Words matter: Learning from shale gas

You have probably noticed all the interest in shale gas and related developments in British Columbia.  There was concern over a state-owned Malaysian firm offering billions of dollars to buy into a northern BC shale play.  Now Chevron wants in spending a pile on both shares in a shale gas play and in the pipeline infrastructure to distribute the gas.

How many stories have you read lately about companies looking to spend hundreds of millions to help develop New Brunswick’s shale gas?

Zero.

I could be talking about Arkansas or Pennsylvania or Bakken but BC is more instructive because it is a Canadian province just like New Brunswick.

You could argue, rightly, that NB’s shale gas development industry is more theoretical than BC where 50% of all new gas wells are from shale and other unconventional sources.

But it is stil interesting to me.  Back in the latter part of the first decade there was a lot of interest in exploratory work in New Brunswick.  Now?  Who knows.  Maybe there is interest but it isn’t showing up in the media.

Of course the low price of gas and the US glut isn’t helping but those market dynamics are in place out in BC too.

What bugs me the most is the political response.  Instead of looking at our natural gas as an important and valuable resource much of the political response has been to demonize the resource.  Of course the tepid and very lacklustre response from just about every other stakeholder just reinforced much of this view.  Name me one influential stakeholder that vigorously endorsed shale gas development?  There were some external voices – Donald Savoie comes to mind- that were very supportive of at least getting through a proper exporation phase for the industry just to see if we can actually extract commercially viable gas – but not many.

Now companies are dumping billions into BC and nothing into NB.  I hope that will change but…..

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31 Responses to Words matter: Learning from shale gas

  1. Instead of blaming the political response, I would be looking at the corporate environment in new Brunswick and asking why it is unwelcoming to investment from outside.

  2. The experts usually are right about hazard, and the public usually is right about outrage. Experts face two critical communication tasks in the shale gas risk controversy, not one. The task everyone acknowledges is the need to communicate better, to explain that the hazard is low, at least hypothetical. The task that tends to be ignored is the need to listen better, to hear that the outrage is high and take action to reduce it.

    Some have been supportive of the industry by simply stating that the hazards are low. The hazards may indeed be low, but that’s not really the issue. Others have been supportive by stating that the province needs the revenues. This argument is cynical even on the face of it. One of the key reasons that outrage is high is that people don’t believe that government or companies can be trusted to keep their commitments to regulate, monitor and enforce the industry to keep hazard at a minimum or to appropriately compensate those who will be adversely affected.

    We know that the core issue is one of trust. How have government and industry responded to that knowledge?

  3. mikel says:

    I think Mr. Campbell has too much of a bee in his bonnet over the protestors. The government of New Brunswick has CONSISTENTLY touted the benefits of the gas industry, and that never changed when the government switched to the other party. They signed a five lease to a company that broke the province’s law. The liberals are making noises about a moratorium, but clearly that is just to get elected.

    Meanwhile, if the government had simply announced a year long moratorium, as the original protestors asked, this would have been all over and done with. Sorry to be so critical, but seriously you have to be crazy to think that the New Brunswick government has ANY idea what it is doing regarding gas development. They may have good intentions but they are clearly out of their league.

    As for investment, the province has pretty much opened its doors for companies to do exactly the same as they did with the forest industry. There are some noises about small businesses getting hurt by the talk about regulations, but again, protestors have been demanded regulations for YEARS, they aren’t stopping the government.

    Meanwhile, one of the only partnerships developing gas dissolved because the larger company saw no reason to test any further. Now, when the guys who stand to make or lose money make decisions, its worthwhile to pay attention.

    So like the first poster said, when you wonder why no malaysian company is offering billions, ask the CORPORATE sector, not the government. At no time in the past has the government of NEw Brunswick EVER stopped development, and has given no indication that it will. So if the province doesn’t look like BC, don’t ask the government-they’re every bit as willing to bend over as BC-probably more so.

  4. Phil says:

    Are you getting income directly or indirectly from the energy industry? If think you need to clearly state your financial situation regards this issue.

    Why do u use neutral language when discussing the benefits of shale supporters, and low grade negative language for those who are concerned with the costs of such action?

    Ultimately you play up benefits and down play costs…very Wall Street of you.

