Tag Archives: shale gas

Mar 04 2016
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Business, Economy, Energy

To frack or not to frack

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Finally, there hovers on the horizon of New Brunswick’s energy future voices of reason.

The most compelling statements contained in the final report of the province’s Commission on Hydraulic Fracturing – appointed by Premier Gallant nearly a year ago – are these:

“New Brunswick’s economy needs to transition to a new economic and environmental reality: New Brunswick needs to generate more wealth. To do this, the private sector must accelerate its transition to a value-added resources and knowledge-based economy.

“Value-added industries rely primarily on technology, productivity and skilled labour to create products and services, often from natural resources, that are sold at premium prices. Energy can play a key role in getting us there, but only if we change how we think about it.

“New Brunswickers need to regard energy investments as part of the larger advanced technology story rather than simply as a commodity as we have done in the past. This will stimulate greater investment in energy technologies, particularly those that can help us transition to a more affordable, cleaner energy future. . . To meet existing regional and national climate change goals New Brunswick residents, businesses and governments will need to change the way we produce and consume energy.

“The Commission heard from individuals, companies and governments that are either ready to begin this transition to a low carbon society or want to accelerate what is already underway. Determining the role of natural gas in New Brunswick’s current and future energy mix is an important part of this conversation.”

Exactly, and I couldn’t have stated the case better.

We have to stop thinking about fossil fuels as cheap, seemingly endless resources we burn in our cars, homes, businesses, and industries for heat and light. Rather, we must begin to deploy them as means to a clean-energy future – the feedstock that powers new manufacturing technologies and processes, which ensure that environmentally neutral alternatives actually gain footholds in the commercial and popular imagination of this country, this region, these hometowns.

In this sense, in this respect, the Commission’s report is a rare call to action for a government-appointed body. It infers from the consultations it has conducted that most people are ready for productive, progressive change; it implies that only political and bureaucratic laziness is stopping what clearly should be the most important technological transformation since the western world’s Industrial Revolution.

It’s not alone. Robert Arthur Stayton, a university and college teacher and solar-energy advocate based in California recently blogged, “Is it a contradiction to burn fossil fuels to build renewable energy? The transition to a solar-based economy will require expending a great deal of energy to build solar and wind energy systems. Because our current energy systems are largely based on fossil fuels, this effort will add significant new usage of fossil fuels, and thereby increase our carbon emissions. Opponents of solar use this fact to say that we should not pursue renewable energy because that makes the climate problem worse. They have it exactly backwards.”

Instead, he contends, “Non-renewable fossil fuels should be considered as our means of getting to a sustainable renewable energy system. The finite cache of fossil fuels is our one shot for getting to an energy system that is essentially infinite in time (if maintained). Every kilowatt-hour expended building solar and wind equipment will yield many kilowatt-hours of clean energy over time. We should consider that to be the highest use of fossil fuel. . because it moves us toward our goal of a sustainable and clean energy system.”

Finally, voices of reason may prevail.

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Jan 27 2016
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Business, Democracy, Energy, Oil and Gas, Politics

Running on empty in New Brunswick

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We become what we think we are.

If we believe that we are weak, uneducated and profligate, the chances that we will lie down, refuse to crack a book, and spend whatever money the state sends us to load up on Kraft Dinner and past Christmases’ chocolate treats rise precipitously.

If, on the other hand, we are convinced that we are strong, innovative and prudent, the odds of our crafting a real future for our neighbours and ourselves – one we build with reason, critical thinking, social deliberation, and daily service – improve significantly.

New Brunswick sits uncomfortably somewhere between those two poles of conscience.

On the one hand, in this province we are gorgeously engaged, generous and rational. On the other, we are thicker than a sack of hammers at the bottom of the Petitcodiac River.

We, for example, continue to muck and moil over the possibilities of a shale gas industry in this province even though we know that market forces, combined with our own government’s foot-dragging, have effectively shut the door on that avenue of commercial enterprise.

With the price of Texas crude spluttering just below $32 a barrel, the entire oil and gas industry in Canada is in suspended animation (if not actual free-fall). Now, there is almost no point in imagining a future in which we control the uses to which we put our indigenous fossil fuels (if we ever have).

Still, as Adam Huras of the Saint John Telegraph-Journal reported earlier this month, New Brunswick Energy Minister Donald Arseneault thinks “the 12-year lows facing natural gas prices could buy the province more time to get the industry right – that’s of course if the province decides to go in that direction.”

