Category Archives: Oil and Gas

Dec 08 2014
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Energy, Oil and Gas, Politics

The goofiness of New Brunswick’s very own Fraggle Rock

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It’s been a long time coming, but fracking has officially become not only the bugbear, the hoary thorn, the bothersome burr in the butt of New Brunswick’s body politic, but also its low, comic relief.

For this, we can thank former Tory Premier David Alward, who, while he was in office,  couldn’t stop yakking about the alleged 70-trillion cubic-feet of gas resting quietly beneath the shoes of all those who still refused, against all common sense, to move to Alberta, where considerations about air, soil and water quality are. . .let’s just say, petrochemically sanctified.

But kudos should also go to our new premier, Brian Gallant, who just can’t seem to make up his mind about a drilling technology that’s been deployed safely in this province for nearly two decades.

Mr. Gallant squeaked out a minor majority of seats for his Grits in last September’s election at the expense of Mr. Alward, largely by promising to put an end to hydraulic fracturing – the practice of blowing water and chemicals into tight plays of oil-and-gas-laden sedimentary rock. A moratorium is in order, he declared. (Except, of course, it wasn’t).

Now, he intends to deliver one – in a manner of speaking.

In an interview with the Saint John Telegraph-Journal last week, he stated, “We had a commitment of having a moratorium on hydraulic fracturing. We will be presenting a mechanism on how we will accomplish that in the net few weeks. Now, whether it will be able to pass or not in the time frame that remains to be seen with how the opposition reacts to this.”

Oh, really, Mr. Gallant? The last time any of us checked, you actually held a majority of seats in the provincial assembly. Or, did you skip over the section in the Liberal party playbook, entitled, “Now that you are premier, here are a few guidelines to keep you from falling on your own sword; subsection 1.0, choking on your own words”?

To wit: Is the premier actually intimating that his moratorium on shale gas development in this province depends on how the provincial legislature’s minority opposition votes on the issue? Because if he is, I can save him the trouble of orchestrating an extensive, tedious debate. So, for that matter, can Bruce Fitch, Tory leader.

“We’re going to expose the gaps that we’ve seen in Premier Gallant’s initial foray into politics,” Mr. Fitch declared in the House last week. “Most premiers come in with 100 days of change. He’s had 100 days of chaos.”

The assessment is, of course, as harsh as it is inaccurate. The new premier has racked a couple of historic wins since assuming the mantle of office this past fall. One, surely, is his courageous decision to bring New Brunswick into the 21st Century on a woman’s right to choose how and when to continue, or terminate, her pregnancy.

Another innovative, though less dramatic, policy change is Mr. Gallant’s determination to open up his $900-billion infrastructure rebuild of the province to the private sector’s technology industries. That sort of thinking hasn’t been in evidence around these parts since former Premier Frank McKenna decided to transform 1990s New Brunswick into a Silicon Valley of the north.

All of which makes Premier Gallant’s position on shale gas development in this province perplexing, if not incomprehensible.

A man this evidently smart, engaged and studious – a man who suggests that a proven technology needs halting even though that same technology can and is safely deployed to keep a potash mine, for example, in operation – purely and simply boggles the mind.

Or, maybe, just maybe, that’s the big joke, the big kahuna of humour in all of this.

The Grits need an exit strategy from its ill-advised promise to the less than half of New Brunswickers who support a temporary ban on fracking. All the reigning Libs need do is appear consultative, inclusive, welcoming in a big-tent sort of way. Oh, dear Tories, won’t you please raise your hackles, sound your trumpets, and get us out of this mess we created.?

Indeed, Freddy Beach, won’t you please send in the clowns?

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Nov 27 2014
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Economy, Energy, Environment, Oil and Gas

Would fracking turn New Brunswick into North Dakota?

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For those of the anti-shale gas, “I-told-you-so” bent, a New York Times piece from last Sunday’s edition about the utter mess – both figurative and literal – North Dakota’s oil and gas regulators are making of their state provides for some delectable reading.

Some of us will peruse the weighty tome (it runs close to 5,000 words) with mock horror and secret delight as we study a jurisdiction so fascinated by the economic promise new, horizontal drilling technologies represent that it has, with few exceptions, thrown environmental caution to the wind of commerce.

As the Times article makes plain, “Since 2006, when advances in hydraulic fracturing. . .began unlocking a trove of sweet crude oil in the Bakken shale formation, North Dakota has shed its identity as an agricultural state in decline to become an oil powerhouse second only to Texas.”