  5. Tony says:

    Here is a great lecture by Michael Porter which is very relevant to your last phrase (“I hope that will change but…”)
    http://www.youtube.com/watch?v=y5I_cnpP99U

  6. I have not received any payment from any source to promote shale gas. The closest I have been indirectly to the industry is a paper I worked on with the Atlantica Centre for Energy on the supply of natural gas. This was a research paper and my involvement with it was well publicized.

    I will restate, however; that there is no problem at all with actors in any public policy debate – on all sides – taking payment to promote ideas. That’s part of the democratic process. As with the commenter, I do believe people should be upfront when they are paid to promote specific points of view – either in print or online.

    The issue raised by Downes is an important one. The lack of support among the business community has been puzzling given that many of them should be set to benefit through the supply chain. There are over 100 firms in the oil and gas supply chain in the small province of Saskachewan.

  7. Tony says:

    @mikel
    “when you wonder why no malaysian company is offering billions, ask the CORPORATE sector, not the government.”
    > As I said in a comment to another post, the corporate sector is not investing because (1) the “right” government incentives are not in place and (2) public opinion pressure makes the current investment environment quite unstable. The second point could be addressed by an unequivocal statement by both the NB government and the opposition that they support shale gas exploration. Just put yourself for a moment in the place of a Malaysian company looking for investment opportunities in North America and answer the following question: are there other jurisdictions that offer a more stable and friendly investment environment than New Brunswick?

  8. mikel says:

    Tony, I was going to go looking for quotes, but there are simply TOO MANY. Just type in ‘david alward on shale gas’ or ‘new brunswick government on shale gas’. The opposition is irrelevant, THEY put the current contracts and regulations together. Virtually EVERY opposition in every part of the hemisphere will make similar grumblings, usually much louder in the US, but once in government its ALWAYS a different story.

    ‘Public opinion’ is irrelevant to investment. When people invest, most don’t even LOOK at public opinion, its so irrelevant. Windsor Energy just extended their contract into a five year lease, and they are universally reviled in New Brunswick. What do they care, they live in Ontario!

    I don’t need to put myself into the place of a malaysian company -the Fraser Institute for MANY years has ranked New Brunswick as the BEST place for mining, and gas extraction falls along the same lines. THAT is the kind of stuff investors look at. Do you think the chinese don’t know that there are lots of public protests against oil sands development? Do you think they care?

    Now, again, in one area I think we may agree, and that is that the New Brunswick government has been dragging its feet on its ‘new’ regulations, and obviously that may affect investment. But again, protestors have been clamouring for those regulations for YEARS.

    Anybody that thinks that if ANY company came to NB and wanted to develop shale gas that Alward wouldn’t roll out the red carpet is, to my mind, delusional. There is only ONE company the government can even get interested, and so they basically handed them thousands of hectares all around Fredericton hoping they’d find something somewhere.

    But to be blunt, some people expect it to be like with the Irvings-if the government hasn’t basically promised a blank slate with virtually no oversight then they aren’t being ‘business friendly’ enough. Fine if you think that, but don’t be surprised when the majority (or at least a fair sized minority) don’t agree with you.

    And again, it comes down to reality-you can’t sell what you don’t have, and its even harder to sell it when its a commodity that nobody particularly needs. There was ONE study that made, to my mind, crazy claims about how much gas NB was sitting on. Since then all the tests have come back negative, and one large partner pulled the plug. Now, MAYBE, its a conspiracy and companies have found that gas but are waiting til the glut dies down,but again, that has nothing to do with the government. Alward knows that jobs ALWAYS trump environmentalism in New Brunswick.

  9. mikel says:

    Not sure what happened, maybe my comment is still there but it seems to have disappeared.

    I’ll make this shorter. To Tony, the Fraser Institute has ranked New Brunswick as the BEST place for mining companies for quite a few years. Gas extraction falls under similar guidelines. Apart from the delay in regulations, there is NO evidence that the NB government is not fanatic about shale gas investment. Everything they say indicates their support.

    As for investment, that goes where companies make money, not where they are loved-particularly in the resource sector.

  10. Tony says:

    @mikel
    I don’t have much time to answer all your points, so I will comment on only a few of them:

    “it comes down to reality-you can’t sell what you don’t have, and its even harder to sell it when its a commodity that nobody particularly needs.”
    > That’s a great point. I am not familiar with the studies about shale gas in NB so I will have to rely on your argument.

