North Dakota and the good life

If  you recall the report the New Brunswick Chief Medical Officer wrote about shale gas industry, you may remember among the grab bag of warnings was that shale gas would bring an epidemic of sexually transmitted diseases to New Brunswick.   She was worried about the social impacts of man camps that appear to service the oil and gas industry in remote locations.

North Dakota wants people to forgo the man camps and move there permanently.   I this is absolutely the right approach.  Not only are man camps not particularly nice as places to live, when employment income is sent out of the state, it limits the local economic benefits.

This by the way would be particularly true in a place like New Brunswick where 80 – 90% of all tax revenue is derived from employment income.

So we need to learn from North Dakota and try and attract talented workers and small businesses to move here while simultaneously training our people and identifying SMEs with the capabilities to work in the industry.

Of course, this whole discussion might end up being moot.  An article in the Motley Fool magazine recently suggested that SWN’s exploration in New Brunswick and elsewhere recently has been disappointing and they are now moving heavily into an area in Nebraska where the gas is said to be wet.  In case you haven’t noticed, they aren’t lining up to explore for natural gas here.  Other than the resilient Corridor Resources in the Sussex area, who else is actively looking for oil and gas?

The opponents of shale gas – the real ones – knew this.  They don’t a moratorium.  They just need the CFOs of drilling companies to google “shale gas” and hit dozens of stories of the resistance in New Brunswick while the Nebraskans and the North Dakotans are welcoming the industry with open arms (for the most part).

At that recent conference in Moncton, Francis McGuire -who’s firm is drilling in the Dakotas – asked if we care more about our land and water than the North Dakotan farmers.  I thought that was interesting.  What do we know about shale gas that would still make 70-80% of us be resistant while the resistance in areas where the gas is already flowing is much less.  Of course there will always be resistance to any kind of oil gas or mining projects but in the main there is broad support in the areas where shale gas is currently in development.

I guess we know something they don’t.

 

 

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11 Responses to North Dakota and the good life

  1. mikel says:

    Actually, you can google ‘north dakota farmers’ and ‘shale gas’, and find an answer to your question. Its not like there is a ND Farmers Media outlet in NB. Here’s from one link: “The Jorgenson family loved living on the prairie in North Dakota – until the shale gas boom started”

    I’m not sure what is meant by ‘the real protestors’, the act of protest is fairly clear cut. Its true that sadly there are people who suspect that changes in New Brunswick won’t actually come from their own government, but from changes in the industry. Corridor’s ‘resilience’ is a bit of a stretch, half of it is owned by saskatchewan potash, and half the gas is used by them. For YEARS Corridor wasn’t even looking anywhere else for gas.

    But thats a good blog, you essentially make another point for protesting that industry when a place like North Dakota can’t even convince people to actually live there. This is pretty common in the industry, and as you say, in NB those taxes are necessary,so without them, well, so much for that!

    Its also instructive that by becoming ‘successful’ in North Dakota, without web searches you virtually never hear about the problems, which is all the more reason to protest an industry before it gets to that point. You can go to facebook and other web sites and read what the media never talks about-how thanks to development Penobsquis has become unliveable for many people, and the noise and vandalism and drunkeness from ‘man camps’ has already made it unbearable to many.

    So you really answered your own question by bringing up North Dakota. That said, with the right regulations and enforcement, etc., I don’t think the industry is nearly as bad as people think. Unfortunately NB has none of those regulations or enforcement, so thats a moot point.

  2. anonymoose says:

    from the linked article –

    Up until now, much of the attention that oil boom towns such as Williston have gotten has been negative, like the New York Times story last year about the high crime rate and the sexual harassment and violence faced by the town’s relatively few women. The new ad campaign will presumably try to paint a rosier picture.

  3. Andrew Agnew says:

    Great piece on gas exploration. I wonder if you agree that in the last 6 months there has been a shift of more people supporting shale gas exploration/development? Also, if we manage to get this industry going, we get to bring our people back home, like my brother in-law working on a shale gas development in Northern BC.

  4. mikel says:

    I know I wasn’t asked, but I’d like to know where evidence of that shift in public opinion comes from, I certainly haven’t seen it. Many people got upset at protestors and their extremism, but its a far cry to state that because you don’t like protest, therefore you must be in favour of what is being protested against.

