Atlantic Canada faces gas-price shock as offshore wells dry up: report

A new report into Atlantic Canada’s gas market warns Nova Scotia’s fast-dwindling offshore supplies risk increased imports and higher prices for the region’s industry and consumers.

The report, authored by U.S. consultancy ICF, was submitted June 30 as part of a Nova Scotia Power filing to the National Energy Board.

Emera-owned N.S. Power is in a regulatory tussle with Maritimes and Northeast Pipeline, the Enbridge-owned company that’s shipped gas from the Sable Offshore Energy Project into Eastern Canada and New England since 1999.

The report warns that the pending shutdown of the ExxonMobil-operated Sable project — coincidentally set to occur at the same time as Shell’s closure of its Deep Panuke offshore gas field — will “expose the market to the risk that the cost of the (Sable) pipeline, originally designed with New England as an anchor market, must be borne by an ever-shrinking number of shippers as it reverses flow.”

“The problem will become acute” following

Sable’s shutdown, warns the report.

Additional papers within the same filing indicate the Sable shutdown will likely occur circa late 2019 — although Enbridge executive Steve Rankin told The Chronicle Herald on Thursday it could take place in 2020 or, as indicated recently by a related report from another firm, as late as 2022.

At the heart of the dispute is Maritimes and Northeast’s request for board approval of a 15-per-cent, $175.9-million discount for customer Irving Oil, which uses Sable gas for its Saint John refinery operations.

With Emera also running Brunswick Pipeline, a Maritimes and Northeast competitor, the report warns that if Brunswick Pipeline were to win Irving Oil’s business — a move Emera hasn’t suggested it will make, but which seems more likely if the board prevents the discount — then existing Maritimes and Northeast customers such as N.S. Power will be forced to make up the difference. This would put price pressure on all of N.S. Power customers.

That scenario might increase gas prices from $1.11 per million British thermal units to $2.07, the report warns.

In addition to Enbridge and N.S. Power, other Maritimes and Northeast industrial customers include Emera Energy, and Shaw Brick’s Lantz operation.

Sable’s decommissioning is set to begin next year, when rig Regina Allen begins a two-year contract to plug and abandon Sable’s 21 wells.

Enbridge recently rebranded from Spectra Energy and is headquartered in New Brunswick and, globally, in Calgary.