A little over 20 years ago I was asked to a meeting at Moncton City Hall where Bud Bird and the gang at Gas NB were going to present on the exciting new opportunity that natural gas would present for New Brunswick. I asked Bud directly would having local access to natural gas lead to more industry setting up in the province and his response was an unequivocal “yes”.
This week the tap was finally shut off and Sable gas will no longer pump into the Maritimes.
I have said before that this was likely one of the biggest lost opportunities for New Brunswick in generations. There were no new manufacturing plants attracted as a result of cheap gas. Lower cost natural gas did bolster the competitiveness of many of our largest industrial players but the system overall never achieved what was hoped for and in fact was mostly a huge disappointment. The blame can be spread around – government, regulator, Enbridge, etc. all played a role in the dysfunction.
Now the problem is much more straightforward. Depending on the price of gas we will need to import $300 – $400 million or more in gas each year to satisfy the demand here and our gas users will mostly have to pay a significant premium over most other regions of North America. Some may switch back to heavy fuel oil – a few have already done this.
Enbridge turned out to be a wily player. They were facing the potential write down of several hundred million dollars and ended up selling to another company for what was likely a small premium. The executive that pulled this off likely got himself a juicy Christmas bonus this year.
The new natural gas distributor has a 25+25 year license to distribute natural gas (50 years if you are math challenged) and no local source. Gas is already being purchased in Alberta and the southern U.S. and being pumped all the way here (although some of this is virtual – the transportation costs are very real).
It is possible that more local gas will be found and start to supply local markets at some point in the future but there are lots of hurdles.
Many of the same folks that argue for self-sufficiency in agriculture and other products – that argued vehemently against selling NB Power to Quebec as we would lose control over our energy systems are perfectly content to import natural gas – which is now likely a more important source of energy for our big industries than electricity – at a long term premium.
How much? Impossible to say but will likely be in the billions of dollars over the term of the franchise agreement.
There is a false and intellectually lazy narrative out there that natural gas is going to fade away as an energy source anyway as renewables take its place. This is not true. In fact, it is likely transportation fuels will decline before natural gas – industrial and residential – does so. In fact, if we had a little bit of ambition we could have used natural gas to convert Colson Cove and Belledune – having a profound impact on our carbon emissions.
If natural gas use declines in New Brunswick in the short term it will be because industry has a) declined and moved elsewhere; or b) firms have shifted back to other more carbon intensive fuels.
Sable R.I.P. Your demise is going to cost New Brunswick’s economy dearly.