    “the Fraser Institute for MANY years has ranked New Brunswick as the BEST place for mining, and gas extraction falls along the same lines”
    > The Fraser Institute is a totally unreliable source. They will say that from anyone willing to bring tax rates close to zero. We all know that a good investment environment goes well beyond low taxes.

    “Do you think the chinese don’t know that there are lots of public protests against oil sands development? Do you think they care?”
    > The Chinese are investing on the oil sands for strategic reasons. They want to satisfy the U.S. energy needs with North American oil so they don’t have to compete with the Americans in other parts of the world. I personally also think that they are after know-how (technical and Western-style business).

    “‘Public opinion’ is irrelevant to investment.”
    > I disagree. Public opinion is very important where governments are weak and/or change too often. New Brunswick is a textbook case. If you are going to invest, say, $100 million in a project in NB, you want to be sure that the regulatory environment is going to remain stable regardless of who is in power.

  11. mikel says:

    A couple of good points and a couple of misunderstandings. My point about China is only that there IS public protest, but that doesn’t mean they aren’t keen to invest. The Fraser Institute certainly has its biases, but its something business pay more attention to than, say, internet forums. There are people who will ‘publicly protest’ virtually ANY development. And NB’s tax rate isn’t that much lower than many places, certainly not better than places like Columbia. What it has offered is stability, lack of enforcement, and ‘public opinion’ that basically says “if there’s a job in it, we’ll do it”.

    The regulations are certainly the standout point, and if we were talking about ANY other issue it would make sense. But again, I don’t think ANY royalties have been paid for the past two years because the price of natural gas is so low. So when you have no profits, you don’t pay many royalties.

    The point is that it would be VERY different if natural gas WERE found. I have suspicions that the initial tests that ‘found more gas than is in Alberta’ are, shall we say, less than accurate. I’d just like to remind people that about ten years ago a ‘natural gas boom’ was predicted for Prince Edward Island. It turned out to be a con job which ended up costing islanders big money that they invested.

    I WILL agree that the current wait on the new regulations is not something that helps, however, businesses are quite used to dealing with governnent. NO regulatory environment ‘stays stable’ for long, and unfortunately for the theme of this blog, investment doesn’t tend to stay nearly as long. The days when company X will come in and build a factory and stay there for generations is lONG gone.

    By the way, in NB its FAR more ‘stable’ given the fact that in the US most states and localities have numerous challenges they can use to combat those regulations. In many states citizens can draft a referendum on fracking, banning it entirely if THEY want. Many towns have to have referenda before development even begins. And an extremely litigious society like the US means lawsuits can come from almost any quarter. A place like NB has NONE of those problems. Its VERY difficult to sue anybody for anything in NB, and a majority government essentially has dictatorial powers for four years.

  12. Amin says:

    NB lacks leadership with respect to resource development. The people lack the will and determination to be self sufficient. Look at BC, Alberta, Saskatchewan or Newfoundland ….all successful provinces due to resource development. Wake up New Brunswick!!! Your people leave your province and migrate to the mentioned provinces to develop their natural resources (including fracing).

    Once again NB will miss out on a great opportunity to move ahead. Hopefully the equilization payments remain intact…..but for how long!

  13. mikel says:

    Well, here’s just one sample from Alwards ‘year end review’.

    “the year ahead will largely determine whether new resource development opportunities in New Brunswick will come to fruition – a prospect the Tory government is pitching as a linchpin in reviving the province’s economy.”

    “That’s why we are so focused on resource development,” Alward said

    “If you look at the provinces in Canada that are prosperous: British Columbia, Alberta, Saskatchewan and Newfoundland and Labrador, we have some of those same opportunities whether it’s natural gas development…”

    That’s just from ONE interview.

  14. Amin says:

    Mikel,
    you appear to be against resource development. Alward is all talk with little leadership ability and no track record. Look at Ralph Klein or Danny Williams….great leaders and their time in office proved them to have vision. Their results shut up hypocrites. NB flips back and forth between the parties …..politicians play politics. No one really cares about the future of NB.

    Good luck with the deficit and pray that the federal government continues the equilization payments.
    I am from Alberta and hope we stop paying!!! Oilsands and Fraccing (Natgas) are fine by me…we’ve only been doing it safely for decades.

    Calgary, AB

  15. Khalid Amin says:

    Mikel,
    I have read several posts from you regarding the Windsor Energy situation.
    You certainly DO NOT have your facts straight. Windsor Energy DID NOT violate any law.
    Read the regulations!!! We had permits from DNR and NB Highways Dept. not to mention RCMP escort.
    Minister Northrup played politics with the file for his personal political gain. Maybe he should read the regulations.

