Mark Hume, Globe and Mail, Jan 21 2014
VANCOUVER — A former scientist with the Geological Survey of Canada has cast doubt on the B.C. government’s promise of an economic boom from increased liquefied natural gas production.
Premier Christy Clark has made gas development a cornerstone of her administration, saying the province has “an unprecedented opportunity” to exploit several new fields and develop LNG export plants. Her government says that would produce a cumulative gross domestic product benefit to B.C. of $1-trillion by 2046 and make the province debt free.
But David Hughes, a geoscientist with the federal government for more than 30 years who now works as a private consultant, says in a report posted online that the numbers do not add up.
“The LNG export plans of the B.C. government are unlikely to be realized at the scale envisioned and must be seriously questioned,” he says in his report, BC LNG: A Reality Check.
Mr. Hughes is a fellow of the Post Carbon Institute, a California-based think tank for which he has written several reports on energy resources in North America, and contributed to the book Carbon Shift. He said he published this report independently. “I just did it because I thought it needed doing. I got paid zero for it,” he said on Tuesday.
And he said in an interview that if LNG is exported to the degree projected, B.C. and the rest of the country could have an energy deficit.
Mr. Hughes said his analysis is based on statistics from the National Energy Board, which has approved seven LNG export applications in B.C. and is considering two others.
“We are led to believe that LNG is a potential bonanza on the scale of the oil sands capable of creating a $100-billion ‘Prosperity Fund’ and wiping out the province’s debt by 2028,” he writes. “An analysis of gas production in B.C. and the characteristics of the shale and tight-gas reservoirs targeted, as well as the environmental issues surrounding scaling production to the levels envisioned, suggests these lofty plans bear closer scrutiny.”
He said to meet the export targets in B.C., the gas industry would need to drill 50,000 new wells in the next 27 years, which is double the number drilled since the 1950s.
Mr. Hughes said he thinks that is unlikely – and he doubts B.C. will get all the new LNG plants the government is talking about.
“It is uncertain how much of the approved export capacity will be built, but the public would be well advised not to count on an LNG bonanza,” he states.
Government and industry rejected the conclusions. A spokeswoman for the B.C. Ministry of Natural Gas Development e-mailed a statement to The Globe and Mail saying the province has a large surplus of gas that can be exported while leaving a long-term supply for domestic use. The NEB said in an e-mail that it “is satisfied that the gas resource base in Canada, as well as North America, is large and can accommodate reasonably foreseeable Canadian demand and a plausible potential increase in demand.”
The Canadian Association of Petroleum Producers said the gas resource base is vast and growing.
Mark Pinney, CAPP’s manager of markets and transportation, said the NEB estimates that Western Canada’s marketable gas reserves are more than 907 trillion cubic feet, and new discoveries are being made.
“If you do the math, at our current production rate, we’ve got over 180 years of gas supply remaining at current production rates,” he said. “Our view is that we’re not resource constrained at all, we’re market constrained.”
Mr. Pinney said the international market is highly competitive and new pipelines and LNG plants in B.C. are urgently needed.
“We’ve got to go out there and try and fight and compete and develop those new markets so that we can realize the full resource potential,” he said.
Mr. Hughes said the NEB has been approving export permits at an unsustainable rate.
“The NEB appears to have violated its mandate to ensure Canadian energy security by approving seven LNG export applications, which [would permit exports that] add up to more than the current gas production of all of Canada,” he states.
Mr. Hughes runs the consulting firm Global Sustainability Research Inc. His report is posted on line on the site Watershed Sentinel, an environmental news magazine in B.C.