    And again, these are old arguments. SWN is from the US, and they already have standby crews. The company made the point of saying that they hired New Brunswickers specifically because of protest and to show that NBers WOULD directly benefit. Plus, the province’s own studies point out that job gains would primarily be in the first five years, and then like other places, the companies move elsewhere. So it would be a pretty bad move to pack up and move from BC for what would be temporary jobs.

    But if you look at the online evidence there is little from the last six months. I would say maybe eight months as thats when facebook and other online groups started getting organized. But since October there has really been no news that would make people suddenly change their minds. In fact I don’t think I’ve ever seen a person actually change their mind on this…except maybe Alward since becoming Premier. Unless of course people got so terrified by the budget.

  5. anonymoose says:

    mikel :
    Corridor’s ‘resilience’ is a bit of a stretch, half of it is owned by saskatchewan potash, and half the gas is used by them. For YEARS Corridor wasn’t even looking anywhere else for gas.

    I think that’s great though! I’d much rather use cheap gas to lower costs for NB businesses instead of shipping that gas straight to Boston and all we get is a pittance of a royalty.

  6. mikel says:

    My point was that they weren’t actually doing any exploration, so can’t really be said to be ‘resilient’. They are simply still pumping gas that’s been tapped half a decade ago-and nobody has even targetted them for protest, so ‘resilience’ wouldn’t really be a term I’d apply.

    I agree about using cheaper gas, however-the reality is that weather permitting, and if Europe doesn’t also want american gas because of their problems with Russia, gas is expected to be cheap and plentiful in the US. I think it was the conference board that said Canada could be a net IMPORTER of gas within a decade. Which means there’s no reason to develop an industry at all. Nova Scotia’s resources are dwindling, most of the east coast has moratoriums, and in New Brunswick, I think what is available about matches supply, but I’m not even sure NBPower uses NB gas or imports it.

    Plus, again, there are no plans for companies to use cheap gas, so far what we have seen is that IRVING companies get dirt cheap gas because Irving supplies them. Other businesses have to rely on Enbridge and pay the much higher costs. So once again this simply gives Irving an advantage and kills competition, and probably jobs as well.

    As for Saskatchewan Potash, we don’t really know enough to know whether its a good thing. There’s the obvious option of NOT just having pittance royalties, in fact I think Sask Potash is still getting its potash for FREE. But if it DIDN”T have the gas, it would have to use power, which would be NBPOwer, which means they’d be a customer and would obviously be not only helping pay down the debt but adding to NBPower’s profitability.

    So using gas, UNLESS its use actually creates jobs (and I don’t see how an energy choice creates jobs, whether I use gas or electricity makes no difference jobswise) simply has ZERO effect on the economy except for what I mention. I’d like to ASSUME that SP is still paying the royalty as it comes out, but that’s certainly no guarantee, so the province may actually be LOSING money out of the deal.

    On a larger industrial level, having everybody on gas may very well be a good idea, however, none of the current policies are trying to do that, all they are trying to do is feed the industry and get the gas out. If there were no potash, that deal obviously wouldn’t have happened, SK wouldn’t be in NB, and maybe Corridor wouldn’t be quite so ‘resilient’. The public intervenor said YEARS ago that rather than orimulsion, NBPower should develop gas, much like the public utilities of Manitoba and Saskatchewan do-and for the purposes you mention. That was ignored, which lead to not only the orimulsion fiasco, but the current state of affairs.

  7. anonymoose says:

    mikel :
    Plus, again, there are no plans for companies to use cheap gas, so far what we have seen is that IRVING companies get dirt cheap gas because Irving supplies them. Other businesses have to rely on Enbridge and pay the much higher costs. So once again this simply gives Irving an advantage and kills competition, and probably jobs as well.

    I believe Irving is selling some of that gas to other industrial users, if you google “irving truck natural gas” it appears they’re trucking it to McCains and Acadia U, presumably they’ve got more customers I didn’t spend much time researching.

    mikel :

    So using gas, UNLESS its use actually creates jobs (and I don’t see how an energy choice creates jobs, whether I use gas or electricity makes no difference jobswise) simply has ZERO effect on the economy except for what I mention. I’d like to ASSUME that SP is still paying the royalty as it comes out, but that’s certainly no guarantee, so the province may actually be LOSING money out of the deal.

