N.S. needs new energy strategy due to falling gas reserves - policy group
Canadian Press
Tuesday, July 26, 2005
HALIFAX (CP) - Nova Scotia needs a new energy strategy now that assumptions of plentiful natural gas are proving vastly over-optimistic, says a report prepared by a Halifax-based think-tank.
The study, released late Monday, notes that gas-reserve estimates off Sable Island have been reduced by almost 60 per cent in recent years. "Offshore activities continue to decline," writes report author Larry Hughes, an engineering professor at Dalhousie University in Halifax.
"Sable's reserves were downgraded for the third straight year, this time to 1.35 trillion cubic feet, from an original estimate of 3.6 trillion cubic feet."
The report was prepared for the Canadian Centre for Policy Alternatives by Hughes, who is also head of the energy research group at Dalhousie.
The introduction of the report says the study was prompted by the failure of the Nova Scotia Energy Department to provide a progress report this year on its energy strategy - which was originally created in 2001 with a promise of annual updates.
According to the study, monthly offshore natural-gas production rates in Nova Scotia peaked in December 2001 at 517.8 million cubic metres.
Monthly offshore production has decreased since then. By May 2005 production had declined by 37 per cent, or over 190 million cubic metres.
The study blames the decline on "three significant events."
-The high cost of drilling in Nova Scotia's offshore.
-In June and December 2004, the Canada-Nova Scotia Offshore Petroleum Board announced that it would not proceed with its call for bids for new exploration licences.
-In addition to not receiving exploration bids, a number of companies failed to request an extension to their exploration licences.
With evidence that natural gas has been "oversold," the report says the province should move ahead more quickly on energy conservation programs.
"The province must develop local energy sources that will create and keep wealth within the province," writes Hughes.
He recommends a new action plan for the province, including:
-A renewable energy strategy that would emphasize biomass, solar and wind power, while reducing the province's reliance on imported coal and oil.
-Developing a public transportation network of buses and electrified trains.
-Creating a provincial electrical distribution system that relies less on large thermal generating stations hundreds of kilometres away from cities.
-Using high-sulphur coal in combination with technologies that reduce greenhouse gas emission.
-Support for low-income households faced with higher heating costs needs to be combined with a program that supports greater heating efficiency, through, for example, covering the costs of the heating efficiency audits.
The report is skeptical that the construction of several liquid natural gas terminals in the Maritimes will produce lasting economic benefits.
"Beyond the safety risks, the long-term benefits, in terms of, for example, employment and government revenue, of developing LNG production capacity are minimal at best," it says.
© The Canadian Press 2005
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