    We received our 5 year lease after spending over $5million for our work plan.

    Regards,

    Khalid Amin
    President and CEO
    Windsor Energy Inc.
    Calgary, Alberta

  16. mikel says:

    IF I’ve ever said Windsor broke the law then its from a media report (its in numerous headlines-one from the RCMP). Not only have I read the regulations I was regularly posting them on the CBC forums. But if you are who you say you are, then you must know you are partially responsible for the need to change the regulations, which is part of the problem.

    If Seismotion didn’t need Sussex’s permission then there was no reason to contact them and ask for it and making them look stupid-which for a politician is easy to accomplish, but not easy to admit. However, since I HAVE read the regulations then I can say just how badly it is worded, and why there is ample room for different interpretations, and why they need to be changed (I can post them here if anybody is interested).

    Since you are reading this, we might as well ask-WHY are you still in New Brunswick since you have such a low opinion of the place? I suspect its because you either make money or think you will make money. IF the regulations are so terrible and the people are so stupid and the politicians are so bad, then why invest in New Brunswick AT ALL?? That just proves my point that I’m making to Tony-that public opinion simply doesn’t enter into it (and your comments here don’t help).

    On the point of ‘vision’, I really don’t agree, but I’m glad you brought it up. There is now a court case in Alberta from a woman who is a consultant in the energy sector and ‘claims’ that her well was poisoned by fracking. According to her, within days of going public she had at least 50 other people who reported the same problem, but really had no recourse since the Albertan Department of the Environment says it really has no obligation to look out for the wells of landowners.

    People forget that Canada has about the worst media concentration in the industrialized world, so the story “hey everything is great out west” is often touted as evidence that fracking is perfectly fine. Just because people don’t HEAR about problems, doesn’t mean they don’t exist.

    Its ludicrous to call it resource DEVELOPMENT. You don’t ‘develop’ gas, you extract it and then you sell it. It is resource EXTRACTION. But you make the point well-what we know is that once people have jobs and an industry like the oilsands or offshore oil is flourishing, it is next to impossible to get governments to listen. Which means it makes perfect sense for anti fracking protestors to be so active NOW to dissuade it.

  17. Tony says:

    @mikel
    You may want to see this. According to CAPP, it is estimated that the New Brunswick shale gas play holds more than 70 Tcf. That is not a small amount.
    http://www.capp.ca/getdoc.aspx?dt=ntv&docID=203973

  18. Tony says:

    @mikel
    You may want to see this. According to CAPP, it is estimated that the New Brunswick shale gas play holds more than 70 Tcf. That is not a small amount.
    http://www.capp.ca/getdoc.aspx?dt=ntv&docID=203973
    While somebody may/will argue that only a fraction of it is economically recoverable, the whole point of exploratory drilling is to answer this question. And let’s not forget that jurisdictions like Alberta get a good amount of revenue from their land leases.

  19. mikel says:

    They don’t say where that estimate comes from-from my reading it seems to be a couple of tests ages ago and extrapolated. Since those tests were done a series of other tests showed almost NO gas (one company even pulled out). As for leases, most of the area where gas is expected has ALREADY been leased so no more money is expected.

    Actually, at this point its INSANE to be even talking about gas since the price is so low-I think most of the companies are looking for oil anyway. The Corridor ‘corridor’ in the second quarter of last year contributed a grand total of ZERO dollars to the government.

    Maine is currently seeing record low energy prices because years ago they were smart enough to build natural gas power plants. IF NB had done the same then YOU could have dirt cheap power right now by SHIPPING IN gas, not talking about how to ship out a dirt cheap commodity that may or may not be there.

    I know thats irrelevant NOW, but the point is, that was a possibility discussed a DECADE ago, but instead it was decided to redesign for orimulsion, and rebuild Lepreau. THAT is your government-the people who, I hate to be so critical, but who were SO stupid they didn’t provide for cost overruns in a contract for a redevelopment that had never been attempted before!

    Frankly, while many of the claims of protestors are absurd and hyperbolic, I think its far more insane when people who are MUCH more educated than many of the rural protestors come out against these people, who if anything have been proven RIGHT in almost all their claims.

