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Nova Scotia, New Brunswick Craving U.S. NatGas After Banning Unconventional Drilling

Canada's Atlantic provinces are sliding into dependence on imports after banning horizontal drilling and hydraulic fracturing (fracking) to tap their natural gas deposits, said an industry- and government-supported agency.

Nova Scotia and New Brunswick will rely on U.S. exports or overseas tanker deliveries of liquefied natural gas (LNG) -- or both -- as of 2022, predicted the Canadian Energy Research Institute (CERI).

"Both provinces are without a doubt on the cusp of a fundamental change," said CERI report, “Economic Potential of Onshore Oil and Gas in New Brunswick and Nova Scotia.”

CERI observed that the fracking bans, enacted by Nova Scotia in 2014 and New Brunswick a year later, arrived as the Atlantic regional production industry subsided into a late aging stage of accelerating decline.

After 28 years in operation in Nova Scotia waters, the Sable Offshore Energy Project is down to producing shrinking volumes of depleting reserves. The nearby Deep Panuke platform only taps its dwindling subsea supplies during spells of peak demand and prices.

Only a fraction of the Maritimes & Northeast Pipeline's (MNP) capacity for 550 MMcf/d of exports to New England remains in use. During heating seasons flows are reversed, converting MNP into an Atlantic Canadian import conduit.

On land in New Brunswick, aging conventional wells are running down, ending legacy production that began in the mid-19th century when Atlantic Canadian entrepreneurs figured among the North American petroleum industry’s pioneers.

Government, academic and industry surveys estimated that the region still harbors up to 136 Tcf of gas. But the fossil fuel wealth is embedded in dense geological formations that can only be tapped with Canadian adaptations of U.S. fracking methods.

The provinces banned the technology after government-appointed inquiries heard echoes of U.S. protests against suspected environmental and health hazards. Atlantic Canadian opinion surveys documented popular fear of fracking. Native communities staged hot, at times violent demonstrations against industry activity.

Facilities to enable Atlantic Canadian reliance on imported gas are available, CERI said.

With a boost from capacity additions currently underway to the northeastern U.S. pipeline network, MNP could become a year-round conduit for growing exports of Marcellus and Utica shale gas.

On the New Brunswick coast at St. John Canaport LNG, Canada's lone tanker import terminal for overseas gas, stands ready to accept cargos after plans for conversion into an export site were scrapped because of high costs and supply uncertainties.

CERI's 184-page study makes a case, with elaborate economic modeling, that ending fracking prohibition would foster a significant enhancement to the region's notoriously lean livelihoods.

Over the next 20 years, allowing just enough gas production to make the Atlantic provinces self-sufficient in gas would generate a forecast C$2.7 billion ($2 billion) in investment and C$12 billion ($9 billion) in revenues.

Granting the Atlantic Canadian supply industry permission to reach full potential as an exporter, would enable projected investment of C$11.5 billion ($8.6 billion) and foster revenues of C$29 billion ($22 billion), CERI calculated.

But little hope is raised for speedy repeal of fracking prohibition after lengthy public inquiries and expert studies demonstrated that fear of advanced gas production technology runs deep in the Atlantic region.

"The dilemma of unconventional oil and gas development in New Brunswick and Nova Scotia extends beyond the issue of potential adverse impacts on the environment and human health," CERI said.

"The possibility of future unconventional resource developments in the two provinces strongly depends on the level of trust the provincial residents have in all levels of government and the industry; clarifying major questions regarding acceptable levels of risk and ways of sharing risk and benefits; and a community involvement in the decision-making process."

CERI concluded its review of the troubled Atlantic Canadian gas scene with a literary sigh of hope.

"The interesting irony is that Nova Scotia and New Brunswick have extensive histories in oil and gas exploration and production, New Brunswick dating back to 1859 -- the same year as Pennsylvania's famous Drake well -- and may yet become larger oil and gas players in the future."

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