Says Mr. Arseneault: “In terms of lifting – or not – the moratorium (on shale gas development), even if there is down time, it gives people more time to get better educated with the issues. . .and it will give government more time to review the report submitted to us by no later than March 31.”

He refers, specifically, to the research his department has commissioned from a three-person panel on the environmental, social and economic efficacy of hydraulic fracturing in the province. The question now becomes: Is he kidding?

He’s right in one sense. What, exactly, is the rush? Given the industry’s pricing structures these days, we have all the time in the world to, effectively, decide not to decide, which is, after all, what this provincial government has desperately desired for this fractious issue since the beginning of its mandate.

Again, we become what we think we are. If we believe that we are, by nature, cautious and conservative, then we will rejoice in every opportunity that removes risk from the process of democratic decision-making.

Sure, let’s take this whole shale-gas thing and give it a good look-see. It’s not as if the issue matters much these days. The market has bottomed out; exploration companies are no longer testing, drilling or producing; and as for public debate, well, all is quiet on the eastern front of environmental protest.

Still, what if we applied that standard to every other challenge the province faces?

Should “wait-and-see” become the new motto we teach our children as we ask them to find their personal and professional bliss elsewhere in Canada or the world?

Should we “be” in this place or merely sleep in it?

Are we timorous or bold and forthcoming?

It’s a decision we choose for ourselves, and it always has been.

In the end, we become what we think we are.

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Jul 16 2015
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Business, Economy, Politics

The perfect picture-panic province

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What a marvelous time to be the youngest premier in Canada, representing the oldest population in the nation. Could anything in Brian Gallant’s professional experience be less desirable than the thankless job he now faithfully executes?

The 32-year-old’s to-do list would give Hercules a panic attack.

First, there’s the little problem of a $12-billion long-term public debt, and a $500-million annual deficit that just won’t go away no matter what tweaks he executes to civil-service spending.

Second, there’s a litany of campaign promises that inveigh against any reasonable tool to manage the province’s fiscal crisis.

There will be no new revenue streams in the foreseeable future – not from onshore natural gas development, not from a putative pipeline from Alberta into Saint John, not from the high-tech or natural resources sectors, not from manufacturing, not even from community economic entrepreneurship. Nada. Zip. End of story. Period.

Third, the cost of health care in New Brunswick is rising alarmingly, given the tax base that remains to help pay for emergency rooms, walk-in clinics, family physicians, fully equipped hospitals.

This province “boasts” the highest per-capita spending on “interventional” medicine (as opposed to the preventative type) in the country. We are, as a populace, fatter, drunker, and more likely to cough our lungs out than any other region of Canada.

Fourth, we continue to endure the steady outmigration of our “best and brightest” to other parts of the nation, the continent and the world. And, even when other parts of the nation (Alberta), the continent (the Midwestern shale patch) and the world (the European Union) fail to retain promise, our ex-pats routinely choose places other than home in which to roost (Brazil, Venezuela).

And then, of course, there are the awful employment numbers, reported far and wide around this tiny province.

According to a piece by John Chilibeck in the Saint John Telegraph-Journal, published last Saturday, “New Brunswick’s bleak jobless situation became even gloomier in June, with the unemployment rate shooting up into double digits again, to 10.8 per cent. . .Statistics Canada’s monthly labour force survey (reported that) employment in the province fell for the second consecutive month, down 3,500 in June.”

All of which must leave the impression, even in the minds of the most circumspect among us, that we are circling the drain. And that gives us the equipoise to blame the current office holders for their mismanagement, misalignment and even malfeasance.

Still, how much blame for what ails us can we properly assign to a new government, less than a year into its mandate, or even its one-term predecessor (party politics, notwithstanding)?

A friend of mine cornered me at a local grocery check-out recently and demanded to know why I haven’t been holding this young premier’s feet to the fire. “He’s obviously way over his head,” he declared as we surveyed the price of beef from Alberta. “So, what’s up with you? Have you gone soft, or something?”

To which I replied: “I was the first out of the gate telling the government to raise the HST by one percentage point. I was one of the first to tell this government to monetize shale gas, responsibly.”

My friend replied: “Well, I’m not for raising the HST, and as for shale gas, I’m for it as long it doesn’t affect me in any way possible.”