    For more on that I just have to mention my research into that Alberta case, which does seem pretty specious now. What appears to be the case in Alberta though, is that the government has found that most people’s wells are old and don’t stand up well to the surrounding gas extraction. In short, it is the well itself which is the problem. Now, an EASY fix for that, but one which is never discussed, is for those same energy companies to simply come in and fix up people’s wells to higher standards. Of course they refuse to do that, and then there are problems, and the government says “aha, the problem is your crappy well, not the energy company”. In reality, BOTH have a point.

  20. Khalid Amin says:

    If you have read the regulations you would know that this is what is states:

    GEOPHYSICAL EXPLORATION
    17(1)A geophysical permittee shall not work
    (a)within the bounds of a municipality unless the consent in writing of the municipal authority is obtained; or
    (b)within any highway right of way unless the consent in writing of the District Transportation Engineer is obtained.

    ONLY in NB, OR is “interpreted” and maybe or include the municipality. My understanding of the language is that you do this OR that! so you get the municipality consent OR get highways consent!

    Why did the RCMP return the file to DNR so quickly?

    Yes sad but true….NB is a terrible place to do business as evident by the lack of commerce and people leaving the province. Look at the Fraser Institute report and please enjoy the comments at the end of the report.

    New Brunswick tumbled to 10th place from seventh to become the worst-ranked province in this year’s survey. New Brunswick’s poor showing is related to the manner in which regulations governing exploration and development of shale gas resources are being administered and uncertainty over the environmental regulations that will apply to a shale gas industry.

    “To top it off, concerns over anti-development activism in New Brunswick have increased since a company pursuing shale gas activities was vandalized last summer,” Angevine said.

    http://www.fraserinstitute.org/research-news/news/display.aspx?id=18470

  21. mikel says:

    However, the highway was within the bounds of a municipality which means Section (a) applies-you can’t have an ‘or’ when BOTH of the conditions apply. And when I say “don’t touch these cookies OR muffins” what it means is “don’t touch these cookies AND muffins” (you can’t come back and eat the cookies and say its OK because there was an ‘or’ in there and you didn’t eat the muffins). Those twisted semantics are why the regulations need work, and the fact that the subcontractor requested a meeting to get permission shows that YOUR subcontractor agrees with this different interpretation than yours.

    As for why it was sent back, like I said, your interpretation is reasonable, and like the police said, in the regulations there actually aren’t any penalties for breaking the regulations. All it says is that the minister can order a work crew to stop working until he’s satisfied. Combine that with a court case and its pretty clear why. And again, having regulations with NO penalties kind of seems like a good reason to revamp the regulations.

    As for Fraser, heck, even on this pro development blog there is almost universal derision for the Fraser Institute by readers! But again, in that one area we all agree-nobody wants ‘uncertainty’, and protestors have been clamouring for the new regulations for YEARS now. However, its very doubtful its the same regulations that industry wants (ie.none).

    Most of the study is complete balderdash, many oil companies happily expand in corrupt locales, even take advantage of that corruption. Heck, Alberta shares its rating space with Israel for petes sake. There is a reason that number one in their survey is ‘fiscal’-namely royalty and tax structures. Yet the study itself doesn’t mention a SINGLE royalty or tax rate, only executives ‘feelings’ about them.

    Just to point out a couple of bits, one of the only fiscal related subjects is on taxation,where companies said how likely they were to invest based on taxation levels-numbered one to five. NB had the second HIGHEST number who would invest, only to Saskatchewan. And something like 80% were in the top two. Strangely enough 20% were at five, which was ‘would not invest because of this issue’. So here we are talking about ONE industry, and 80% of respondents think NB either encourages or does not deter investment in its tax policies, yet 20% ‘would not invest’ due to this same issue.

    Most oil executives taking part in the study probably know next to ZERO about NB, let alone every other country in the world which is part of this ‘survey’. It’s interesting to note that somewhere around 10% of respondents gave NB a ‘five’ (would not invest because of this reason) for virtually EVERY category. For heavens sake, 13% would not invest because of ‘political instability’, as if the people were going to overthrow the government-a number higher than every middle eastern country but four, almost as high as Iraq-and even higher than Quebec!

    For security it seems two incidents of vandalism are enough to make 25% of respondents ‘not invest’, more than TWICE the number that would not invest in Pakistan, even though the Taliban has threatened to blow up pipelines and kidnap oil executuves!