But, according to the newspaper’s independent investigation, using “previously undisclosed” sources of information, “as the boom really exploded, the number of reported spills, leaks, fires and blowouts has soared with an increase in spillage that outpaces the increase in oil production,” partly because (or so the implication goes), “forgiveness remains embedded in the (North Dakota) Industrial Commission’s approach to an industry that has given (the state) the fastest-growing economy and lowest jobless rate in the country.”

When the Times says “forgiveness”, it’s not exaggerating. Its research indicates that, since 2006, the Industrial Commission has collected a little over $1 million in penalties against oil and gas companies found culpable in environmental accidents. That compared with $33 million in Texas – no state of tree-huggers, it – during the same  eight-year period.

In other words, writes the Times, North Dakota is a “small state that believes in small government. . .It took on oversight of a multi-billion-dollar industry with a slender regulatory system built on neighborly trust, verbal warning and second chances.”

Meanwhile, “over all, more than 18.4 million gallons of oils and chemicals spilled, leaked or misted into the air, soil and waters of North Dakota from 2006 through early October 2014. The spill numbers derive from estimates, and sometimes serious underestimates, reported to the state by the industry.”

This is, of course, just the kind of thing opponents of shale gas development in New Brunswick fear: The ready collusion (or, at least, the appearance of one) between those who would rape the good earth for its booty of fossil fuels and those who are empowered by law to protect the environment from such ritual violations.

After all, they insist as they point to their smudged copies of last week’s Times, if it can happen in North Dakota, it can just as easily happen here.

In fact, they’re not entirely wrong.

The slope to ecological perdition is, indeed, slippery, made all the more so by the oil and gas industry’s unquenchable thirst for growth. When a province, like New Brunswick, or a state, like North Dakota, believes it has few options to forestall economic collapse, it will, more often than not, sell out to the highest bidder with the fanciest drilling technologies and most accessible checkbooks.

Still, when a province or state has more things going for it, economically speaking, than simply its natural resources, there’s little temptation to relax regulations and oversight to buffoonish parodies of themselves.

The question is whether New Brunswick is anything like North Dakota?

In fact, there may exist some disturbing similarities between us. Over the years, we’ve both suffered from stubborn levels of underemployment, a perennial skills drain, a creeping fiscal morass, declining public revenue, and outmigration.

But our differences make a far more compelling argument that New Brunswick is better equipped than its American doppelganger to stick to its regulatory guns.

We have a history of protest against shale gas, especially hydraulic fracturing; North Dakota does not. We have a tradition of strong, involved central government; North Dakota likes to have its libertarian pie and eat it, too.

What’s more, New Brunswick already has, in place, a reasonably strong set of regulatory injunctions, starting with a moratorium (or, rather, the threat of one) on tight oil and gas drilling until the current Liberal government is satisfied about its safety.

All of which, perhaps, affords us the moral authority to tsk and cluck at our friends south of the border. They blew it.

But their bad examples should not lead us to assume that we are doomed to set our own, should we ever get around to believing in ourselves again.

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Nov 27 2014
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Economy, Energy, Oil and Gas

The perils of East Coast pipeline politics

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On the energy front, perhaps we should not have been so quick to assume that Maritime economic priorities neatly dovetail with those of Ontario and Quebec. After all, when have they ever?

Indeed, if there was a time when political leaders in New Brunswick considered  TransCanada’s eastbound pipeline project a slam-dunk, that time is over, which leaves the province’s new Liberal premier Brian Gallant with yet another post-election migraine.

According to a Globe and Mail report last Friday, “Quebec Environment Minister David Heurtel sent a letter to (TransCanada) chief executive officer Russ Girling laying down seven conditions (the company) must meet to win the province’s support for the (Energy East) project. With his letter, Mr. Heurtel established conditions similar to those adopted by British Columbia Premier Christy Clark for Enbridge Inc.’s controversial Northern Gateway pipeline that would deliver oil sands bitumen to Kitimat for export to Asia, though his tone was somewhat more agreeable than Ms. Clark’s has been”.

Specifically, “Mr. Heurtel’s conditions include the need for public acceptance of the project, for proper consultations with First Nations, and for clear economic and fiscal benefits for Quebec, as well as assurances to gas customers. Mr. Heurtel also cited a National Assembly resolution demanding the government assess the impacts of ‘upstream”’GHG emissions – those produced by extracting the oil – for the pipeline that would carry 1.1 million barrels a day of western crude to market. But he was vague on whether the government will assert the right to block the pipeline.”