In other words, everything is better than the status quo, except for the status quo.

What a marvelous time, indeed, to be the youngest premier in Canada, representing the most calcified attitudes in the nation: The perfect picture-panic province.

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Jun 10 2015
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Business, Economy, Oil and Gas, Politics

Reversing our job losses

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In electoral politics, the easiest promises to make are always the hardest to keep. As the New Brunswick government recesses for the short, hot summer, it leaves with the uneasy certainty of that adage festering in the pit of its stomach.

No campaign vow is more facile – or more common – than the one that guarantees robust employment, despite evidence that strongly militates against its success. Still, every candidate for public office, regardless of his or her party affiliation, trots out the tired old trope, “job creation is our no. 1 job,” or words to that effect, as if his or her magic wand is loaded with something more substantial than good intentions.

Why elected representatives routinely beg to assume direct responsibility for an economic process that is quite eminently and obviously resides outside their wheelhouse is a question only the gods of political ambition can properly answer. The results, however, are as predictable as rain in the springtime.

As Statistics Canada reported last week, New Brunswick somehow lost 5,300 full-time jobs in May, just as nation, overall, picked up 59,000 positions.

“Certainly after a disastrous first quarter, the outlook suddenly seems a lot brighter,” a Financial Post article observed. “For that, we can thank an unexpected surge in hiring in May­ ­– the biggest gain in seven months, in fact, and more than six times larger than anyone had expected. And the majority of those new jobs were created in a previously unlikely location – Ontario, which had seen its prominence diminish in recent years as the manufacturing-focused economy turned to energy-heavy provinces for growth.”

All of which suggests that economists at the TD Bank were onto something earlier this month when they noted in letter to institutional clients, “The notion of ‘short’ or sell Canada became a growing theme in international circles, as falling oil prices added to concerns about an overheated housing market and high household indebtedness,” Derek Burleton and Leslie Preston wrote. “A few months later, however, it seems the bears have not been proven right. Data so far in 2015 show that investor flows into Canada have remained resilient and sentiment on the Canadian dollar has picked up.”

But as the country, on the whole, grows buoyant, the same cannot be said for New Brunswick, where the total number of employed in the unmerry month of May fell by 2,800 and 4,600 fewer people were combing the classifieds or pounding the pavement for even a glimmer of a job.

That performance was “bested” (if that is the correct word) only by Alberta, which lost 6,400 jobs. Newfoundland and Labrador shed 4,300 positions; Quebec lost 2,100; and Saskatchewan simply treaded water.

Never, however, underestimate a government leader’s sunny determination to put the best light on even the darkest circumstances.

Faced with the inevitable questions about his jobs record, New Brunswick Premier Brian Gallant insisted, “We’ve said from Day 1 that there will be ups and downs,” he told the Saint John Telegraph-Journal. “I think that’s (the province’s static job creation record in recent years) pretty positive when you look at what is happening nationally. Alberta, which is one of our economic drivers in the country, lost thousands over the last month. We have many companies and businesses here in New Brunswick that provide to the supply chain in Alberta, so obviously they are going to have some impact.”

Of course, if this provincial government insists on falling into the commonplace trap of issuing promises regarding job creation, it would do well to consider all the factors that are actually within its power to influence.

Shale gas, anyone?

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Jun 10 2015
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Business, Economy, Energy, Oil and Gas, Politics

Towards a clean-fracking future

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In a singularly breathtaking review of the facts, the U.S. Environmental Protection Agency – still, the gold standard on all matters ecological – says ‘yes’ to hydraulic fracturing, within limits, of course.

Its long-awaited, durably delayed report on one of the most controversial resource-extraction technologies in 15 years resolves thusly: “From our assessment, we conclude there are above and below ground mechanisms by which hydraulic fracturing activities have the potential to impact drinking water resources. These mechanisms include water withdrawals in times of, or in areas with, low water availability; fracturing directly into underground drinking water resources; below ground migration of liquids and gases; and inadequate treatment and discharge of wastewater.”

Still, it insists in terms that could not be more certain, “We did not find evidence that these mechanisms have led to widespread, systemic impacts on drinking water resources in the United States. Of the potential mechanisms identified in this report, we found specific instances where one or more mechanisms led to impacts on drinking water resources, including contamination of drinking water wells. The number of identified cases, however, was small compared to the number of hydraulically fractured wells.”

