Everything you ever wanted to know about natural gas
The Economist magazine has a spectacular special report this week on natural gas. It covers everything from how the gas market works, to the new technologies used to extract gas to how gas is changing energy markets around the world. There is also a full section on the risks associated with gas development including environmental concerns.
The NB government estimates this province has some 80 trillion cubic feet of shale gas. Now most of us, including me, don’t have any idea how much that is but anything measured in the trillions seems large.
Canada’s total production in 2011 was estimated to be 3.75 trillion cubic feet so by that measure, there is enough gas under New Brunswick to supply the entire Canadian market (and substantial exports) for 21 years. That’s a lot of gas.
We don’t know if it can be extracted. We don’t know if there are markets for this gas. We don’t know if we will be cut off as shale gas is developed widely elsewhere. We do know we have the gas.
What do you do when you realize – in very short order – that you have a gold mine under your feet?
This is all wild speculation of course but take that 80 Tcf and multiply it by a conservative price of $4.00 per thousand cubic feet – and you get a revenue stream of $320 billion. Spread that out over the next 60 years and that would equate to $5.3 billion in revenue per year (in today’s dollars and assuming $4.00 stays). That, in turn, would translate into substantial tax revenues per year (through royalties and economic activity) and possibly several thousand good paying jobs direct, indirect and induced.
I don’t want to debate these numbers. They could be wildly high or low – the estimated amount of gas is only based on what is known.
This is why I am frustrated that the environmental concerns over hydraulic fracturing have taken up 99 percent of the conversation. I agree this is the most visceral issue and one that has been pounded by environmental groups, social media and the traditional media but there are other major concerns too such as markets for our gas. Everyone is racing to attract natural gas investment – across Western Canada and more than a dozen U.S. states. We have a large store of it but finding uses at an acceptable price (to buyers and producers) is critical. Are there potential new uses for our gas? We have substantial pipeline infrastructure and gas offshore Nova Scotia is likely to be dry within a decade or so.
If we don’t develop our own gas, we will have to bring it in from the US or from LNG – and other places get the economic benefit and we just pay the cost.
So let’s have the debate but I really hope we can expand it to include a broader set of issues.