Ontario, too, wants environmental assurances and pledges from TransCanada that its newfound interest in shipping western bitumen through its territory en route to Saint John’s refinery will not overwhelm priorities to make supplies natural gas available to central Canadian industry.

Meanwhile, Premier Gallant is scrambling to put the new developments in the best possible light. “I will meet with Quebec Premier Philippe Couillard to talk about the fact that we are certainly behind the project,” he told reporters on Friday. “For us, what’s important is to assure when we can do it in the most safe and secure way possible. It’s one of the reasons why I read about the project at length two years ago. When we put the project into motion, I was already aware that we can do this in a secure way.”

Of course we can. But that’s not really the point. These days, pipelines are symbols of industrial rapacity and environmental carelessness. As such, they are marvelous for galvanizing public opinion against any expansion of the fossil fuel industry, as Maude Barlow, no shrinking violet on the subject, demonstrated last year.    

Regarding the Energy East proposal, the national chairperson for the Council of Canadians, told her interviewer from the North Bay Nugget,  “I want to let communities know not to be pressured to make a decision or risk not getting the benefits of the pipeline. I can tell you there are no benefits. There’s no argument for this pipeline. It’s an export pipeline and we don’t need it. . .We get the risk and (oil companies) get the reward,” adding “I would like to know what are the big jobs, because this pipeline is for export. It’s about greed. They’re playing with a potential environmental catastrophe that environmentalists have been warning about. . .It’s so much more dangerous (than any other oil) and it’s crossing watersheds and many waterways around the Great Lake Region that are already being threatened. We certainly don’t need to add to that threat.”

Naturally, TrabsCanada couldn’t let that go. It responded with its own statement:

“Quebec and New Brunswick currently import more than 700,000 barrels of oil every day – or 86 per cent of their refinery needs – from countries such as Algeria, Iraq, Saudi Arabia and Nigeria. At current oil prices, this is over $75 million drained out of the Canadian economy – every single day. Energy East proposes to connect Western Canada’s resources to Eastern Canada’s needs. Greater supplies of domestic crude would improve the financial viability of eastern Canadian refineries by giving them access to less-expensive, stable domestic supplies.”

Of course, for Mr. Gallant, it could be worse. He could start talking enthusiastically about shale gas.

Let the protests commence.

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Nov 11 2014
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Business, Energy, Environment, Government, Oil and Gas

A moratorium that’s missing in action

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Something has put the swagger back into Steve Moran’s step. The CEO of Corridor Resources is pulling his best impression of Mad Magazine’s mascot, Alfred E. Neuman, these days. What, him fret?

“We’re a little bit worried about the short term, but over the long term, no, we’re not as concerned,” he told the Telegraph-Journal last week, regarding the New Brunswick government’s decision to slap a moratorium on hydraulic fracturing in shale gas development.

“We think government officials understand the potential of the resource here and we think that once they feel they have addressed their issues in terms of health and safety that they will come around and that we’ll be back to work. . .We are confident that, over time, we will work our way through this moratorium.”

All of which raises an interesting question: What moratorium would that be?

The new Liberal government of Brian Gallant has been threatening to level a temporary ban on fracking since long before their election win.

Indeed, it’s not too hyperbolic to say that more words have been expended on the potential perils to human health of hydraulic fracturing than there has been gas extracted from the ground.

Here’s the new premier on the subject two weeks ago: “We believe there should be a moratorium on hydraulic fracturing due to the lack of information concerning the risks to our environment, our health, and our water. I think it’s important for people to know what we’re concerned about – it’s the process of extraction called hydraulic fracturing.”

Now, here’s Energy Minister Donald Arseneault just last week at the New Brunswick Exploration, Mining and Petroleum conference: “We have a clear mandate from the people and a very consistent message over the last two years that we want a moratorium on the shale gas industry. We had a clear mandate on election day to move forward on that and that’s what we are going to bring forward in the near future.”

Again, when, exactly, would that be?

In reality, it is not at all clear that the Liberals have received a “clear mandate from the people” on this issue. Some surveys conducted before, during and after the election campaign indicated that the public in this province is deeply divided on hydraulic fracturing. If anything, the edge seems to go to the pro-gas lobby as long as the industry can provide credible, verifiable assurances about its safety practices and environmental stewardship.

Neither is it clear that Messrs. Gallant and Arseneault are singing the same tune, let alone from the same song sheet.

There’s a big difference between slapping a ban on the shale gas industry, as Mr. Arseneault is mumbling about doing, and carefully parsing the distinction between hydraulic fracturing and other methods of resource extraction, as Premier Gallant is wont to do.

One definitively slams the door; the other leaves it open just a crack.

