such as natural gas (4 per cent).

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How is oil formed?

There are two theories as to how oil is formed. The most widely accepted theory, the biogenic theory, begins with plants using solar energy to convert carbon dioxide and water into oxygen and carbohydrates through a process known as photosynthesis. When the plants die, the sediments containing them become buried and, as the depth of burial increases, heat and pressure transform the carbohydrates into hydrocarbons. This takes place in source rocks, usually very fine-grained rocks known as black shales. Coal is a solid hydrocarbon derived from land plants. Oil is a liquid hydrocarbon derived primarily from simple marine plants and animals, and natural gas is a gaseous hydrocarbon derived from either terrestrial or marine materials at a higher temperature and pressure than coal or oil.

The other theory of oil formation, the abiogenic theory, speculates that hydrocarbons were trapped inside the earth as it formed and are migrating to the surface.

Once the oil is formed, continued pressure from overlying rock strata forces the oil to migrate through permeable rock layers until it is trapped in reservoirs of porous sedimentary rock such as sandstone or limestone, or until it escapes at the surface. There are several types of traps:

Normal fault - Normal fault traps occur where reservoir rock on one side of the fault is positioned against impermeable rock on the other side of the fault.

Thrust fault - Thrust fault traps occur where reservoir rock overlain by impermeable cap rock has first been folded, then thrust-faulted over itself.

Stratigraphic pinch-out - Stratigraphic pinch-outs occur where reservoir rock loses its porosity due to cementing or decreased grain size, or where reservoir rock gradually thins out and is surrounded by impermeable rock.

Reef - Ancient reefs built by corals and other communal organisms often develop porosity that, if sealed by impermeable rock, forms prolific reservoirs. Porous rocks draping over the reef may form separate reservoirs.

Anticline - Compression folds rocks into anticlines (hills) and synclines (valleys). If reservoir rock is overlain by impermeable rock, traps form at the crests of the anticlines.

Salt dome - Salt domes occur when salt at depth is forced toward the surface by the weight of surrounding rock. As the salt deposits bulge upward, traps are formed in upturned reservoir rocks flanking the domes and folded reservoir rocks overlying the domes.

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What are the different types of oil?

Crude oil is commonly classified as light, medium or heavy, referring to its gravity as measured on the American Petroleum Institute (API) Scale.

Light crude oil contains many small, hydrogen-rich hydrocarbon molecules. Light oil flows easily through wells and pipelines. When light oil is refined, it produces a large quantity of transportation fuels such as gasoline, diesel and jet fuel. Light oil commands the highest price per barrel.

Heavy crude oil contains many large, carbon-rich hydrocarbon molecules. Additional pumping is needed to make heavy oil flow through wells and pipelines. Heavy crude oil contains a smaller proportion of natural gasoline and diesel fuel components and requires much more extensive refining to make transportation fuels. Heavy oil commands a lower price and the difference in price per barrel is called the differential.

Bitumen is a crude oil that does not flow, or cannot be pumped without being heated or diluted, and generally has an API gravity of less than 10°. The bitumen mined from the oil sands deposits in the Athabasca area of Alberta, Canada has an API gravity of around 8°, but is upgraded to an API gravity of 31° to 33°. This upgraded oil is known as synthetic crude oil.

Oil sands are naturally occurring mixtures of bitumen, water, sand and clay that are found mainly in three areas of Alberta - Athabasca, Peace River and Cold Lake. A typical sample of oil sands might contain about 12 per cent bitumen by weight, although bitumen content can vary widely among specific samples and sites.

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What is refining?

An oil refinery is a manufacturing facility that uses crude oil as a raw material and produces a mix of products. The product mix can be varied by changing the types of processing units or the process conditions, or by using different crude oil feedstocks. In summer, for example, Canadian refineries increase their output of gasoline for motorists and their production of asphalt for road paving. In winter, they refine more home heating and diesel fuels.

All refineries are different. Some can process heavy crude oils or synthetic crudes, while others only process conventional light crude oil. The degree of flexibility is a key factor in refinery competitiveness.

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How are oil sands and heavy oil produced?

Conventional methods
Some heavy oil can be produced using conventional means, such as vertical wells, pumps and pressure maintenance; however, compared to other, more sophisticated production methods, this is very inefficient.

Horizontal wells improve efficiency by increasing the length of the wellbore that is exposed to the producing formation. Technologies such as progressive cavity pumps and drilling with coiled tubing further improves the economics of the well, but the limiting factors are still gravity and viscosity of the oil.

