18 September 2011

Classical gas #nlpoli

Former Conservative policy advisor Cabot Martin knows a thing or two about energy.  The guy worked in the energy department in the 1970s and was involved in every major policy development in oil gas and electricity in the province for over a decade.

He’s got an op-ed piece in the Saturday Telegram that questions the wisdom of developing Muskrat Falls when the American markets are being shifted by cheap natural gas. Unfortunately, the thing isn’t online. The closest you can get is a reference in the editorial.

The editorial discusses the potential use of natural gas to replace Holyrood instead of Muskrat Falls.  The Telegram editorial and the Navigant report, released this week on behalf of Nalcor, mention a 2001 natural gas study done for the provincial government.

The gang at Navigant missed another important report study on the feasibility of bringing natural gas ashore from the Jeanne d’Arc basin.


Done for NOIA, the offshore oil and gas association by Dr. Stephen Bruneau.

Regular readers of these scribbles will recall this point from a post in July that discussed the natural gas option:

A 2005 discussion paper prepared for NOIA by Dr. Stephen Bruneau looked at six options for getting additional electricity for the island grid. Bruneau concluded that development of only 60% of the known gas reserves at Hibernia, White Rose and Terra Nova would give enough natural gas to power a Holyrood size generating plant at full capacity, 365 days a year for over a century.  That would displace 500,000 tons of greenhouse gases each year.

Bruneau estimated the cost of a pipeline to bring the gas ashore to be $300 million. Another $400 million would build a natural gas generating plant, with another $112.5 million needed to build a short on-land pipeline and build natural gas handling facilities at sea.  Total cost would be less than $1.0 billion.

Nalcor didn’t study natural gas because it didn’t want to study it. 

They didn’t want to study it because their political masters had already directed them to pursue any development of the Lower Churchill.  Nothing else entered their collective skull.

The Conservatives and Nalcor started the most recent LC project in…wait for it…2005, the same year Bruneau did his work for NOIA.

Even as Danny Williams was launching down the road to the Muskrat mess, others were talking sensibly about alternatives to meet the province’s needs.

Three things to take away from this:

  1. Nalcor did not make a decision on how best to meet consumer electricity needs in the province at the lowest cost for those consumers.  They followed political orders to build the Lower Churchill.  Period. Everything else got tossed in the bin.
  2. Natural gas is a cheaper, viable alternative to Muskrat both for domestic needs, for electricity export and for industrial diversification.  Bruneau’s 2005 study put the cost at about a $1.0 billion.  Cabot Martin estimates $3.0 billion.  That’s still half the official estimate for Muskrat Falls. And frankly, since the official estimate of $6.2 billion is about 40% below the real cost they should be starting with, natural gas only gets better the more you know about Muskrat.*
  3. People with way more experience in provincial energy policy that Kathy Dunderdale, Danny Williams and Ed Martin combined all think Muskrat is a big mistake.  Cabot Martin is just the latest.  Who would you trust:  the people who delivered the province’s oil industry or the gang that expropriated an environmental cesspool of a paper mill, by accident?

Think about it.

- srbp -

*edit for clarity of reference to 40% and Muskrat.