The upstream oil, and gas sector includes the exploration, production and basic processing of crude oil and natural gas. Petroleum refining refers to the physical, thermal and chemical separation of crude oil into major distillation components and conversion into finished products, such as fuels (motor gasoline, diesel fuel, aviation fuel, light and heavy fuel oil), non-fuel products (such as lubricating oils and greases, asphalt) and raw materials for the chemical industry.

There are many environmental impacts associated with activities from the upstream petroleum industry. The emissions released by the industry to the air from flaring, for example, are of concern with respect to regional air quality and greenhouse gas emissions. Air pollution emissions from the industry include toxics, such as benzene and particulates, smog precursors, acid emissions and greenhouse gases, such as methane and carbon dioxide. Environment Canada's National Pollutant Release Inventory reports that upstream petroleum activities contribute 21% of the sulphur oxide (SOx), 13% of the nitrogen oxide (NOx), and 19% of the volatile organic compound (VOCs) in Canada. The petroleum refining process results in the release of a number of air pollutants, including: sulphur oxides, nitrogen oxides, volatile organic compounds, particulate matter, carbon monoxide, and benzene, as well as many greenhouse gases (GHGs).

In 2000, Canada produced approximately 1.6 million barrels per day of conventional crude oil, 325 000 barrels per day of crude from oil sands operations, and 6.3 trillion cubic feet of natural gas. The majority of Canadian crude and natural gas exports go to the United States. In 2000, 1.4 million barrels per day of crude oil and over 52% of the produced natural gas were exported to the U.S., producing revenues of over $15 billion.

According to the Canadian Association of Petroleum Producers, the industry employs over 89 000 people directly and 153 000 people indirectly. Currently there are 19 refineries operating within Canada. The Canadian refineries directly employed about 10,000 Canadians in 2003. Twenty nine thousand were employed in wholesaling, marketing and distribution of refined oil products. Sixty thousand worked in retail outlets for petroleum products.

Environment Canada develops, promotes and manages environmental research and development (R&D) aimed at reducing and/or eliminating air emissions from the upstream petroleum industry, including pipelines. Through programs such as the Program for Energy Research and Development (PERD), the Technology Early Action Measures (TEAM) component of the Climate Change Action Fund and Action Plan 2000, Environment Canada and Natural Resources Canada fund R&D into research topics such as the flaring of waste gases, carbon dioxide capture and storage, and contaminated soil and groundwater remediation.

Under the auspices of the Canadian Council of Ministers of the Environment, Environment Canada has been engaged in the development of the National Framework for Petroleum Refinery Emissions Reduction aimed at developing a new and more effective approach to managing emissions from petroleum refineries. Implementation of the Framework is expected to lead to substantive emissions reductions-as high as 50% of some parameters at some facilities.

Renewable Energy

Many petroleum companies are expanding their traditional business models through strategic investments in renewable energy products and services. 

Renewable energy has little or no greenhouse gas emissions, and most forms of renewable energy do not contribute to the formation of smog, acid-rain or hazardous air pollution. When low-emitting forms of renewable energy are used to replace fossil-fuel energy, reductions in air pollution occur and cleaner air is the result.

Renewable energy is a viable energy source in a growing number of applications and offers many environmental benefits as well as increased local economic opportunities.  In 1999 the segment of the industry considered as emerging had gross revenues of about $1.4 billion, including $400 million in exports.  It employed an estimated 3,700 Canadians. 

The Federal Government is undertaking an extensive list of actions to promote renewable energy in Canada. These actions include research and technology development, incentive programs, resource assessment and mapping, procurement initiatives, and marketing and awareness building activities.