On natural gas and economic development

Did you know that there is natural gas out near Sussex in the McCully field? There is and in fact, the Potash Corporation of Saskatchewan has been using that gas for its local operation for several years. Now a new study estimates that there are “proved and probable sales gas reserves of 119.3 billion cubic feet could be recovered from current and future wells drilled in the evaluation area“.

Now you will just have to trust me on this. That a fair amount of gas. Not by Alberta standards and not by offshore Nova Scotia standards but if they recover and sell all that gas it should generate a fairly good revenue stream to the province from royalties.

So the heat is on to get a 30 km lateral pipeline built to connect this gas to the distribution system to be sold on the open market most likely in the US.

Now, the executive director of the local economic development agency in Sussex had an idea. He knew that the economic spinoff benefits to the local community of this project were going to be minimal. The royalties go to the province. The actual field is not within local municipal boundaries so no real property tax benefits. The engineers and field workers were more than likely living in Moncton. So aside from a few more bucks spent in the local restaurants and gas stations he realized there would be no real benefit to the local community.

So he had an idea. Why not set up an industrial park near the site that would attract manufacturers and other large users of natural gas? His reasoning was that if they could attract one or two large users (like the potash corp.), the producer of the gas would have less incentive to invest millions into a 30km lateral pipeline. Or, like the potash corp itself, another large user or two might actually take a stake in the project.

There were some compelling business case reasons why this made sense at least at a high level. First, the local gas could’ve been made available with any transmission costs – shaving something like 30% of the cost. Second, the producer wouldn’t need to spend millions on a lateral pipeline – presumably reducing the cost structure somewhat. Third, if the province wanted to there could be flexibility in its royalty structure to attract business. All in all, the gas out there for industrial users could have been considerably cheaper.

Potential anchor projects? Small natural gas fired energy plant. A large manufacturer with co-generation capacity. My favorite – a specialty fuels manufacturing plant (jet fuel, etc.) made from natural gas and shipped by truck.

Now I haven’t followed this closely in recent months but I gather from the paper today and from the lack of any news on the other project – that it is probably dead.

Just another good idea with no collective will to even try.

And for you energy industry experts reading this, I realize there are a number of serious challenges with this whole approach but I still think that it was an innovative idea that deserved a fair hearing. An idea that could have been floated to the jet fuel manufacturers or the producers of power (not NB Power) or to a few large manufacturers.

But no, let’s ship it all to New England. Take our pittance. Buy a few more MRIs and watch our population decline. And while we’re at it why not have some beer and popcorn?

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0 Responses to On natural gas and economic development

  1. David Jonah says:

    David you are right on the money.

    I have been writing about the lack of focus in this province on new alternative energy production.

    Further to your point about the potential Sussex area Industrial Park, which was a great idea and typical of our inability to follow through in the Province for some reason now; there is a real opportunity to do something great.

    Natural gas is one ingredient that can be used for creating hydrogen fuel and other combinations to create bio-fuels and alternative fuel supplies that could have standing orders from the Public Purse for the fuel conversion of snowploughs, school buses, municipal buses in all cities.

    And in the same manner- even if we have to subsidize the rearly implemntation of conversion costs to get off foreign oil, is the conversion of transport trucks that are engaged in the daily, around the clock transport of hog fuel from pulp mills to steam plants including hospitals in this Province.

    Since we are going to drive up their electical costs, we should be looking for methods to reduce consumption of diesel fuel. Natural gas can also be used for actual electrical power generation and the technology for all of this is springing up all over the World.

    It is to weep.

    Every hour somewhere in New Brunswick, a Hog Fuel truck is engaged in several hundred kilometer runs moving chipped bark to burners to produce steam energy.

    This list of things that could be done to set New Brunswick on an fossil fuel independence course in energy efficiency and energy independence from this one find are immense.

    For instance.

    There is work right now going on in Stoney Creek, 25 miles from your office to bring back the last producing natural gas deposit that is all part of the same geological fault running through from Sussex to Fundy Coast through Albert-Kings County.

    And yet we do nothing.

    No one should vote for any candidate until they come out with an alternative energy policy for New Brunswick with Federal help to implement.

    The first dollars in Leduc, Alberta Oil Filed were Federal subsidies in 1948 and favourable tax treatment write offs.

    We deserve at least this as a minimum.

    A New Brunswick Energy Industrial Park, linked to Canaport in nearby Port of Saint John would put Sussex on a path to playing a critical role of providing more than just cow’s milk to the Province, but to producing the mother’s milk of economic development and competitiveness for the whole Province and possibly the Maritime Transportation Industry; with affordable conversion of public diesel motors to fuel developed from available natural gas.

    Domestic production natural gas, that is.

    We need to question who and why we are simply going to dump our previous natural gas in the pipeline for no Made-In-New-Brunswick advantage.

    For more ideas and previous articles on energy including the development of a hydrogen based economy, see my blog http://monctonlocal.blogspot.com/

    Great posts, stay on this one, as I am going to, until we embarrass political leadership at all levels to come forward and actually have a strategy instead of a dance routine of focusing on management instead of strategic direction.

    Managing the tax revenue efficienntly should be a given, however having a vision for where we are as a Province in 25 years is the actual measurement standard we should be using on our Premier and all our Federal MP’s.

    They need to get with a program and not be the least informed in the community about the threats and oppoirtunities that are facing us in energy production and alternative fuel economies.


  2. David Campbell says:

    No one should vote for any candidate until they come out with an alternative energy policy for New Brunswick with Federal help to implement.

    We’ll all have to vote for the Greens….

    It would have been wonderful to have some horsepower put behind that Sussex Energy Park concept – your ideas should be pursued.