    Other jurisdictions are using cheap gas, if our energy costs stay high that’s just one more factor kneecapping our economy.

  8. mikel says:

    Good points. I’m not sure about Irving, I found an article from a month ago that stated that Irvings flakeboard company is a customer of Enbridge, so its odd that Irving would be supplying other customers but not its own companies. This was part of a report that talked about how Enbridge hasn’t reviewed its own industrial customers consumption and now wants to hike rates further.

    I agree about your other point, but that wasn’t what I was talking about. The potash is IN New Brunswick. It can’t be ‘kneecapped’ by Ontario or bangladesh or anyplace else because the resource is THERE. Yet instead of making money off that, the province is giving it away in exchange for some jobs. And like I said, energy costs are going UP even though gas is cheaper everywhere else. That’s not an economic problem, but a political one. I was in full agreement with David back when he was criticizing the government when Enterprise Saint John wanted to use its own natural gas so that companies WOULDN”T be ‘kneecapped’. The provincial government laughed in their faces, so while ‘cheap gas’ is something lots of people would love to see, NONE of the governments policies actually support that result. So you can have ‘blind faith’ that ‘maybe’ it will come as a happy accident of development, and that would be fine if there were no possibility of negative consequences.

  9. mikel says:

    This may be a repeat, but my comment disappeared. CBC had a report that Enbridge wants to raise rates again for industrial users, so not only are energy costs high, they are getting higher. That’s not an economic problem but a political one. One of the chief complainers about that was Irving Flakeboard, so it seems weird that Irving is supplying gas, but not to its own company. Why that is, I don’t know, but it seems at least the Flakeboard company is paying the same as everybody else. And again, NONE of this is resulting in lower energy costs, but actually higher energy costs, so you can’t really argue that its a remedy for rising prices.

  10. Jim says:

    For someone who has “its the economy, stupid” in their blog heading, you sure don’t know much about economics.

    There is a very important fact that everybody, and especially pro-corporate economists, have overlooked about the shale gas issue in NB. New Brunswick landowners don’t own the minerals, oil and gas lying beneath their land; American landowners, for the most part, do. So in the US each landowner is in a position to negotiate with the mining/drilling companies, and they have the final say as to whether their land is available and what royalty they will demand.

    Landowners in New Brunswick have no such bargaining position, as the provincial government owns the mineral rights and has the final say on whether or not drilling will take place on virtually 100% of the land in the province, privately-owned or not.

    So yeah, if I was in North Dakota I might decide that a short-term influx of royalties, directly to my bank account, might be a worthwhile trade-off for a spike in local truck traffic and the reasonable chance that my water would be contaminated in perpetuity. As a landowner in NB, I receive no such direct benefit yet still assume all the risk.

    New Brunswickers have also learned this winter that despite having more than enough local supply (Sable and McCully field) to meet local demand for gas, residential users will get the shaft when it comes to prices. Our esteemed government has also managed to settle on one of, if not the lowest royalty rate in the world for gas. So if their is any argument for shale gas that might sway even the most astute and educated landowner, it isn’t an economic one.

  11. mikel says:

    Actually, there are a couple of mistakes in there. First, in the US there is eminent domain,which lets a number of state governments expropriate land, and its a fairly common event.

    Second, the royalty rate is only low initially in order to spur development, then it goes up to one of the highest rates. Third, those arguments have little to do with economics, and have been discussed here long ago, so the blogger is certainly aware of them (so the insults really aren’t necessary).

    There isn’t any attempt to sway landowners because the simple fact is that the development proposals are all on crown land, not private land. Like in the US, landowners will be assuaged by how much the cheque is for. If not, its true, the government CAN force people to allow development, but the Minister has said they won’t, and with the amount of crown land available and the amount of media watchfulness, thats highly unlikely. Given that fracking can go horizontally, there is really no reason to infringe on private land unless its a particularly large landowner.

    So it certainly IS an economic argument, but certainly not for landowners.

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