Abundantly endowed with fossil fuels and hydroelectric resources, Canada is the world's fifth-leading energy producer. Energy production is exceeded only by manufacturing as a percent of Canada's gross domestic product (GDP).
In the late 1990s, Canada's oil industry made a strong recovery from low prices in the preceding years. Petroleum production in quantity began in 1947 with the discovery of oil 29 km (18 mi) south of Edmonton. Output of oil was 2.9 million barrels per day in 2002, when reserves were estimated at 4.9 billion barrels. Petroleum is now the largest single contributor to mineral output. Heavy crude oil is produced entirely in western Canada, with 60% coming form Alberta and 40% from Saskatchewan. It is transported to eastern Canada and the United States through two major oil pipeline systems, both originating at Edmonton; one extends east to Toronto, and the other southwest to Vancouver and the state of Washington. On the east coast of Canada, oil exploration has been focused on the Jeanne d'Arc Basin off Newfoundland. Terra Nova, the second major project in the region, began production at the beginning of 2002, with a capacity of 115,000 barrels per day over six years. The White Rose oil field, in the same basin, was expected to become operational in 2004. There are potentially up to 300 billion barrels of synthetic crude oil available from western Canada's oil sands. Reserves at Athabasca in northern Alberta are among the world's two largest oil sand deposits.
Canadian natural gas reserves were estimated at 1.7 billion cu m (60 billion cu ft) in January 2002. Natural gas production rose to 184 million cu m (6.5 billion cu ft) in 2000, third in the world after Russia and the United States. Gas production is mostly centered in Alberta, which accounts for about 80%. The 3,017 km (1,875 mi) Alliance Pipeline, which carries natural gas from western Canada to the Chicago region, is the longest pipeline in North America.
Canada ranks among the top producers of electric power in the world and first in the production of hydroelectricity. In 2001, Canada's total net installed capacity reached 111.1 million kW. In 1998, 59% of electrical capacity was hydroelectric, 29% thermal, 12% nuclear, and less than 1% geothermal. The marked trend toward the development of thermal stations, which became apparent in the 1950s, is due in part to the fact that most of the hydroelectric sites within economic transmission distance of load centers have already been developed. When the Churchill Falls project reached completion in 1974, the capacity of the plant was 5,225 MW, making it, at the time, the largest single generating plant of any type in the world. It has since been surpassed by Hydro-Québec's 5,328 MW generator, the first completed station of the massive James Bay project. Net electric power generation in Canada in 2000 was 587,100 million kWh, 61.2% of it hydroelectric, 25.3% conventional thermal, 11.9% nuclear, and the remainder from geothermal and other sources. Consumption was 499.8 billion kWh, and net exports of electricity amounted to 48,800 million kWh.
Low-cost electricity generated from waterfalls and fast-flowing rivers has been a major factor in the industrialization of Québec, Ontario, and British Columbia, most significantly in the establishment of metal-smelting industries. In other areas, hydroelectric power is not as abundant, but all provinces have turbine installations. As of 2002, Canada's hydroelectric resources still included substantial untapped potential.
Atomic Energy of Canada Ltd. is responsible for research into reactor design and the application of nuclear power in the electric power field. In 1962, commercial electric power was first generated in Canada by a nuclear reaction when the Nuclear Power Demonstration Station at Rolphton, Ontario, became operative. Canada's first full-scale nuclear power station, completed in 1956 at Douglas Point on Lake Huron, produced its first power early in 1967. Nuclear power production declined from 102.4 billion kWh at its peak in 1994 to 69.8 billion kWh in 2000. In 1999, Canada had 14 nuclear reactors operating at five power facilities.
Coal production reached 76.2 million tons in 2000, with reserves estimated at 7.2 billion tons. About 90% of coal consumption is for electricity generation, and most of the remainder is for steel production. The increase in total output since 1970, especially the increased output from Alberta and British Columbia, is almost entirely due to the growth of the Japanese and South Korean export markets. In eastern Canada, however, domestic coal must be augmented by US coal imports.