Of course, in this parade of mixed messages, Mr. Aresneault has been a marvelous band leader.

On the tricky position into which any sort of moratorium would put Corridor Resources and its gas customer Potash Corp., the minister weaved for the Telegraph-Journal earlier this month:

“The last thing we want to do is potentially put certain operations in jeopardy. For me, PotashCorp is a major player in New Brunswick. It’s a concern for me. It doesn’t mean that it gives everybody a green light, but it’s definitely in the back of my mind that I’ve got to be conscious and responsible going forward.”

As to the fate of PotashCorp’s new Picadilly mine without ready supplies of fracked natural gas, Mr. Arseneault said, “Those are the questions we are going to be asking the company. If we didn’t impose a moratorium, what is the activity they have planned for the next couple of years? Having a moratorium, how will it impact their operation? Will it impact potash? We haven’t settled on a specific menu other than we know there will be a moratorium.”

But, I wonder if that’s even certain anymore.

Indeed, Steve Moran, is there something you’re not telling us?

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Nov 05 2014
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Energy, Oil and Gas, Politics

How howling from the edges of sanity is good for New Brunswick

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As voices in the wilderness, we raise our rhetoric to match the long, lonely howls that issue from the pits of our guts. We see the future from our perches at the peripheries of Main Street, Freddy Beach, Parliament Hill and, yes, even Wall Street.

And, from that vantage, the future of this province is (trust me) utterly howl-worthy.

We are the pundits of New Brunswick, whose opinions about such things as economic development, social sustainability, energy policy, and fiscal management are sometimes politely acknowledged, but more often violently rejected.

We’re used to it.

Our fellow citizens are, after all, entitled to the pabulum their elected representatives ritually spoon into their pie holes when said representatives promise that their gruel will, in the end, taste like filet mignon.

But when guys like David Campbell, writing for the Saint John Telegraph-Journal, and scribes like Bill Belliveau and Norbert Cunningham, penning for the Moncton Times & Transcript, are routinely vilified for pointing out the patently obvious, and necessarily important, about this province’s. . .um. . .let’s just say “challenges”, I am risibly motivated to whip out my formidable arsenal of wordy invective to level the decidedly unlevel playing field that is the blogosphere.

Then again, what would be the point of that when we have Donald Savoie in our philosophical corner.

The “great prognosticator” issued another in a long line of epistles from his mount at the University of Moncton the other day.

In this one, he wrote, “Whether one likes it or not, the global economy is here and it is highly competitive. New Brunswick has to compete with what it has, not with what it wishes it had. I was surprised (during the recent provincial election campaign) to hear aspiring politicians and observers making the case. . .that we can say no to development opportunities in the natural resources sector and that all we need to do (is) create new economic activities to diversify our economy. How can we do this?”

Good question (though, it is rhetorical).

Allow me, pundit-wise, to take a crack at an answer (though it be unrhetorical).

Posit the following: Natural gas is far less damaging to the environment than any other form of fossil fuel; its extraction technologies for both orthodox and unorthodox plays are proven, safe and reliable; its delivery infrastructure is far less likely to fail and, therefore, pollute than those for crude and refined oil and coal.

Now, acknowledge the following: There is enough shale gas lying beneath the surface of this province to power local economies for decades through extraction, transportation and refining activities, alone. But that is only the outline of the big picture (if we had big-picture thinkers at our various seats of government, they might have paid attention decades ago).

The true, long-term potential of this resource, should we choose to embrace our own economic interests, is technological and innovative leverage.

Even the most committed environmentalists must surely realize by now that transitioning to a fully sustainable, renewable energy future will only succeed when we finally learn how to deploy the relatively cheap energy we harvest from the ground and the sea beds.

Almost every component of a wind turbine, a tidal array, a solar facility, a hybrid automobile, a bloody, backyard greenhouse is a product, directly or indirectly, of refined petroleum, cracked into shape for re-manufacture into the building blocks of plastic, pure and simple. That’s the foundational reality of our industrial economy; it has been for 100 years.

Saying we wish it weren’t so won’t make it go away.

What might, though, over time, is a coordinated, comprehensive public-private partnership to transform New Brunswick into a think tank, industrial test site and centre of excellence for repurposing the world’s excess plastic as the building blocks of sustainable, renewable energy technologies.

From here, the province – with its surfeit of institutes of advanced education relative to its population – could pioneer a global standard for delimiting the use of petroleum products to, in effect, manufacture only those technologies that produce sustainable, renewable, in-situ energy (lamentably, planes, trains and automobiles must be off the table for the time being).

