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

The Guardian (Charlottetown) - - WEEKEND BUSINESS -

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.

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