Energy security: Infrastructure is not enough

Security, the freedom from risk or danger, is commonly used in reference to personal or national security. Our view of security has expanded in recent years to include food security when referring to a nation's ability to feed itself and water security when confronted with the issues of declining water quality. Over the past decade, increasing energy costs, coupled with rising demand and tight production, have resulted in a new type of security, often referred to as energy security.

The International Energy Agency defines energy security as "the physical availability of supplies to satisfy demand at a given price". The availability of supplies refers to both energy supply and energy infrastructure; the loss of either can result in the loss of energy security. There are few jurisdictions in the world that can claim to be completely energy secure; however, some are more vulnerable to the vagaries of energy supply and infrastructure issues than others, take, for instance, Nova Scotia.

Nova Scotia gets about 12 percent of its energy from indigenous sources, notably biomass (for wood heating), hydroelectricity, and a small amount of natural gas (for residential, industrial, and utility use). The remainder is imported: oil (about 63 percent) from the North Sea, Venezuela, Middle East, Hibernia, and U.S., and coal (about 25 percent) mined in Columbia, Venezuela, and U.S. All of these countries or regions are facing supply problems; for example, oil production has peaked or is in decline in the North Sea, Hibernia, and the U.S., while the Middle East and Venezuela continue to have political uncertainties.

Of course, Nova Scotia is not alone in its reliance on imported energy -- many other countries, including the U.S., China, India, Japan, and much of western Europe, all compete for imported energy products to meet their demand for energy. Not surprisingly, this does not improve Nova Scotia's energy security, if anything, it makes it more precarious as rising world energy demand is increasing the cost of energy while many suppliers are struggling to maintain production.

It is generally agreed that for any jurisdiction to improve its energy security, it must reduce its demand for energy and replace imported energy sources with indigenous ones. In Nova Scotia, politicians, business groups, and other organizations are promoting natural gas as a way to address both energy security and climate change. The prevailing argument is that natural gas is indigenous (helping energy security) and burns cleaner than coal (reducing greenhouse gas emissions).

Perhaps the best example of the push for natural gas can be found in HRM's Community Energy Plan, in which a natural gas turbine located on the Halifax peninsula will supply electricity to the community and steam to the hospitals and universities. A tunnel to house a natural gas pipeline is being drilled under Halifax Harbour from Dartmouth to supply the turbine with natural gas; the longer term objective is for the natural gas to be distributed to offices and homes on the peninsula.

Before embarking on a major natural gas infrastructure construction program such as that proposed by HRM, it is worth considering the sources of natural gas. At present, the Sable Offshore Energy Project is Nova Scotia's only source of natural gas. Natural gas production from Sable peaked in November 2001 at 18.1 billion cubic feet and has been in decline ever since (production in December 2006 was about 10.3 billion cubic feet). To date, it has produced about 1.1 trillion cubic feet (TCF) of natural gas of an estimated 1.4 TCF. The recent addition of a compression deck will not increase the volume of the reserve; rather it will hasten its depletion.

EnCana's Deep Panuke is the only other significant natural gas project on the horizon. It is a small field (estimated to hold less than 1 TCF) and still requires the go-ahead from the EnCana's directors some time later this year.

With limited supplies of indigenous natural gas, proponents are looking to liquefied natural gas (LNG) to meet Nova Scotia's perceived needs. Of the two Nova Scotian projects, one has been mothballed (Anadarko's Bear Head) and the other is still searching for a supplier (4Gas in Guysborough). Irving, in conjunction with Repsol (a Spanish supplier of LNG), is completing construction of an LNG facility in Saint John. Since the natural gas from this facility will be shipped directly to the U.S., it cannot be considered as a potential supply for Nova Scotia.

Whether or not an LNG regasification facility is built in Nova Scotia, the fact remains, LNG is not indigenous energy source. It is expected that the world's major natural gas suppliers will band together to form a cartel, much like OPEC, to control the supply and price of LNG.

If Nova Scotia is to achieve any degree of energy security, it will be necessary to begin with a review of provincial energy demand, and then focus on how this demand can be reduced and ultimately replaced with indigenous supplies of energy. Building infrastructure in the hope that a supply of energy will be available is not the way to improve energy security.

Submitted to Chronicle-Herald - 14 March 2007 - unpublished