Off course, mine is just one voice in the wilderness of ideas.

Let the vilification commence.

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Nov 04 2014
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Business, Economy, Energy, Oil and Gas, Politics

It’s time to get clear on natural gas

Welcome to the energy big leagues, Mr. Premier.

Wheels upon wheels, gears upon gears, the squeeze play against Brian Gallant’s determination to impose a moratorium on hydraulic fracturing in New Brunswick – the preferred industry method for extracting natural gas, with water, sand and a proprietary soup of chemicals,  from sedimentary rock – has officially commenced.

Not that there’s anything especially surprising about Corridor Resources’ public insistence that 30 of its fracked gas wells supplies PotashCorp’s operations in the Sussex area of the province – to no ill effect on the water, soil and air – with a competitively priced, comparatively clean source of fuel with which to dry the fertilizer for market readiness.

Nor is their anything particularly shocking about PotashCorp’s addendum last week.

“Access to a secure, stable and sustainable gas supply is critical to our. . .longterm success,” New Brunswick General Manager Jean-Guy Leclair told the Telegraph-Journal. “While there are alternate fuel sources for our facility, they would have profound implications on our current and future operational costs.”

Read between the lines, Mr. Premier. That’s a palpable threat. By now, you must know this. What’s mystifying is why you apparently didn’t see it coming.

Or, perhaps, you did, and your hard line in the sand during the election campaign was merely a political gambit to win over some voters.

Maybe your strategists advised you to hold that line for as long as you could and then capitulate only when major industrial players left you no choice.

If I had been one of your back-room boys, I would not have counselled this: Stay true to your principles until such time as the oil and gas lobby intimates major job losses; then reverse course in the broader interests of economic development.

And, in the process, blame the big, bad bogey man of corporate Canada for forcing your hand. “The devil made me do it, folks,” you might plead. “What can I say?”

Whatever is the case, all of it has been poor politics, poorer public policy and a fundamentally bad start for a new government.

And it’s getting worse.

Cabinet solidarity is one of the rocks that grounds leadership in a parliamentary democracy. It tells the electorate that the men and women the premier has chosen has his or her back, and, in the process assures the great, voting unwashed that they haven’t made a colossal mistake at the ballot box.

So, under these circumstances, what are we to make of Mines and Energy Minister Donald Arseneault’s freelance, off-playbook commentary last week?

“I was the minister back in 2007 who struck the deal to attract that investment of $2.2 billion (PotashCorp’s expansion) to New Brunswick,” he told the Telegraph-Journal last week. “We do know that Corridor feeds gas to the potash mines, and for me that is a very important component. . .For me, PotashCorp is a major player in New Brunswick. . .The last thing we want to do is potentially put certain operations in jeopardy.”

Now, we cut to a Page 3 story in the same organ on the same day.

“No,” declared Premier Gallant, “for us, it is a hydraulic fracturing moratorium, and we’re certainly willing to meet with different operations, different businesses, all stakeholders and New Brunswickers to understand the best way to implement this moratorium.”

None of which actually clarifies anything, except that the young premier of this province understands practically nothing about energy politics and, far more troubling, he seems oblivious to the worries of at least one of his important lieutenants – the one in charge of, arguably, the most important economic portfolio.

What now shall we expect? Will a great muzzling commence?

There is a way, of course, to safely and responsibly frack for gas in New Brunswick. We’ve been doing it for years. As long as we adhere to the tightest regulations our democracy provides — with the most comprehensive environmental oversight common sense produces — we have an even chance to reduce our reliance on far dirtier forms of fossil fuel and maybe, just maybe, generate the economic incentive to fully transition into a renewable, sustainable society. There is nothing new in any of this.

What is new is that we, in this fine, elegant, innocent part of the world must face the fact that we need the hard, tough, clear leadership to get us where we need to be.

Welcome to the energy big leagues, New Brunswick.

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Nov 01 2014
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Energy, Environment, Oil and Gas

What’s the fracking story, already?

On the endlessly controversial subject of hydraulic fracturing for natural gas in this province, New Brunswick’s Liberal leadership has, in the span of just one month, gone from reliably hard-headed to unpredictably incoherent.

Here’s Premier-designate Brian Gallant talking to the CBC, following his election win last month: “There will be a moratorium on hydraulic fracturing and those businesses (oil and gas explorers), I’m sure, are not surprised. This has been talked about, discussed and debated as a province for months if not years now. . .I think we have jurisdictions around us where I think we’ll be able to pull some of their experiences, how exactly this should be instituted, what’s the best way to go about it and what are the next steps.”

