Tapping into energy
Muskrat Falls hydro project weighs on region
It is volatile times in the energy business, and Todd McDonald says his business is helping clients manage their energy requirements during changing circumstances, so business is good.
McDonald is founder and CEO of Energy Atlantica, an energy trading company based in Halifax and focused on the unique energy needs of clients in Atlantic Canada and the northeastern United States.
“I think the biggest change (so far in 2019) is the end of Sable
(Offshore Energy Project) and Deep Panuke actually happened. They’re no longer things that will happen in the future, and now
100 per cent of our natural gas is imported from other regions,” he says.
“It used to be we had all (the natural gas) to meet our needs and we had tons left over, and we would send it away and we would sell it and some of the profits would be shared among Atlantic Canadians,” McDonald says. “So, we’ve slowly went from that, to not having much and having to import most of it, and now we have to import all of it.”
Now, all the natural gas in the region is coming from fracked wells in either the Marcellus region of the United States or Alberta. “Those would be your two primary sources, there’s a lot coming from Alberta and there’s a lot coming from Marcellus,” he says.
Enbridge is bringing in some natural gas, as is Heritage Gas and many of the industrial clients, generators, are bringing some in, and that encompasses everybody doing the gas importing, says McDonald.
Meanwhile, the ill-fated Muskrat Falls hydroelectric project has been devastating to Newfoundland and Labrador.
McDonald says he believes Muskrat Falls electricity will not be coming on stream until mid2020.
“Newfoundland ... they’re in a lot of trouble and I would bet anybody a dollar, or as much as they want, that they will have a federal bailout. That province is bankrupt based on Muskrat Falls,” he says.
“What they’ll effectively need is to renegotiate with the feds on royalty sharing (from offshore oil production) and that’s probably how they’ll dig themselves out of the hole but if you think about it, that is just another federal taxpayer subsidy. The rest of the country is going to have to bail out Newfoundland because of Muskrat Falls, there are no if, ands or buts about that,” he says.
“And certainly the privateequity and bond market would substantiate that (view) because Newfoundland ... can’t even borrow money in the private sector anymore.”
McDonald says he wouldn’t be surprised if Newfoundland and Labrador would want to renegotiate its energy deal with Nova Scotia as well, but that arrangement is “fairly ironclad”.
“I wouldn’t be surprised if somebody tried to get some money out of us, but I don’t think Nova Scotia is at risk,” he says.
Muskrat Falls aside, McDonald says he would love to have an honest argument about whether the Atlantic region should develop its natural resources.