To be clear, it reports, “This finding could reflect a rarity of effects on drinking water resources, but may also be due to other limiting factors. These factors include: insufficient pre- and post-fracturing data on the quality of drinking water resources; the paucity of long-term systematic studies; the presence of other sources of contamination precluding a definitive link between hydraulic fracturing activities and an impact; and the inaccessibility of some information on hydraulic fracturing activities and potential impacts.”

What does all of this mean to New Brunswick, where a potential 73-trillion cubic feet of shale gas nestles below ground, obstructed not so much by drilling technology than by public policy (a moratorium on the stuff is, after all, in effect)?

Well, say the pooh-bahs in Fredericton, ‘we’re just going to have to study the study, because, well, you know, that’s what we do.’

And so they will with all the enjoyable attention the issue deserves, given that New Brunswick currently ‘enjoys’ one of the highest jobless rates in the country, an absurdly high annual, per capita deficit and a long-term debt that would make a reality showrunner bleat for a chance to film the coming fiscal apocalypse for both prime time and Netflix.

The problem, of course, is that the Gallant government has moored itself to an ideological anchor. Its determination to utterly ignore the relevant research paid for by the previous government – for purely partisan and, therefore, spurious, reasons – has, in the light of new and independent findings from its largest international trading partner, forced its feet of clay.

If, as the EPA insinuates, fracking need not ruin the soil, water and air of this naturally pristine province (given proper regulations and industrial protocols), then what prevents the Province from engaging in the hard, indisputably contentious business of charting a ‘clean-fracking’ future? Technically, it now seems, the endeavour is not impossible. Politically, however, it remains untenable, as the gritty Libs try to ford the gulf between campaign rhetoric and pragmatic, responsible governance.

As for the EPA study, “it’s a major report,” a ranking member of the Province’s three-person Commission struck to examine the fracking conundrum here told the Saint John Telegraph-Journal earlier this week. Said Cheryl Robertson, who hadn’t yet perused the document in its entirety before her interview: “It will be an interesting read.”

More interesting, of course, will be hers and her colleagues’ own findings.

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Jun 03 2015
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Economy, Energy, Oil and Gas, Politics

Lies our province tells them

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When I go abroad, I never fail to remind my felicitous hosts that New Brunswick enjoys the finest temperatures in the western world: Here, it never drops below zero, and, here, it never rises above room temperature.

Gosh, friends, it hardly ever snows.

I also tell my international confreres that the province where I currently hang my many toques bustles with sustainable, environmentally benign industries; its rural communities are economic dynamos that support entrepreneurial vigor and verve; its cities are jewels of downtown, cultural development; its public accounts are balanced; and, oh gee-whiz let’s just be honest, its future is as bright as the North Star on a late November night.

When I yak this way the English think I’m mildly amusing; the Scots couldn’t care less. In fact, only the Irish know that I am lying through my rose-colored shot glasses (after all, in their post Celtic-tiger phase, they should know blarney when they hear it). Fortunately, for representatives of this provincial government, the Americans are just a wee bit more gullible.

For, when New Brunswick’s cohort of trade officers and assorted politicos tells a Texas crowd of energy poo-bahs just how wonderful shale-gas development opportunities in New Brunswick might someday become, they may as well be speaking to a roomful of kindergartners. (Oddly enough, that’s exactly how New Brunswick’s cabinet members prefer to address the citizens who elected them on just about every subject anyway).

As John Chilibeck of the Saint John Telegraph-Journal reported earlier this week, “a moratorium on fracking hasn’t stopped the New Brunswick government from advertising the potential for a shale gas industry in the province. At an energy conference in Houston, an officer with Opportunities New Brunswick recently set up a booth showing a poster of shale gas formations in North America, including the possibility of deposits in New Brunswick.”

Did someone not get the memo?

It reads something like this, courtesy of the provincial government’s own website on the matter: “The moratorium (on fracking) will not be lifted unless there is social license in place; clear and credible information about the impacts of hydraulic fracturing on our health, environment and water, allowing us to develop country-leading regulatory regime with sufficient enforcement capabilities; a plan that mitigates the impacts on our public infrastructure and that addresses issues such as waste water disposal; a process in place to respect our obligations under the duty to consult with First Nations; a mechanism in place to ensure that benefits are maximized for New Brunswickers, including the development of a proper royalty structure.”