He even speculated almost sanguinely about the possibility that one or more of the drilling operations might sue the province as a result of his determination to the toe the environmentally expedient line: “(A legal action) is certainly something that could become a reality. We recognize that. We will certainly meet with (shale gas companies) and we will explain why our position is what it is.”

Now, here’s newly appointed Minister of Energy and Mines Donald Arseneault explaining to the Telegraph-Journal this week that he is well aware of the relationship between Corridor Resources and PotashCorp – in which the former supplies the latter with fracked, New Brunswick gas and has for years.

“The last thing we want to do is potentially put certain operations in jeopardy. For me, PotashCorp is a major player in New Brunswick. It’s a concern for me. It doesn’t mean that it gives everybody a green light, but it’s definitely in the back of my mind that I’ve got to be conscious and responsible going forward.”

To which the averagely informed, casually interested follower of the public-policy follies that constitute a permanent entertainment event in Fredericton (regardless of the party in power) might react thusly: Huh?

Does this mean the Grits are backtracking on their promise to temporarily forbid fracking? Or is their position merely, as the spin doctors like to say, “evolving”?

A more urgent question concerns the fate of PotashCorp’s new Picadilly mine without ready supplies of fracked natural gas. “That’s a valid point,” Mr. Arseneault told the T-J. “And those are the questions we are going to be asking the company. If we didn’t impose a moratorium, what is the activity they have planned for the next couple of years? Having a moratorium, how will it impact their operation? Will it impact potash? We haven’t settled on a specific menu other than we know there will be a moratorium.”

Again: Huh?

Dear reader, now to recap:

There will be a moratorium on fracking at some point in the near, to mid-term, to distant, future. But whether or not it will be a comprehensive, province-wide ban or a series of selective prohibitions depends entirely on whether or not the injunction injures the fortunes of one of the province’s largest industries.

In this instance, concern for the water table – the moral justification of the moratorium in the first place – takes a back seat to the more pragmatic realities of economic development.

Then again, the mere fact that Corridor has been operating in New Brunswick without incident for 10 years at least raises the possibility that drilling for tight shale gas – either hydraulically or with propane – can, in fact, be done both safely and responsibly. And, so, the purpose of a moratorium becomes what, exactly?

Mr. Arseneault appears to suggest it’s partly about election-campaign promise fulfillment – the Grit’s analogue to the previous Tory government’s refusal to consider raising the HST even a little just because, while running for office, they said they wouldn’t.

“At the end of the day,” the minister said, “our principals don’t change – we are going to implement a moratorium. I didn’t lie about it (to industry). I made that very clear. But we just need to determine now with the information that we gathered from them and other stakeholders as well as what kind of moratorium we want to implement.”

In other words, just as soon as this new government gets its story straight.

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Oct 29 2014
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Economy, Energy, Oil and Gas

New Brunswick: Last stop on the trolly to the great hereafter

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And now for something completely obvious.

News flash: New Brunswick (Nova Scotia, too) is in the grip of its very own, made-in-the-Maritimes “death spiral”. The question, of course, is: what does the afterlife look like?

Former Premier and current Deputy Chairman of TD Bank in Toronto didn’t actually pronounce the time of this province’s passing – under the weight of its own inertia and all that sand that’s piled up around the hole into which its head has been stuck lo these many years – at a ballyhooed energy conference in Saint John last Friday. But he came darn close to pulling out the heart panels.

“Clear. . .zap. . .clear. . .again. . .clear. . .zap. . .clear.

In fact, Mr. McKenna said this: “Our regional economy is flatlining. We are depopulating. Our population is not just leaving; it’s getting older. It’s aging at twice the rate of Alberta’s. (Well, naturally it is, as that’s where capital markets and the current federal government encourage every mentally healthy, able-bodied young person in this country to go and become reliable, God-fearing taxpayers).

Here’s another snippet from Mr. McKenna’s all-too-familiar tirade against complacency:

“We are in an endless cycle of high deficits, declining population, higher interest rates and payments, a aging population, higher cost of services, less equalization, less personal income, higher taxes and consumption taxes. It’s a death spiral that we’re in if we don’t do something about it.”

Ah. . .and therein – as the Bard might have said, watching the surfer dudes ride the Pettitcodiac’s mighty tidal bore – lies the rub. What, indeed, is to be done?

We could eschew the costly histrionics surrounding shale gas development, based on a largely discredited “docu-drama” some years back, which featured (among other provocative absurdities) a guy lighting his tap water on fire (Reality check: the water table in upper Pennsylvania had been laced with trace amounts of methane long before fracking technology was the apple in the drilling industry’s eye).