Thermal in-situ recovery
About 80 per cent of Alberta's oil sands are buried too deeply to be mined, and must be developed using in-situ methods. In-situ means "in place" in Latin; the oil industry uses this term to indicate the bitumen is separated from the sand underground in the geological formation where the bitumen is located.

For both oil sands and heavy oil, steam is often used to facilitate production by softening the bitumen, diluting and separating it from sand grains, and enlarging or creating channels and cracks through which the diluted oil can flow.

Existing in-situ technology uses natural gas-fired boilers to generate steam. The process requires a lot of water - up to three cubic metres for each cubic metre of bitumen produced - but more than 80 percent of the water is recycled.

Current in-situ production technologies recover between 25 and 60+ per cent of the bitumen in the reservoir - a somewhat higher recovery rate than most conventional light crude oil wells.
The two most successful methods are steam-assisted gravity drainage (SAGD) and cyclic steam stimulation.

About 20 per cent of Alberta's economically recoverable oil sands bitumen reserves are close enough to the surface to make mining feasible. These are all located in the Athabasca oil sands area north of Fort McMurray. An advantage of mining is that nearly all of the bitumen is extracted from the ore, while in-situ methods leave a substantial amount of the resource underground. A disadvantage is that a great deal of earth and ore must be moved, disturbing significant areas of landscape. To achieve economies of scale, the projects are very large. Each of the operating mining projects also has an upgrader on site or is connected to an upgrader by pipeline.

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What is upgrading?

Upgrading is the process that converts bitumen into a product with a density and viscosity similar to conventional light crude oil. This is accomplished by using heat to "crack" the big molecules into smaller fragments. Adding high-pressure hydrogen and/or removing carbon can also create smaller hydrocarbon molecules. Most of the energy for upgrading is obtained from byproducts of the process.

Upgrading is usually a two-stage process. In the first stage, coking, hydro-processing, or both, are used to break up the molecules. Coking removes carbon, while hydro-processing adds hydrogen. In the second stage, a process called hydro-treating is used to stabilize the products and to remove impurities such as sulphur and nitrogen. The hydrogen used for hydro-processing and hydro-treating is produced from natural gas and steam.

Upgrading produces various hydrocarbon products that can be blended together into a custom-made crude oil equivalent, or they can be sold or used separately. The Syncrude and Suncor mining projects use some of their production to fuel the diesel engines in trucks and other equipment at their operations. Suncor also ships diesel fuel by pipeline to Edmonton for sale in the marketplace.

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How are oil prices determined?

In Canada, competitive market forces determine the prices of crude oil and most refined products. However, because transporting crude oil by ocean is relatively inexpensive, the prices of various types of crude oil are more or less uniform around the world. Prices move up or down on a daily or even hourly basis according to perceptions of global supply and demand.

The key market for Canadian crude oil prices is the Chicago area, where western Canadian oil competes with U.S. and foreign supplies. The most widely quoted North American crude type is West Texas Intermediate (WTI). Due to daily futures trading on financial markets such as the New York Mercantile Exchange, WTI has become one of the world's benchmark crudes for determining the prices of specific grades of oil at various locations. Its price reflects worldwide oil supply and demand as well as the conditions in the North American market.

WTI has an API gravity of 40° and a sulphur content of 0.5 per cent. Other crudes are compared to WTI and priced according to API gravity, sulphur content and location, all of which affect processing and transportation costs.

The price of North Sea Brent crude is another benchmark used in international crude oil marketing. North Sea Brent has an API gravity of 37° and a sulphur content of one per cent. It is therefore priced lower than WTI. In Canada, domestic crude oil prices such as the Edmonton Par price are largely determined by the price of competing crude oils in the Chicago market. The Edmonton Par Price is based on 40° API gravity and 0.5 per cent sulphur content, similar to WTI.

The Organization of Petroleum Exporting Countries (OPEC) continues to influence world crude oil prices by setting production targets for members. However, due to growing production in non-OPEC countries such as Russia, Norway, the United Kingdom, Canada, Brazil, Argentina, and China, the organization no longer has the same degree of control in the international oil market that it did in the 1970s and early 1980s. OPEC comprises 11 oil-exporting countries: Algeria, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates, and Venezuela, which together produce about 40 per cent of world crude oil.

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