Is there an economic case for natural gas development in N.B.?

As New Brunswick launches a review of its moratorium on shale gas development, the move is raising questions about whether there is an economic case to lift the ban.

Premier Susan Holt announced the review on Wednesday, which will reassess the moratorium established in 2014. The five-month review will consider whether the five conditions for lifting that ban “still reflect today’s science, technology, market and regulatory best practices.”

One of the review’s considerations is the economic impact, but it’s not clear the province’s revenue from gas royalties will exceed what taxpayers may spend to attract investment, said  Dave Sawyer, the principal economist with the Canadian Climate Institute.

He said developing the sector will be expensive up front.

“There’ll be lots of companies lining up, but they’d also have their hands out,” said Sawyer.

Jim Emberger, a spokesperson for the New Brunswick Anti-Shale Gas Alliance, said he worries that there might be a delay in the province collecting royalties from development.

Emberger said if New Brunswick is depending on natural gas development to help increase revenues, the province will have to wait.

“Any revenues, if they do accrue, aren’t going to come until well down the line,” said Emberger.

He said more fossil fuels is the last thing the province should be considering.

When Premier David Alward’s government explored natural gas development in 2013, they revealed a royalty system — a two-tier system with lower royalties for companies starting out that would increase once they started making profits.

At the time, former energy minister Craig Leonard said higher rates early on would have deterred companies from setting up at all.

On Thursday, the province said during a fiscal update that this year’s deficit is on track to be almost $1.7 billion, $260 million more than originally projected.

Holt said the economy needs to produce enough revenue to support the services the province provides, including health care.

Louise Comeau, a senior advisor at the Re.Climate, Carleton University’s centre for climate change communications, said the province needs economic development. But Comeau doesn’t understand why natural gas development is a good option.

“There are many other choices we could make. We don’t even know if there’s an economic opportunity here,” said Comeau.

She said using the deficit as an argument for natural gas development is “designed to tell New Brunswickers or Canadians that we have no choice.”

“It robs us of our agency to actually have a conversation about what the choices we should have available to us,” said Comeau.

U.S. natural gas dependence

Holt said producing natural gas in the province would reduce New Brunswick’s reliance on American gas now delivered through the Maritimes and Northeast Pipeline.

Michelle Robichaud, the president of the Atlantic Centre for Energy, said the province uses a “significant amount of natural gas.”

“Ideally, we would have a domestic supply of natural gas so that we are not dependent on the U.S. for a really important energy source that the entire region relies on,” said Robichaud.

Her organization, an industry-funded think-tank, welcomes the province’s review.

Robichaud said more natural gas in the existing pipeline could help power more industry, including the newly approved gas plant in Tantramar.

What other projects are out there?

Sawyer said he needs to understand the province’s main goal in pursuing natural gas. If the goal is more energy, he said, the province should consider renewable projects like wind energy.

Comeau said the province could also think about smaller projects as well, with community ownership.

“My concern is we’re looking at things that are enormous scale without adequate understanding of the risks that go with those kinds of projects,” said Comeau.

Robichaud, however, said extracting natural resources, including natural gas and critical minerals, gives the province the best opportunity for economic gain through royalties.