That’s a fairly tall order and, if I’m not very much mistaken, you can’t put it on a poster even if your eat-and-have-cake heart desires to.

Lamentably, Energy and Mines Minister Donald Arseneault appears to struggle with the conundrum. Responding to the news, he noted, somewhat confusingly, “Putting a moratorium on hydraulic fracturing doesn’t mean you can’t have conventional drilling as well. And a moratorium does not mean you have to stop promoting the province as a place to invest. We can’t hide from the fact we have a moratorium on hydraulic fracturing.”

Fine, but then why advertise to an international audience the province’s vast shale-gas reserves – resources that can only be obtained through fracking – when we have not yet crafted a commercially viable plan for lifting the injunction on the very technology that makes the business rational?

When this government goes abroad, it should remember that truth is a far better drawing card for investment than the banal and wretched alternative.

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Jun 02 2015
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Business, Energy, Government, Oil and Gas, Politics

Might there be a future after oil

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As the Gallant government in New Brunswick laudably attempts to enshrine renewable energy as a way of policy, if not exactly life, in the province, a new study illustrates just how economically efficacious planetary survival is becoming in jurisdictions around the world.

Forget, for the moment, the nauseating push-me-pull-you debate over petroleum resources. Consider, instead, a report (brought to my attention by my good friend Yves Gagnon, P.Eng., D.Sc., and professor of engineering at Université de Moncton) from the International Renewable Energy Agency.

Its annual number concludes that this segment of the sector “employed 7.7 million people, directly or indirectly, around the world in 2014 (excluding large hydropower). This is an 18 per cent increase from the number reported the previous year. In addition, IRENA conducted the first-ever global estimate of large hydropower employment, showing approximately 1.5 million direct jobs in the sector.”

What’s more, “The 10 countries with the largest renewable energy employment were China, Brazil, the United States, India, Germany, Indonesia, Japan, France, Bangladesh and Colombia. . .The solar PV industry is the largest renewable energy employer worldwide with 2.5 million jobs, followed by liquid biofuels with 1.8 million jobs, and wind power, which surpassed 1 million jobs for the first time. The employment increase extends across the renewable energy spectrum with solar, wind, biofuels, biomass, biogas and small hydropower all seeing increases in employment.”

What this should tell us is that there is a good, clean, profitable life beyond fossil fuel; and that only a pervasive failure of public imagination keeps us tethered to a petro-past (of course, it is entirely possible and probably necessary to stand before history as reluctant hypocrites, paradoxically deploying oil and gas resources, inasmuch as they are used to build and sustain renewable energy technologies and infrastructure).

In any case, perhaps New Brunswick’s first-term Liberal government has received the global meta-message loud and clear. According to Energy Minister Donald Arseneault last week, new legislation tabled last week “gives NB Power the authority to deal with local entities on a smaller scale so that the economic benefit, the job creation and any money made from these investments will stay here in the province.”

He added: “There are all sorts of projects. There’s a biomass project and we have one in Dalhousie where they are interested in putting a turbine in the Charlo dam for one megawatt. And there are a lot of community wind projects. This is a way to create economic activity.”

It is, but as the IRENA report points out, none of it is easy: “In the coming years, renewable energy employment growth will depend on the return to a strong investment trajectory, as well as on continued technological development and cost reductions. Stable and predictable policies will be essential to support job creation. Finally, in a year when negotiators in Paris aim to carve out a global climate agreement, the broader policy framework for energy investments will also move to the forefront.”

And this is, of course, where the wheels have always fallen off the renewable energy cart: sustainability costs money; and the return on investment is more often a long-term proposition for governments and industry.

When was the last time anybody in the public or private sector openly mused about the value of durable benefits paid at some point in a fluid future?

When was the last time anyone dared utter the words, “social dividend”, as justification for sensible economic development?

Still, New Brunswick’s government appears to be heading down the only track that does, in fact, promise long-term rewards in the energy sector.

And that’s laudable, indeed.

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Jun 02 2015
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Business, Energy, Oil and Gas, Politics

The origin of facies

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Shall we see a reason to dither, to fuss or bother about shale gas development any longer? Or shall we move on and direct our righteous anger to more eminent calamities in this province – the hopeless young, the fatalistic elderly, the imperilled poor, the overtaxed, the house-proud, the land-poor, stray dogs and cute cats without homes to wreck?

