Gas is giving me heartburn, once again
Roughly the same time New Brunswick was debating and ultimately killing its shale gas opportunity (Nova Scotia had already banned it), British Columbia was starting to develop its shale gas industry in the Montney shale formation using hydraulic fracturing (fracking). Now, it is a rapidly growing, multi-billion dollar industry in BC shuttling gas through a 670 KM pipeline to an LNG export terminal that will ship the gas to Asian markets. I heard today the plan is to double its export capacity which will make it the largest in the world (?) or maybe North America. The government generates significant tax and royalty revenues. First Nations own a large share of the infrastructure.
At that time, which region of the country could have used the development of a new, high value industry? British Columbia’s GDP was growing more or less at around its historical growth rate. New Brunswick’s collapsed to only 0.8% per year over the 13 year period and Nova Scotia wasn’t much better at 1.3% per year. Meanwhile, British Columbia had the fastest GDP growth in the country, among the 10 provinces.
It’s crazy if you think about it too much. Australia was building large LNG plants to serve Asia at that time. The real opportunity by the 2020s (somewhat using hindsight) was going to be Europe. Opportunity lost.
New Brunswick’s natural gas field in McCully is only 50 kms from Port Saint John - not 670 kms through mountains. Billions in costs potentially saved. Opportunity lost.
Dr. John McLaughlin did his tour of the province and came back with a plan for how NB could get public support for natural gas development. It was ignored. Opportunity lost.
Now, I see Mark Carney unveiled his new energy plan and top of his list was ‘energy security’ and reducing our reliance on the US. PP already made a similar promise.
I wonder if they even know that the Maritimes is a huge user of natural gas and it all comes through one pipe from the United States. Gilles Volpe, the head lad at Liberty Utilities, is fond of saying on an energy equivalency basis, New Brunswick uses as much natural gas as electricity. Think about that. Almost every large manufacturing plant in the province uses natural gas. Gas is used to generate electricity and more natural gas-fired generation is coming online in New Brunswick and Nova Scotia.
Never mind that gas is being piped all the way from Pennsylvania or even Alberta (through the US), talk about being exposed to a capricious American president. If he decides to shut of the gas, New Brunswick would be in big trouble. You think either Carney or Poilievre has the Maritimes and natural gas in their energy security playbook? Maybe.
Some of you will remind me that we do have an LNG import terminal that is large enough to likely cover the entire demand of New Brunswick. But at what cost? LNG is much more expensive that traditional sources of gas. We already have the highest natural gas rates in North America. If we relied solely on LNG the costs would be much higher.
In terms of energy security, I don’t care that much about crude oil. The Irving refinery brings in almost all of its supply by ship. It can and does source from countries other than the United States.
Natural gas is another story. And not one so far with a happy ending.
There is some talk of starting a natural gas industry in Nova Scotia and even some musings about New Brunswick. Even the most optimistic scenario would see it taking many years to get off the ground. And with large, already developed fields across North America with lots of growth potential, why start a greenfield industry in the Maritime Provinces?
We should at least learn the lesson. There will always be people lined up to oppose new industries and economic opportunities. Think mining, aquaculture or nuclear energy, among many others. But, like natural gas, these are assets a jurisdiction has and can be leveraged to support the quality of life in our communities.
Canada’s natural resources are an asset the US president can’t take from us (at least I hope this is the case). As he attempts to strongarm our manufacturers to move south of the border, developing natural gas is one important way to maintain a strong economy here.
The gas is going to Asian markets - not European markets.
Thanks for the thorough review of the history of natural gas sector in our province. Having personally worked on trying to develop this industry here 15-20 years ago (back during its brief heyday (??)) I can vouch for the potential benefits this province missed out on. New Brunswick has a history of "snatching defeat from the jaws of victory" (economically speaking). I should add that the available natural gas sampling and testing at that time revealed large deposits in about half of the province, with major ones well away from the McCully field. I have long since lost my files detailing this information but I am sure that someone within our Dept. of Natural Resources probably still has them.
You are correct in that there is always a group here that is against any new industry, or any change for that matter. That is acceptable in any democracy and legitimate criticism should be welcomed to ensure the public fully understands the pros and cons. However, as is often the case, people often rely on opinions and half-truths rather than researching the issues themselves before deciding to be "all in" on opposing something. One has to ask themselves how it is possible that many other parts of this country have made the decision to develop natural gas opportunites very successfully and the sky didn't fall or all the groundwater become contaminated and unusable. Nothing is perfect but when the weight of evidence favors something you would expect politicians to strongly support it but here our politicians seem to be hypersensitive to any public demonstration of opposition - which is what happened in this case and ended the political support.
I find it ironic, to be kind, that rich jurisdictions like Alberta or BC, which contribute far more to Federal government tax coffers than they get back, unlike NB or NS (think Equalization payments), are some of the leaders in natural gas development. And they do this when they already have strong and growing economies so they don't have extreme pressure on them to take unnecessary risks to grow their economy and tax base. Meanwhile, our province which depends on billions of dollars from Ottawa just to maintain critical services roughly on par to the rest of Canada yet we, with our perennially weak economy, chose to not develop a lucrative industry solely based on the vocal opposition of a minority of the population. This fact is certainly fodder for other parts of Canada to look critically at this region. Their view may well be to question why Ottawa is sending so much money to a region that won't even take advantage of its natural resource growth opportunities and thus reduce it's dependence on Ottawa. That leads them to ask if things like Equalization are too generous and if it is acting as a disincentive to our standing on our own two feet?? Like it or not, that is a legitimate question. And never more relevant than right now.
Canada is locked into a trade dispute/war with the US, unfairly but that does change the fact. If things continue as they appear to be, Canada is going to take a hit economically possible for a much longer time than people expect. You can be sure that Ottawa, which will be spending billions helping prop up industries and companies hit by tariffs, as will provinces. This is going to be an expensive proposition as developing new markets to replace the markets destroyed by the tariffs takes time and effort. During this time, Ottawa is going to be under pressure to cut costs every where possible - including Equalization. There will be pressure to cut those payments to slow the growth or deficits and debt. With very little political power due to our small population, New Brunswick and the rest of Atlantic Canada will have little power to stop such cuts from happening. Lets say it gets cut in half. Imagine the shock to our system. Maybe half our hospitals have to close ?? The province certainly can't make up the difference in funding. Under those circumstances many people will be upset, including those that were vocally against the natural gas industry (and other economic growth) when ironically, such an industry might well have been enough to greatly reduce the impact of cuts to Equalization, maybe even keeping those hospitals open.
It is my hope that natural gas gets back on the province's radar for serious development (along with any other energy opportunities that show signs of economic viability). I hope that people will think about all my comments that the next time they are thinking about opposing the development of this industry or any other industries they do indepth research into it's pros and cons from credible sources.