We could concentrate on building the safest means – pipelines – of transporting crude oil from Alberta to Saint John and, in the process, create thousands of short-term, and hundreds of long-term, jobs for New Brunswick.

We might even work to leverage these energy opportunities to lure much-needed venture capital to the province for. . .oh, I don’t know. . .economic diversification away from natural resources and into educational centres of excellence that would pioneer commercially viable, sustainable, renewable, and exportable manufactures in the fields of wind, tidal and solar.

Or, we could go the other way.

We could put the province and all its lands and buildings up for sale to all those national and international bidders who boast the biggest coin in their pockets.

Dear China, the ad would read, “We, in New Brunswick, know how polluted your mega-cities are. Come on over to New Brunswick. We’ll treat you right fine. We’ll sell you our property, and we won’t even charge you minimum wage for the privilege of cleaning your kitchens and bathrooms – you know, the ones that used to be ours.”

Hey Alberta, we might exclaim, “We know you have our children in a ‘death-spiral’ of expanding expectations and blossoming debt. Someday, you know that bubble is going to burst. And when it does, you might like a safe haven to park your aging human capital.

“Consider New Brunswick as Canada’s preeminent retirement village. After all, as we never risked a damned thing on anything, including natural resources, our minds and hearts are clean. We are your last, best hope for a comfortable, easy death. . .Just bring your cheque books, because our B&Bs and private hospices are going to bruise those babies American-style.”

Indeed, given New Brunswick’s appalling fiscal condition, it’s dreadful demographic decline, its moribund economy, its listless and fearful political classes, it’s astonishing that this province has anything to offer the world or even its own people.

Of course, it is our own people – our entrepreneurs, in every shape, size, colour and stripe – who will (who must) save us from our collective inertia.

That, too, remains completely obvious.

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Oct 28 2014
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Energy, Environment, Oil and Gas

Drilling for common sense in the energy debate

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If all politics is the art of the possible, then the genre that inhabits New Brunswick is surely the craft of the calculating.

During the recent election campaign in the province, former Liberal Premier and current Deputy Chairman of T-D Bank Frank McKenna reportedly worked hard behind the scenes (and sometimes in front of them) to help the party’s fair-haired boy, Brian Gallant, comport himself well enough to hold on to the lead right into office.

Of course, that’s what political elders do: they mentor.

Still, given Mr. Gallant’s stand against shale gas development in the province, the pairing did seem odd.

In an interview, two years ago, Mr. McKenna told me in certain and enthusiastic terms, “We have in situ now, calculated by Corridor Resources Inc., 67 trillion cubic feet of gas. That’s bigger than western Canada. It’s a huge deposit! If 10 per cent is exploitable, that’s enough to create a revenue source for New Brunswick for decades to come. All in, it would result in about $15-20 billion in investment and 150,000 person years of work. And for governments, it would result in between $7-9 billion worth of royalties and taxes. . .The way I look at it, the real win comes when we take our indigenous shale gas in the province and hook it into the Canaport liquified natural gas (LNG) facility in Saint John.”

In other words, he said, New Brunswick’s shale reserves could change the conversation about the province’s anemic economy forever. They could transform the region into a jurisdiction whose wealth rivals that of Alberta, Saskatchewan, Pennsylvania or North Dakota.

“What we need to understand is that just by the roll of the dice, we have landed in exactly the best position on the board at this moment in time,” Mr. McKenna said. “We have a Canaport facility with massive storage and with a jetty, getting right into deep water. We have a port that’s ice free and has the capacity to accommodate the biggest vessels in the world. The West Coast can’t do that.”

The former premier was similarly straightforward about the province’s overall condition: “This isn’t just a problem of leadership in government. It’s also a problem of followership. Our citizens have to understand the full depth and breadth of the dilemma that we are facing, and they have to be prepared to face up to some inconvenient truths. It means that they have to become less reliant on government and more entrepreneurial. It means that they have to take responsibility for their own futures.”

Still, if Messrs. McKenna and Gallant stand far apart from each other on tight onshore gas (though they remain generally linked by shared political purpose), the division is not likely to last long.

By vigorously arguing for a pipeline – perhaps, two – to transport Alberta bitumen into Saint John, the current premier is actually, though unwittingly, eroding the rhetorical wall he has erected around the shale gas industry.

That’s because it’s getting increasingly difficult for the unaligned majority in this province to appreciate the logic of Mr. Gallant’s position on fossil fuels.

