Future of Oil and Gas Industry
Hon. Craig LeonardEnergy and Mines
28 November 2012
Mr. Speaker, I’m pleased to rise this morning to discuss the oil and gas industry in our province.
Mr. Speaker, we have a long history in oil and gas production in New Brunswick, but over that 150 year history, we have never witnessed anything similar to the shift in production patterns currently taking place in North America.
Natural gas extraction from shale formations has transformed the energy marketplace around the world, and as we all know, New Brunswick has the potential to take part in that transformation through our own natural gas reserves.
New Brunswick has a shale natural gas in-place resource estimate of close to 80 trillion cubic feet (TCF). And of course, further exploration could potentially increase that estimate.
To put this in context, Mr. Speaker, using the current estimated reserve as a base, we could expect to be able to economically extract approximately 15 TCF of natural gas.
Based on U.S. Department of Energy statistics, 15 trillion cubic feet of gas is enough to heat every home in New Brunswick for the next 630 years.
Or if used to generate electricity, it could supply all of New Brunswick’s residential, commercial and industrial needs for over 100 years.
In other words, it has the potential to provide a significant competitive advantage to our province.
This needs to be considered along with the fact that New Brunswick’s current natural gas supply from offshore Nova Scotia is running out. Estimates vary but without a domestic source, we will be facing serious supply issues within five to 10 years in our province.
Mr. Speaker, all New Brunswickers rely on natural gas whether directly for energy or indirectly through the goods and services we buy.
That is why dealing with this inevitable issue must be a government priority and that is why we on this side of the house have continued to foster responsible natural gas exploration and development in our province.
As much as we as a society intend on moving away from fossil fuels in the future, we must recognize the limitations of current renewable energy sources and must take a responsible and realistic approach to our short and medium term energy requirements.
Natural gas can and will play a significant role in reducing GHG emissions today and into the foreseeable future as it displaces oil and coal as energy sources in our region and provides efficient back up to renewables such as wind and solar.
Recognizing the potential for natural gas extraction from shale formations in our province, over the past year, we have developed proposed regulatory standards and rules to add to the existing standards and released a discussion document in May of 2012.
We also recently received reports by Dr. Louis LaPierre and Dr. Eilish Cleary that have identified issues other jurisdictions have faced with gas extraction from shale formations and how they can be mitigated.
Both reports came to the same conclusion - a moratorium on shale gas exploration was neither required nor desirable in New Brunswick as it would effectively limit the research and exploration required to learn more about the potential of the industry.
Dr. Lapierre’s report also outlined concerns voiced by some members of the public and how those concerns could be properly addressed while continuing to determine the feasibility of gas extraction and the potential for further development.
His report suggested an incremental approach that would focus on a small number of projects and there would be close monitoring during the exploration, drilling and extraction stages as a means of gathering the information needed for decisions moving forward on a much larger scale if possible.
Mr. Speaker, we as Government believe this is a prudent path forward.
We also understand that all stakeholders need clarity and direction from policy and regulations, and indeed the work that has been done to this point has been focused on providing that framework to all stakeholders.
To that end, Mr. Speaker, our intention is to incorporate the various reports and discussion documents, along with public feedback, and develop an Oil and Gas Blueprint that will be made public in the spring of 2013 in advance of expected exploration activities.
The Blueprint will provide the framework and a working process to use rational, science-based information to support informed government decisions with respect to the future development of our province’s oil and gas resources. It will focus on five key objectives that, through the past 18 months of engagement, town halls and meetings, were identified as priorities for the public:
i. Environmental responsibility
ii. Effective regulation & enforcement
iii. Community engagement
iv. Stability of supply
v. Sustainable economic development
Building on those objectives, an Action Plan will address recommendations laid out in the LaPierre, Cleary and Natural Gas Steering Committee reports and documents including deliverables such as standards for water usage and well construction; monitoring standards for natural gas development sites; and a human resource plan to assure proper inspection and environmental oversight on all projects, at all stages.
We also agree there could be benefits in establishing regulatory bodies such as an Oil and Gas Commission and Oil and Gas Secretariat and will examine those concepts. We agree that public health, environmental protection and optimized land use are priorities and will investigate how to best manage these areas.
With the release of the Blueprint slated for the spring, there are certain action items that will have to be developed in the shorter term in order to provide clarity to stakeholders including the royalty regime and the regulatory model.
The work that has already been done in these areas, in addition to the public feedback we received throughout the past year, will allow for these models to be laid out in the near future.
For example Mr. Speaker, New Brunswickers have responded to proposed recommendations with many comments and suggestions, and these have assisted us greatly in refining these standards to become part of a comprehensive rules and regulatory framework.
We will move forward with implementation of these requirements into a rules and regulatory framework that is strong, robust and which will ensure the integrity of our social and natural environments, as well as the strength of our economy for future generations.
The final technical review of the rules will be completed by the end of the year and all activity taking place in 2013 will be required to adhere to the new rules.
In the meantime, Mr. Speaker, we will continue to identify and act upon any possibilities that arise for greater research and scientific work to be done in our province in relation to activities.
In line with this goal, Dr. LaPierre recommended the establishment of an energy institute – an independent body that would ensure credible research and monitoring in support of natural gas exploration and production.
Recognizing that the lack of peer-reviewed information in the public domain has created confusion over this issue, discussions will be initiated with New Brunswick universities to determine the best manner in which we can move forward with this recommendation, as we believe that academia can, and must, play a key role in developing our own knowledge base for natural gas right here at home.
Mr. Speaker, the incremental concept we are advocating is one that industry is receptive to, because it is already the manner in which they operate.
Industry will take a methodical approach to exploring and determining the locations that have the highest potential to contain economic petroleum resources.
Once these locations are identified, drilling and resource testing becomes geographically focused and will provide the opportunity to study and monitor the surrounding environment in order to build the knowledge that will ultimately tell us what kind of industry we can have in New Brunswick and to continuously improve the regulatory model.
Industry is also eager to ensure their operations protect the environment and the public through proactive safeguards. It will be ensured this is the case through robust regulations and enforcement, but industry also understands their ability to operate in any jurisdiction is based on their performance in these areas.
Equally important is the need for industry to work with communities to ensure successful execution of these projects and the demonstration of such cooperation throughout all phases will be required. We will also ensure that industry engages early with First Nations to ensure their involvement throughout the process.
Because Mr. Speaker, the benefits of natural gas production are clear. With transparent and robust regulations, the industrial activity will be safe, and will create jobs for New Brunswickers, increase economic activity for our private sector and increase revenues for government - revenues that could be used to further reduce the deficit and to invest in important areas such as social development, healthcare or education.
When we speak of natural gas development, we have to remember, it is industry at work and industry is the backbone of any successful society.
In New Brunswick, we have a strong history of regulating industry to ensure it acts in a safe and responsible manner.
We have proven that we have this ability for generations in our traditional industries - and there is no reason why we cannot do the same when it comes to natural gas.
In closing, Mr. Speaker, this government understands that we need to move forward because New Brunswick must control its own destiny. There is no doubt that if we do not – others will do it for us. Our values, our goals, and the quality of life that we expect and deserve are reliant on taking advantage of the opportunities afforded to us and overcoming the challenges that may impede us along the way. And that is exactly what we plan to do.
Thank you, Mr. Speaker.