Natural gas may be coming to Halifax: But where’s it coming from?

In the recent announcement of the imminent arrival of natural gas on the Halifax peninsula, both Premier MacDonald and Energy Minister Dooks spoke as if this was the answer to Nova Scotia’s prayers (Gas coming to Halifax, Herald Business, 15 August).

According to the premier, contributing $3.5 million to the conversion of the QE II Health Sciences Centre to natural gas “is an investment that supports the environmental goal of sustainability.” The minister of energy claimed that natural gas is a “clean and reliable energy supply” that will make Halifax “grow and prosper.”

“Sustainability” and “reliable energy supply” are words that cannot justifiably be used to describe natural gas in Nova Scotia. For a government to place so much faith in it is deeply troubling, for it shows that neither of these officials has any understanding of energy security and how it relates to the future of Nova Scotia.

For any given fuel source, energy security has two components: infrastructure and supply. Much of the roadwork taking place on the Halifax peninsula over the past few weeks has been associated with the installation of a network of underground pipes.the infrastructure needed to carry natural gas. However, where is the supply?

At present, Nova Scotia’s only source of natural gas is the Sable Offshore Energy Project; most of which is shipped to New England via the Maritimes and Northeast (M&NE) pipeline. Production from Sable peaked in November 2001 at 18.1 billion cubic feet (BCF) and has been in decline ever since—this past January production fell below 10 BCF. The addition of a compression deck late last year pushed production back up to 15.3 BCF in May, although it has since fallen back to about 13.3 BCF. To date, Sable has produced about 1.2 trillion cubic feet (TCF) of natural gas, out of an estimated 1.4 TCF. Although the compression deck may increase the volume of recoverable gas, it will also hasten Sable’s decline.

With little other appreciable offshore activity, the government is promoting EnCana’s Deep Panuke project. It is a small field—estimated to hold less than one TCF of sour gas (natural gas with a high sulphur content)—and still requires the go-ahead from EnCana’s directors sometime later this year.

As a result of the disappointment in the offshore, the provincial government is focusing on onshore activities, notably coal-bed methane, a field of which has been found in the Cumberland Basin near Stellarton and Springhill. At a Chamber of Commerce meeting held in Halifax last spring, Energy Minister Dooks said that this project was “another step towards meeting our energy security”; however, since the developers of the field plan to export most of the natural gas to New England, it is unclear how this onshore discovery will help many Nova Scotians.

Undeterred by the lack of domestic natural gas supplies, proponents are looking to liquefied natural gas (LNG) to meet Nova Scotia’s perceived needs. Of the two Nova Scotian projects, one has been all but abandoned (Anadarko’s Bear Head) and the other is still searching for a supplier (4Gas in Guysborough). Meanwhile, 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 a potential supply for Nova Scotia. Whether or not an LNG regasification facility is built in Nova Scotia, the fact that LNG is not a domestic energy source means that supplies can be interrupted at any time.

Another possible natural gas supply is from Newfoundland’s Jeanne d’Arc Basin, where small quantities of natural gas have been found in association with oil plays. The proposal from the consortium studying this potential supply is to have the natural gas compressed on the offshore platforms and then to have the compressed natural gas (CNG) shipped directly to the Boston market or to transport the CNG to Nova Scotia and then have it shipped to Boston by the M&NE pipeline. If the CNG makes landfall in Nova Scotia, some of the natural gas could be made available to Nova Scotia; however, the pipeline route is considered to have two drawbacks: a lack of pipeline capacity should an LNG project go ahead in Nova Scotia, and the pipeline tolls that would be avoided by direct shipment to Boston.

At present, Nova Scotia imports almost 90 percent of its energy. Such an overwhelming reliance on imported energy puts Nova Scotians at risk of volatile energy prices and supply disruptions. With domestic supplies of natural gas in decline or intended for export, anyone relying on natural gas in Nova Scotia will be forced to turn to imported supplies, if they can be found.

If the premier and his minister of energy want Nova Scotia to grow and prosper, they should develop policies that meet the energy needs of Nova Scotians with energy sources that are truly sustainable and reliable.

Published 8 September 2007 Chronicle-Herald