Natural Gas Industry Contributes 6.7% of Canada's GDP and Supports More Than 599,000 Jobs in 2008

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Researched by Industrial Info Resources (Sugar Land, Texas)--The Canadian natural gas industry contributed more than $102 billion, or 6.7%, to the nation's gross domestic product (GDP) in 2008, with about 599,000 Canadians, or 3.5% of the domestic workforce, employed in jobs supported by the sector, according to a recent study.

The study, "The Contributions of the Natural Gas Industry to the Canadian National and Provincial Economies," was conducted by IHS Global Insight (Canada) Limited, a leading provider of economic and financial analysis and market intelligence, for America's Natural Gas Alliance (Washington, D.C.), an educational organization formed by leading natural gas exploration and production companies in North America.

The impact of the natural gas industry on the Canadian national economy stood at an impressive $70.3 billion in direct contributions and $31.8 billion in indirect benefits. The contribution of the industry to the national economy stood at more than $96.9 billion in 2006 and $98.5 billion in 2007.

Overall, the industry accounted for 6.7% of Canada's economic output in 2008, compared to the contribution of the U.S. natural gas industry at 2.7% of the nation's GDP, as revealed by another investigation.

In terms of employment, the sector supported 599,000 direct and indirect jobs, or 3.5% of the total jobs in Canada, and contributed about $29.9 billion in labor income in 2008. More than 583,000 jobs were supported by the industry in 2006, with labor income of more than $29.5 billion. The figures increased to more than 595,000 jobs in 2007, with labor income of more than $29.7 billion.

In 2008, about $13.5 billion of the labor income was generated from direct jobs, and the balance, about $16.4 billion, came from direct and induced employment. In the U.S., the natural gas sector represented about 2.1% of total jobs, although the actual number of jobs, at 2.8 million, stands much higher than in Canada.

More than 189,000 personnel were directly involved in exploration, production, transportation and delivery of natural gas or in providing onsite construction services to the industry. This includes more than 43,000 jobs in natural gas extraction, 41,400 in support services, 17,100 in distribution, and 6,400 in pipeline operations. But the most number of direct jobs, more than 81,000, entailed provision of engineering and construction services to the industry.

The number of indirect jobs stood at more than 246,000, while another 164,000 jobs are estimated to have been "induced" through demand for goods and services created when workers holding direct and indirect jobs in the sector spent their income.

Alberta, where most of the Canadian natural gas industry is concentrated, tops the list of provinces in terms of absolute value, as well as economic impact. The province's natural gas industry contributed $77.8 billion, or about 27.7% of its GDP. The corresponding values stood at more than $9.8 billion, or 1.7%, for Ontario.

Saskatchewan ranked a far second in terms of economic impact, with the industry providing about $3.1 billion, or 5.1%, to the provincial GDP. British Columbia ranked third both in actual value and economic impact, with the industry accounting for more than 4.5% of the provincial GDP, at a little more than $8.7 billion.

Alberta also topped the list of jobs supported with about 324,700 jobs, which was more than 16% of the province's overall employment. British Columbia ranked second, with more than 111,700 jobs representing 4.8% of its total employment, followed by Ontario, with more than 99,000 jobs contributing about 1.5% of the total jobs in the province.

The report also includes data from Statistics Canada (Ottawa, Ontario) and states that natural gas and gas liquids accounted for 45% of the total primary energy production in Canada in 2007. About 60% of the domestic natural gas production was exported that year.

According to Eric Marsh, the executive vice president of Natural Gas Economy at EnCana Corporation (NYSE:ECA) (Calgary, Alberta), low costs and abundant supplies have made natural gas an attractive alternative to oil, which is also environmentally friendly. Demand for natural gas, as compared to other fuels such as coal and oil, is set to increase as tougher environmental regulations come into play in Canada and the U.S.

Industrial Info Resources (IIR) is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy related markets. For more than 26 years, Industrial Info has provided plant and project spending opportunity databases, market forecasts, high resolution maps, and daily industry news.