Let’s face it, fracking as a nexus of public opinion in New Brunswick is as dead as a dry well. We don’t want it; we never will.

Sure, we will always want cheap oil and gas; we will just want it shipped in pristine containers that never leak, never smell, never foul the big, rock candy mountain that is this superbly self-aware part of the world.

And sure, we will always want what big-box stores offer: plastic, vinyl, more plastic, more vinyl. Never mind that 88 per cent of everything you can spend a dollar-and-a-half to buy is composed of petroleum derivatives – from shampoo to cigarettes, from sundresses to sandals.

Nope, folks, we are fated to play out the roles our human natures dictate. We want what we want, and the cheaper the better. That’s called evolution. Look it up. It’s the one principle that tethers all ideological tribes together, forever.

“My position is well known and I respect (New Brunswick Premier Brian Gallant’s) approach, because I do think it’s thoughtful and considerate,” former New Brunswick Premier Frank McKenna told the Saint John Telegraph-Journal recently. “What I like now is that there is a specific process in place (for shale gas development). It would be my hope, whatever the conclusions would be, that we would arrive at it expeditiously. I wouldn’t want to see (this issue) hanging around us for many years. I’d like to see us deal with it as quickly as possible.”

He is absolutely right, of course. Still, to say that Mr. McKenna’s views on this subject have ‘evolved’ in recent times is to say that Mr. Gallant won the past provincial election thanks, in part, to the federal Grit, anti-fracking machine operating just barely behind the veil that young Justin Trudeau wears to hide his pretty face from the voting public.

Once upon a time, Mr. McKenna had this to say to me about shale gas in New Brunswick: “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, New Brunswick’s shale reserves could change the conversation about the province’s anaemic economy forever. They could transform the region into a jurisdiction whose wealth rivals that of a Saudi Arabian principality.

So, shall sleeping wells lie?

This province is justly famous for its ability to come a short way in a long time. Shale gas once represented an even chance to transpose this historically proven equation. No more. We must look to other, more socially acceptable ways to keep ourselves from starving and freezing in our own homes.

As Mr. McKenna might advise, we must adapt, if not exactly evolve.

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Mar 31 2015
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Energy, Environment, Oil and Gas

On the shale gas merry-go-round

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The on-again, off-again shale gas industry in New Brunswick is less impressive for its estimated 70-trillion cubic feet of exploitable resource than for its verifiably inexhaustible supply of deja-vu moments.

Last week, Energy Minister Donald Arseneault introduced a new “panel” of experts – comprised of New Brunswick former chief justice Guy Richard, former University of New Brunswick President John McLaughlin and former chairwoman of New Brunswick Community College Cheryl Robertson – who will spend the next few months assembling the “true facts” about the practice of hydraulic fracturing, on which the Liberal government has slapped a moratorium.

Said Mr. Arsenault at news conference in Fredericton last Tuesday: “It’s an independent commission. . .They have carte blanche. I don’t want to prejudge how they are going to do their work. Justice Richard, as well as the two commissioners. . .will have the opportunity to consult who they feel can contribute to this process.”

All of which feels eerily familiar. A couple of years ago, the pro-shale gas Progressive Conservative government established the New Brunswick Energy Institute (NBEI) to, among other things, conduct research on shale gas development, including hydraulic fracturing, as an “independent” body of experts, beholden to nothing no one but their own findings and consciences.

Its mandate was, and is, “to commission and oversee scientific research in New Brunswick, peer review relevant research from other jurisdictions, and provide access to the information for New Brunswickers in an easily understood format so it can be considered in forming opinions about appropriate courses of action in the energy sector.”

Its mission statement elaborates on this role “to fund and foster research, which will assist with the understanding of, and decision making related to, energy issues and potential development in New Brunswick (including exploration, production, transportation, transmission and utilization.”

It’s also charged with examining “energy-related research and observations in other jurisdictions, to assess their value and relevance to the New Brunswick scene; to communicate the Institute’s findings in a clear, objective and comprehensive fashion to all New Brunswickers, including both the public and decision makers; and, to provide advice to the Government, either unsolicited, or upon request.”

