Shale Gas Development: The Twin Problems of Minds and Markets

99% of the space in the public square allocated for debate about shale gas development in New Brunswick has been used up by debate about the environmental concerns raised by the extraction technology.   As I have said before, if this industry is to go ahead (as it is across North America – shale gas is dominating all new extraction in recent years – it’s now 50% in BC), the people will have to support it – or at least tolerate it  A vast majority against shale gas – no matter how it develops elsewhere – will bring it down here as a development opportunity.

But public concerns are only one of the problems.  The other is the lack of markets for new gas.    With the rapid expansion in the USA – they are now looking at LNG terminals for exporting US gas.   In BC, the new energy plan calls for a dramatic increase in shale gas development – but the markets are Asia.   As discussed in The Economist, in February Mitsubishi struck its biggest energy deal yet, with Encana, agreeing to pay C$2.9 billion to develop shale gas in British Columbia. The reserves, it said, may be enough to satisfy Japanese demand for nine years.

I’d like to see a little more of horsepower dedicated to thinking about potential markets for NB shale gas.  This is not a 12-24 month issue.   This is about 10-20 years out.  No energy firm makes huge investments without a long term time horizon and right now the market outlook for NB gas seems murky.

It is true that Sable gas is running out but the NS government is putting significant efforts into developing its offshore gas industry – the challenge, of course, is the price of extraction compared to onshore shale gas.  However, offshore gas doesn’t have the same NIMBY worries – with the exception of fishermen.

I don’t know a lot about it but the LNG infrastructure in Saint John complicates matters as that facility can serve local markets with imports of LNG.  The economics are complicated.

In the end, it would be nice to have a medium term plan to build local market demand for our own gas.

1 thought on “Shale Gas Development: The Twin Problems of Minds and Markets

  1. To mirror the previous blog, the comments of which can’t be seen, I think that is something that investors and the businesses involved in extracting the gas will be doing. Why would NBers do the work to develop markets for companies to get the profits from? Or is this a sneaky way of trying to sidetrack the protest-‘hey, lets forget about protesting, what about talking about markets’:)

    Either way, sorry to tell you, but BC is right next to asia. Asia needs its own short term energy, but is rapidly building up long term. People talk about how alternative energy sources are ‘something for the future’, but China is building solar and wind sources at a HUGE rate. Japan, of course, is screwed for obvious reasons and needs short term power, which BC can easily supply.

    The markets NB is closest to either have plenty of their own sources (scandinavia), are building up alternative power (Germany) or are too broke to ship it in (most of the others)-or are warm most of the year and don’t need nearly as much (caribean).

    Now, a REALLY far reaching society would be looking at power transfer. If you want to look at real money for power, it would be the places with the technology to ship ‘energy’ in ANY form. Its amazing that the few feeble wind turbines in NB provide more power than Dalhousie and Belledune did together, yet the ‘common wisdom’ in the province is STILL that ‘wind power is something that may be cost effective some day but not yet’.

    But by all means, do all the legwork for building a business plan for two decades in advance, when you still don’t even know whether there is any gas worth developing, when one of two companies that was looking for gas said there was none, and when one of the major researchers says its not even worthwhile looking for gas so they are looking for oil.

    Given all the hoopla for creating a ‘hardwood institute’ in Edmunston to create eight jobs and Harpers claim that it will lead to ‘prosperity’, I think the two plans would go well together. I’d maybe suggest a third-doing the legwork for the ‘magic bean’ industry. I just happen to have a supply that will ‘lead to prosperity’, and I’d be happy to part with them for the right price. Best of all, you don’t need to spray them for decades to kill them, and then pay for an institute to study how to get them to grow again, and they won’t pollute your water (thats a magic bean guarantee!)

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