    So, you’ll forgive us if we discount Fraser in favour of a little more tangible accounting. After all, despite all your negative thoughts about New Brunswick, here you are with a five year contract, when 90% of those survey respondents probably couldn’t find New Brunswick on a map.

  22. Tony says:

    @mikel
    I will get to your points when I get some time to do it over the weekend. In the meantime, there is a question that has been lingering in my mind for sometime (I read David’s columns sporadically and I always see your comments): what do YOU think New Brunswick should do to promote economic development? It’s very easy to play the devil’s advocate (I do it very often myself), but the province needs some creative ideas.
    (Disclaimer: I lived in NB for three years and came back to Alberta four years ago. I used to be against the equalization system but now I think that it actually subsidizes the health and education of people who end up coming to work to Alberta anyway. I am not very optimistic about the Atlantic region myself but I would love to see the culture of dependency overcome — for the good of Canada).

  23. mikel says:

    I just listened to the Current this morning and thought I’d compare it with Fraser’s little ‘study’. If you missed the Current today you should check it out. It seems that Ecuador is the ONLY constitution in the world where ‘nature’ has constitutional rights. That means the right to exist in its ‘natural form’.

    Now, that’s quite an extreme proposition I think you’ll agree. If you live in New Brunswick, you’ll also notice that the environment is not exactly high on the government’s agenda. Recently a new map of wetlands was released which opens up huge new areas for exploration, and as said above, the environmental regulations under which exploration happens have NO penalties. A company could break every regulation in the Act and be gone by the time a Minister showed up to ‘stop work’.

    However, according to Fraser’s survey, 42% of oil executives think Ecuadors government either encourages or does not deter investment, and only 4% would not invest in Ecuador due to environmental reasons. And this despite the fact that their environment has constitutional protection!

    In New Brunswick, where just that IDEA would have people laughing in the streets and legislature, 0% think the government encourages investment in its environmental regulations. And 30% WOULD NOT INVEST in New Brunswick because of its environmental regulations. Compared to only 20% who would not invest in Quebec-even though Quebec has a moratorium in place, and is virtually the ONLY place in North America, perhaps the world, which has actually looked at the condition of capped wells.

    I’m glad Mr. Amin posted that link, its VERY instructive for New Brunswickers to know just how poorly the province ranks-and why. Since he asked to pay particular attention to the comments for some reason, here’s my perspective:

    “New Brunswick crazies are destroying seismic equipment with no ap parent legal consequences.”

    This even though a man was arrested and charged almost immediately after the vandalism occurred, and this despite the fact that equipment was apparantly left with no security, and despite the fact that vandalism in the province increased right across the board.

    “Singularly unfair and corrupt government”

    Not sure what this pertains to, its usually the ‘crazies’ who use the term ‘corrupt’. I notice the NDP has evidence that Corridor Resources and Southwestern Energy BOTH made contributions to both political parties during the last election, so obviously not ALL energy companies are afraid of dealing with a ‘corrupt’ government.

    “Bureaucracy capable of making arbitrary and unilateral decisions that can virtually destroy a company’s oil and gas exploration activ ities”

    That COULD pertain to Mr.Amin’s own experience where the government was bandying about the idea of not granting the five year license. That’s a valid point, but ANY government is ‘capable’ of that kind of arbitrariness, and the license WAS granted.

  24. mikel says:

    Tony-its really irrelevant what I would do, as you’ve seen from the comments from Mr. Amin, its even irrelevant what a major investor would do as far as public policy goes (and it tends to sidetrack the conversation).

    All a blog can do is TALK about the issue and hopefully bring out some points that readers may have missed and have a reasonable dialogue, something sorely lacking in NB. While David’s blog is invaluable, on this issue, without the comments, his blog pretty much reads like a press release from the Canadian Petroleum Institute. And like the blog title says: “words matter”.

    On your other point I think we agree. Even forgetting equalization, years ago I did a quick study adding up the retirement costs of people moving BACK to NB to retire, and the educational costs of New Brunswickers who went to Alberta-all thanks to data from Mr. Campbell I seem to recall.

    Anyway, by my accounting at the time, not only did it balance out the equalization payments, but it SURPASSED them. In short, it can easily be argued that Alberta OWES money to New Brunswick for basically paying the social costs of its labour force. And that didn’t even include the costs for those families where one member goes out west and the other stays behind to raise the kids, which is a substancial number I’m sure (and doesn’t even RAISE the social issues that may be involved from the stress a divided family may entail). It was quite some time ago so I don’t remember details, and to be fair it probably included more than just Alberta. However, equalization really is only a TINY amount when you think about it. Two billion seems a lot for NB, but for the rest of Canada it doesn’t even amount to the cost of ONE subsidy to oil companies out west.