For reasons that resist trenchant examination, we are told that pipelines transporting crude into New Brunswick are safer, more environmentally responsible energy developments than is drilling for natural gas using only proven, contemporary technology under a regulatory regime that’s reported to be the toughest in the world.

Wouldn’t it make more sense to do as Frank McKenna has suggested: Permit both undertakings to proceed carefully, yet expeditiously?

In the alternative, if the issue is less about safety than global warming, shouldn’t we take a page out of New Brunswick Green Leader David Coon’s playbook: Stop both projects from happening?

Banning one, and not the other assumes expectations of harm and safety that may be mismatched. After all, pipelines have been known to leak. If we are being asked to assume that risk, however small, maybe we should take another look at the safety record of the shale gas industry before we eject it from the field of possibility.

It’s a tricky calculation, but it’s one we may well be forced to make make sooner than we once thought.

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Oct 20 2014
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Economy, Energy, Oil and Gas

The perils of running a petro-economy

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Western oil magnates and their fellow travellers in government and media once crowed superciliously about their pride of economic place in Canada. They and they alone, they insisted, were responsible for the nation’s surging fortunes in global markets.

They still exult this way, though lately their gloating has become a tad muted thanks to the pounding the price of oil is taking on international commodity exchanges. West Texas Intermediate crude (WTI), the standard used to benchmark all grades, fell to $82 a barrel earlier this week. That was off by more than 10 per cent since the beginning of the month.

We wretched urchins on the East Coast may be tempted to indulge in a little schadenfreude when we witness the fear and loathing that cyclically descends on Alberta’s oil patch. Something about the best laid plans of mice and men rattle around in our brain pans as we watch yet another plane load of New Brunswickers abandon their unpromising, little towns for putatively greener pastures under big sky country.

But, in the broader context, when Alberta hiccups, all of us should worry.

For more than 30 years, economic planners and regulators at both the federal provincial levels have been slowly and deliberately transforming this country into an oil and gas giant. They have nurtured, with countless millions of dollars in publicly supported research and development and tax breaks, astonishing advances in drilling and extraction technologies. Now, we’re all dependent on this continued success, for without it, there’s precious little else to fall back on.

Today, Alberta companies employ nearly as many Maritimers between the ages of 18 and 35 – many of whom are the major breadwinners for their families back home – as do Atlantic firms. Over the past year, the bitumen-rich province generated all of the country’s net jobs growth, adding some 82,000 positions.

Currently, Alberta accounts for nearly a third of Canada’s GDP. According to Oil Sands Today, quoting figures compiled by the Canadian Energy Research Institute, “New oil sands development is expected to contribute over $2.1 trillion (2010 dollars) to the Canadian economy over the next 25 years – about $84 billion per year. According to Statistics Canada, $84 billion is enough to feed more than 90 per cent of Canadian households for a year.

What’s more, “The oil sands industry will pay an estimated $783 billion in provincial ($122 billion) and federal ($311 billion) taxes and provincial royalties ($350 billion) over the next 25 years.”

Meanwhile, “employment in Canada as a result of new oil sands investments is expected to grow from 75,000 jobs in 2010 to 905,000 jobs in 2035 with 126,000 jobs being sourced in provinces other than Alberta. . . .It is estimated the oil sands industry will purchase about $117 billion in supplies and services from Canadian provinces outside Alberta over the next 25 years – about $5 billion/year. For every direct job created in Alberta’s oil sands industry, approximately one indirect and one induced job will be created in the rest of Canada.”

All of which is swell, unless you’re an environmentalist worried about humanity’s rapacious ways with Mother Nature or, as the case may be in the current circumstance, an economist.

Although oil prices have been sliding globally for only a few weeks, the signs of steadily softer demand are everywhere, especially in emerging powerhouses such as China and India, where the pace of growth is slowing. And the causes of this bottoming trend are especially perplexing.

“Historical pricing has been affected by, and dependent upon, turmoil facing the Middle East,” writes Brigham McCown, a former government executive, attorney and public policy expert, in a recent commentary for Forbes. “In times of war and geopolitical instability, prices have historically increased rather quickly, often overnight. As turmoil eased, so too would oil and gas prices, albeit at a much slower pace. Based on historical data, one would expect prices to be dramatically spiking given current events in Syria, Iraq and Libya, yet for all of this instability, prices continue to drop.”

That they do suggests that something more systemic than routine price fluctuations is at work here.

Canada’s unequally booming industries may soon feel the brunt of a great, leveling downturn thanks entirely to Alberta’s outsized pride of economic place in this country.

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