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Report: Sharp Decline in Gas Resources Offshore Nova Scotia Signals Need for New Policy

Four years ago, Nova Scotia's energy future was clearly tied to offshore gas development. However, that does not appear to be the case anymore, according to Larry Hughes, a professor in the Department of Electrical Engineering at Dalhousie University in Halifax.

In a report titled "Securing our energy future? A review of Nova Scotia's energy sector in 2004," Hughes cited the 60% collapse in estimated offshore gas reserves last year to only 1.35 Tcf (from an original estimate of 3.5 Tcf), sharp production declines at the Sable Offshore Energy Project and the industry's turn to liquefied natural gas (LNG) imports. These changes have all thrown the stated energy policy of the province in doubt, Hughes said in the report, which was released last week by the Canadian Centre for Policy Alternatives (CCPA-NS).

Offshore gas production near Sable Island has decreased by about 37% from a peak of 517.8 million cubic meters per month (609.5 MMcf/d) in December 2001 to 327.8 million cubic meters (385.8 MMcf/d) in May 2005. Meanwhile, estimates of gas reserves have been reduced sharply and oil and gas exploration also has decreased.

The report attributed the decline in part to several factors: The high cost of drilling in Nova Scotia's offshore; A decision by the Canada-Nova Scotia Offshore Petroleum Board last year not to proceed with its call for bids for new exploration licenses; And the failure of oil and gas companies to request an extension to their exploration licenses.

The report addresses not only developments in the gas industry, but also offshore worker health and safety, electricity regulation, home heating programs, climate change, and energy security in Nova Scotia.

"Ongoing developments in the energy sector continue to undermine the viability of the provincial government's energy strategy," said Hughes. "How we address the challenges of reliable energy supply, increasing energy consumption and energy related environmental degradation will have huge implications for all Nova Scotians."

With the sharp decline in the province's gas industry, Hughes believes the province should move ahead more quickly with energy conservation and renewable energy programs.

"The reality is that the vast majority of the province's energy is imported, leaving Nova Scotia vulnerable to the volatility of the world energy markets," he said. "By focusing on developing energy from renewable provincial sources, such as biomass, solar and wind as well as on energy efficiency and conservation, Nova Scotia could address both issues of energy security and its climate change." For more details from the report, go to http://www.policyalternatives.ca.

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