NB Coal

Since we are talking energy policy these days I was reminded of an idea a few folks (including myself) floated a few years ago.  The idea was for the NB government to take a stake in the Sussex natural gas deposit and use the gas to fire a natural gas electricity plant.  Since the government would own the gas, the operating costs would be relatively low and the government could have offered that power for whatever rate it wanted -subject to a tax-based ROI.  In other words, you create great jobs that pay high taxes and you will get cheap energy.

The idea was immediately discounted and turfed of course.  This is New Brunswick.  Danny Williams went ahead and bought a stake in Hibernia south (in addition to the federal government investment in the original hibernia).  New Brunswick owned NB Coal and controlled its own supply of coal at one point.

But heaven forbid that the government get in the business of owning gas.

I realize this is a small idea in the big scheme of things but innovative thinking matters – particularly in the long term.

A report came out last week indicating a whole lot of gas under our feet.  Between Sussex and Elgin there’s an estimated 67 trillion cubic feet of natural gas trapped in a 300-metre-thick shale formation that starts two kilometres down.  In the not too distant future this gas should be economically viable (the current Sussex gas is from the same system).  Maybe at that time we can get old Danny to hobble over here and negotiate for us.

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6 Responses to NB Coal

  1. Anonymous says:

    I think the government needs to decide what they should be involved in and what they should not. But if they are going to be in something, they need a strategy and policy and they need to stick to it. Going half way is a formula for disaster.

    Guess the constitution dictates that education, health care and transportation are givens for provincial governments. I would disagree with some of the many proposals for more government involvement such as getting in the auto insurance business.

    However, I would agree with you that energy policy should be a stategic area for the government. It is critical to the economy, safety and well being of NB. We should have a policy and the government of New Brunswick should be influencing strategy, developments and supply. It is simply too important to allow other people or governments to control.

  2. mikel says:

    This is actually a big topic at the facebook site and I was trying to figure out how to bring it in here. Since natural gas is increasingly used to create power, some have posited the amount of natural gas in the Sussex area as a potential reason HQ is interested (though unless its on NB Power land I don’t see how it could make a difference). Keep in mind though that similar grandiose claims were made in PEI about seven years ago-and it turned out to be a huge scam.

    But at the very least, there are lots of people there who are saying the exact same thing as this blog-if its on NB land, then the NB government should own it outright or at least help develop it. So it seems the ‘sides’ have areas where they overlap after all:)

  3. RKA says:

    So are you saying we’re sitting on all this gas and NB gov’t doesn’t reap any benefits? I just don’t get these guys.

  4. Cod Father says:

    Enterprise Fundy commissioned a consultants report not too long after the gas discovery to assess the market viability of a natural-gas fired power plant in the Sussex area. The report is available off their website. It concluded that because the gas was no longer going to be stranded ie: connected to the Maritimes and Northeast Pipeline, thus gas had to be sold at market rates, the project would be unfeasible.

    My how times have changed. The North American Natural Gas market has been turned on its head. LNG terminals and massive shale gas deposites are popping up everywhere. New technology allows shale gas to be extracted. The result?! Alberta is over $7 billion in deficit because the gas prices are so freaking low! A natural gas fired power plant, heck, convert Colson Cove, Dalhousie and Belledune, Ste. Rose and Chatham to run natural gas, and NB would be doing something!

  5. Claude B says:

    Mikel: HQ divested all its holdings in fossil fuels years ago. They used to have a lot of claims in Anticosti and they owned Old Harry off the Magdalen Islands. They’re not after your natural gas.

    Of course, a government-owned NG field would make sense, but that’s not something Canada is used to in the oil a& gas industry. As for the production of electricity from NG, one should ask the following question: would you get a better deal by burning the gas in-province for the production of electricity or is it more lucrative to ship it to New England?

  6. mikel says:

    That’s what I said Claude, but its not all cut and dried. This morning on CBC they had a show on the beluga’s in the st. lawrence. One concern is that it appears Quebec is now getting into the natural gas field. Several locations were scouted, there was even a referendum in Levis (which failed). I can’t remember the name of the town, but they are seriously looking at building a natural gas terminal there, sadly right in the main training grounds for beluga’s. I believe they said that this would be Quebec’s first natural gas terminal, and the intention is to bring in gas from Russia and Albania. Now, imagine if you had gas closer.

    However, again, I don’t know who owns this gas field or enough about how gas can be changed to power. My thinking would be that its far better to change appliances to gas than to change gas to electricity, but I really don’t know much about it. They are ‘thermal’ generating stations, so whether that can be converted from coal or oil to natural gas I have no idea-its just interesting speculation.

    As for the question, it depends on ‘more lucrative to who’? And it depends on pricing agreements. IF people were willing to pay higher rates then obviously the utility would make more money. Selling it directly to the US ‘may’ be more lucrative, but hardly helps NB industry.

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