  25. mikel says:

    Just some more on equalization, since two albertans have brought it up and we know what the arguments look like, some numbers add some perspective. Math is not my strong suit so somebody can let me know anywhere I went wrong.

    There were just over 200,000 census families in NB two years ago.
    The MEDIAN income for family income in NB was just over $60,000 (I use median because it seems more useful than ‘average’).
    The federal rate of taxation on income is 15% on the first $42,000, 22% on the next amount.
    15% of 42,000 is 6300
    22% of (60,000-42,000) 18,000=3960
    6300+3960=$10,260 total FEDERAL tax paid per family

    $10,260 multiplied by 200,000 equals $2.05 billion dollars.

    Those numbers have increased since then, but for that year anyway, that is virtually identical to the amount that New Brunswick received in equalization payments. Now, maybe that federal tax already includes an amount for NB so its more than that, but I don’t know.

    Maybe I’m missing something, but technically this means that ‘Alberta’ or ANY western province, is not ‘paying’ New Brunswick anything, it simply means federal tax payments FROM New Brunswickers are being recycled from the feds BACK to the province. I’m no economist, so maybe somebody else can take a crack at the figures.

    The other issue regarding shale gas is that NB is such a financial basket case that it NEEDS the industry ‘no matter what the cost’. Readers may remember a CBC report last fall from economists who pointed out that IF the Graham tax cuts were reversed, cuts that overwhelmingly benefitted the top 10% earners (90% of the savings went to them), then that would account for THREE QUARTERS of this year’s budget deficit.

    So clearly NB is not quite the basket case its made out to be, but its poor public policy that leads to most of these conclusions (and given the fact that government is in charge of such bad public policy, you should at least recognize where protestors are coming from).

  26. Khalid Amin says:

    Mikel,
    Good rebuttal inparticularly with the Fraser Institute report.
    However your read of the regs is completely incorrect. The mistake is that highways are owned and managed by the New Brunswick highways corporation. The highway is expropriated land and the municipality has no authority regarding the highway. This is why the act is written like this. Highways are not the same as DOT roads.
    The second point is that the RCMP charges people IF a law is violated. They don’t care if there is a fine or not. They can also forward to the crown counsel for prosecution.
    Windsor had RCMP escort and NBHC flag personal on the highway line.
    One would assume the RCMP wouldn’t have “helped” Windsor violate any act?
    I called the investigating officer who said no laws were broken, Windsor had all its documents.
    This leads me to the third point, why would a Minister of natural resources come down hard on a company that is spending money in NB to benefit new brunswickers?
    He made several comments about Windsor and how they did this and that blah blah blah but ultimately he gave Windsor the lease. What a joke of a minister. I believe his profession is being a drycleaner.
    Normally a few calls would have been made between the parties and everyone would have vented their positions and everyone get on with their lives. Why the theatrics
    What you don’t know is that 6 months early SWN actually did violate the same law by drilling shot holes within crown land within the municipality. The minister and staff covered it up. WHAT A GREAT REGULATOR. Question is why? Is the law the same for everyone in NB.

    Regarding the economy, this blog has many good articles about it and the future of NB.
    We are a resource based society. The provinces which understand and accept this are flourishing the others are whining. NB is a whinner.

    Look at the deals happening in bc with chevron buyin 50% of Kitimat LNG, Chinese and Malaysians buying shale assets in Alberta and Exxon Mobil announcing development of Hibernia. What a windfall for the supply chain and Canada’s economy. Even the Feds understand that we need capital and new markets for our future.
    Jump on board orove out of the way New Brunswick!!!!
    Enough of the NIMBY attitude and the green everything hypocracy. Canada has resources and develops them well.
    Btw no one wants to “rape and pillage” NB resources. Everyone need to make a fair profit for this to work. New Brunswick will need to compete for capital GLOBALLY!!!!

    Good luck you’ll need it.