Now that the Grits seemed determined to reinvent the wheel with its own panel of  commissioners, what tidings bode for the Institute? In a brief phone interview last week, David Besner, chair of its Scientific Advisory Council, told me that he is, in effect, waiting and seeing. As for Justice Richard, et. al., and whether or not they will play with the NBEI in the same sandbox, Mr. Besner said, “I haven’t been told anything. . .it’s just what I read (in the newspaper).”

Which, in fact, isn’t very much – though not for lack of sound reporting. Clarity just doesn’t seem to be any government’s forte when it comes to managing natural resources in this province.

When the Tories established the NBEI in 2013, they spent weeks attempting, mostly unsuccessfully, to explain just what the organization was supposed to accomplish. Now, the Grits find themselves with the same rhetorical problem.

To insist that the new panel has “carte blanche” says precisely nothing about its real purpose. Is it to objectively weigh the progress (or lack thereof) on the five conditions the provincial government requires industry to meet before lifting the moratorium on hydraulic fracturing? Or, is it to provide their political masters with a convenient, if respectable, third-party endorsement of its current policies regarding shale gas development?

As Mr. Arseneault says, “It’s a very heated topic. At the same time it’s a very important topic. . .Some people will never change their minds.”

Again, where have we heard that before?

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Mar 27 2015
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Business, Government, Oil and Gas

Isn’t it good, Norwegian wood?

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The sweepstakes that is the oil and gas sector is dominated by short-game players – those who build and boom and inevitably bust and break the bank to survive until the next cycle comes round to titillate the itinerate wildcatters of the corporate world.

In their wake, of course, people lose their jobs, houses, bank accounts, and any semblance of stability and security. If you don’t believe me, just look what $48-a-barrel oil is currently doing to Alberta’s economy. It’s now cheaper to leave the stuff in the ground; two years ago, such a proposition would have been heretical to the financial institutions that happily floated low-interest debt to exploration and drilling companies.

In this volatile segment of the natural resources sector, things change – and they change fast. Understanding precisely how this calculus works has never been a strong suit of any provincial or territorial government in Canada. The words “protecting the downside” has rarely issued from the mouths of energy-rich premiers (not, at least, since the days of former Alberta premier Peter Lougheed, who had the good sense to siphon billions of dollars from the petro-economy into a “heritage fund” in the mid 1970s to, again, protect against the inevitable downside associated with oil and gas development).

Of course, here in New Brunswick, which sits on a potential resource of 70-trillion-cubic feet of shale gas, we don’t endure this particular problem. Oh, lucky us! For, as we hem and haw over the proper “social licenses” that our long-term debt purchases in place of responsible tight-play development, our collective complacency about the future keeps us warm, cozy and competitively irrelevant on a planet that, oftentimes, prefers to face its challenges head on.

But should we ever choose to join that planet, we would do well to rip a page from Norway’s playbook on managing a vast oil and gas industry without falling prey to the temptations of short-game profiteering, gambling and other parlor tricks of chance.

A nice piece by Susan Ormiston, posted on the CBC news site last week, explains fulsomely how that Scandinavian country of five million souls got its energy portfolio right decades ago.

“Norway today sits on top of a $1-trillion pension fund established in 1990 to invest the returns of oil and gas,” she writes. “The capital has been invested in over 9,000 companies worldwide, including over 200 in Canada. It is now the largest sovereign wealth fund in the world. By contrast, Alberta’s Heritage Savings Fund, established in 1976 by premier Peter Lougheed, sits at only $17 billion and has been raided by governments and starved of contributions for years.

Quoting Rolf Wiborg, a former oil and gas engineer with the Norwegian government, Ms. Ormiston reports, “For the last 10 years, when nothing went into the Alberta fund, and we put a lot of money aside, the profit went out of Canada.”

The result: Every citizen of that cold, northern country is a technical millionaire. Meanwhile, every citizen of this cold, northern country. . .well, isn’t.

The secret, Wiborg says, is simply that Norway “doesn’t change” its “policies with the changes in the oil price – you can’t do that. Lougheed’s government in Alberta knew that. They made policies, then they left them behind.”

Meanwhile, the Government of Canada, which counts on a certain stipend from the oil and gas sector to balance the national accounts, not only changes its polices routinely; it changes the date of its budget based on the fluctuating price of this transparently hostage-taking commodity.

It is time, perhaps, for Canada to start playing the long-game with its natural resources.

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