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Tom Adams is a Toronto-based energy blogger and consultant.
To understand the scale of the province’s lost gas opportunity, look to Angola at the forefront of LNG market
As North America’s newly abundant natural gas-driven energy renaissance builds, one of the last regions out of gas is Newfoundland & Labrador. Although the province is blessed with abundant proven off-shore gas resources on the Grand Banks and good potential for on-shore gas from ongoing oil exploration, none of that gas will get delivered to Islanders any time soon.
The earliest the province is likely to see any off-shore gas reaching some market is at best 12 years from now according to a preliminary proposal floated by Husky Oil, an off-shore operator. Husky says it is thinking of starting studies on gas development in 2016 at the earliest. One way to understand the scale of the province’s lost opportunity is to compare Newfoundland & Labrador with another jurisdiction economically dependent on its off-shore petroleum resources — the impoverished but now rapidly advancing sub-saharan nation of Angola.
Last week, Angola, working with Chevron Corp. and others, shipped its first load of Liquefied Natural Gas (LNG) to market. LNG development has provided the impetus to build a large infrastructure to pipe its raw gas ashore. Once ashore, the gas is fed into a world-class industrial complex where it feeds power generation and other industrial uses in addition to converting gaseous methane to LNG. With the market demand and price for LNG soaring, Angola’s timing could scarcely be better.
Angola’s progress in gas utilization is a huge commercial, technical, environmental, and social achievement for a country still recovering from civil war — unthinkable misery that went on for more than 26 years. Some estimates put the number of civilian deaths over 500,000.
Meanwhile, Newfoundland & Labrador’s natural gas policy remains stuck on wasteful reinjection practices. A small portion of the gas now co-produced with oil is used on one off-shore platform, but most is reinjected. Estimates of the unrecoverable reinjected gas range from 10% to 50%.
As blogger and provincial political commentator Ed Hollett notes, the provincial government doesn’t even have an agreed gas royalty regime in place, despite efforts to get one since 1997. A draft version was floated in 2007 but remains unofficial.
There are many similarities between the petroleum industries of Newfoundland and Angola. There is substantial overlap in the oil companies involved in both jurisdictions. Their production histories in recent years are similar. Both became large off-shore oil producers in the late 1990s.
For the rest of this editorial, click here: http://opinion.financialpost.com/2013/06/25/newfoundland-out-of-gas/