  27. Khalid Amin says:

    Here are the supporting links to various information;

    http://thepurplevioletpressnb.blogspot.ca/search?q=swn+violation

    http://www.cbc.ca/news/canada/calgary/story/2012/12/07/cnooc-nexen-takeover.html

    http://www.cbc.ca/news/business/story/2012/12/24/business-chevron-kitimat-encana.html

    http://business.financialpost.com/2013/01/04/exxon-mobil-moves-ahead-with-14-billion-hebron-oil-field-off-newfoundland/

    How much capital is being invested in NB ??? nearly nil in the energy sector. Cheap and secure energy attracts other business.

    Here is an idea…prove up and develop the 80Trillion …yes TRILLION cubic feet (needs $1 billion high risk capital to prove up ) and pipe it to the Repsol/Irving LNG plant ..(change the flow of course) and VIOLA New Brunswick beats Chevron, Alberta and BC at shipping gas to Asia. If your are really sharp, do a Danny Williams deal buy NB a small piece of the pie …sell you gas to Asia for $12mcf rather than the $3.50mcf in North America. Hell lets charge New York and Pennyslyvania an nice fee to ship their Marcellus shale gas to Asia. The USA will be self sufficient re Energy requirements within a couple of decade because of shale production. WE, Canadians will NEED to find another customer(s) NOW!!!

    How is that for a business opportunity or just cry and whine about it because the welfare cheque will be here next month.

  28. mikel says:

    I know I’m beating a dead horse here, but I just had to add a kicker against Mr. Amin’s notion of ‘vision’.

    Newfoundland’s current debt level is $9 billion dollars, even though it has a population only three quarters the size of NB. New Brunswick’s debt is supposed to be $10 billion, for 755,000 people compared to just over 500,000 for NFLD. And this is WITH NFLD’s oil. To be fair, royalties dropped this year because of maintenance and refits, but still.

    What is most worrying is that NB’s debt is increasing, while NFLD’s has been decreasing (12 billion in 2004). However, it may be different once (if) Lepreau goes back online and they can start selling power again, or importing less, and again, hate to keep repeating myself, but when bad public policy is staring you in the face-IF the people can really start making demands and Alward axes Graham’s tax cuts, then clearly the notion of ‘vision’ really doesn’t cover finances.

    I DO think Danny Williams had ‘vision’, but probably for the opposite reason others do-he actually had the balls to stand up to resource companies.

  29. Khalid Amin says:

    What happen to Nfld once the Hibernia production starts….
    The revenue side of the equation must be looked at as well as the expense side.
    The deficit we know and will continue to grow, what is NB going to do about creating real revenues??
    The Government talks about resource development, shale gas development etc but are clued out. They people dont want anything to do with resources but want services blah blah blah
    Chicken and egg …development theories.
    Good luck NB

  30. mikel says:

    I think we all agree on that, but not necessarily on the solution. Like I said, redact Graham’s tax breaks to the wealthy and the ‘revenue’ from that accounts for two thirds of the deficit. In NB its only going to get worse since the Alward government is phasing in a phase out of the provincial portion of property taxes on apartments and second homes. Just the apartment part of that equation accounts for at least $60 million.

    While they are ‘clueless’ I am not sure that is true. IF the province’s books were so bad then surely upping the tax on the wealthy is not out of line. I suspect they are getting their ideas from the Reagan years-namely, starve the revenue side of the equation so that you can push cuts, privatization, and natural gas or other resource industries because “we’re all going to die if we don’t”. They’ve already refused medical equipment which Saint John requested, and now announced a private medical service in Moncton.

    But again, look at Hibernia-Newfoundland had great surpluses for a number of years, but it turns out that much of that was due to the Atlantic Accord and other federal payments which have now ended. The rest, like in Alberta, all depends on the price of oil, which fluctuates very highly, and doesn’t always pay off.

    The final lines are WAY too general a comment. What we know is that a very vocal minority of NBers have a problem with it (and SHOULD), but what ‘the people want’ is very much a mystery. And to say that New Brunswickers don’t want anything to do with resources is BEYOND funny. Clearly you are not from there or know even a LITTLE about the province. If it didn’t have civil servants and teachers as members, the conservation council wouldn’t even exist, and barely does now. Go take a look at Google Earth sometime and narrow down to the level where you can see the treeline and then start scanning around the province to see the state of the forests. Anybody that looks at that and thinks preserving natural resources is even on provincial radar is a loony.

  31. Will says:

    Wow people are blaming corporate investment instead of the fear mongering shale gas opponents and residents who are against change. No wonder we’re a poor province.

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