SWN POSTPONES SHALE EXPLORATION


BY JAMES FOSTER

TIMES & TRANSCRIPT STAFF

30 MAY 2012 08:10PM

SWN Canada, the company licensed to explore the largest part of the province by far for shale gas, is postponing its seismic program for this summer.

This is the second time SWN has temporarily halted its gas exploration in New Brunswick, cutting their work short last year after their equipment was stolen and vandalized, and amid allegations workers were intimidated and assaulted.

This year, the company’s shale gas exploration program has been halted before it could even get started because the province has yet to award the company the permits it needs to start the season’s seismic program.

Tom Alexander, the company’s general manager for New Brunswick, said Wednesday in an exclusive interview with the Times & Transcript that there is some lead time necessary to arrange the proper staff and equipment to carry out their seismic program, and without permits in hand, time has run out.

“By the time this thing gets ironed out,” Alexander said, “we’d probably be outside the window of getting it done this year.”

Alexander said he doesn’t know why the company has yet to receive word on their permits, noting they have applied for their permits in as timely a fashion as ever, but the documents haven’t been forthcoming.

Natural Resources Minister Bruce Northrup said he is investigating the circumstances that have led to SWN’s decision which means that for this year, only a little housekeeping work will be done by SWN and its subcontractors as far as exploring for gas deposits deep underground.

Of the 1.4 million hectares of the province where licences for shale gas exploration have been awarded, SWN has the rights to 1.1 million of that.

The postponement is a significant blow to the nascent gas industry in New Brunswick. Even during last year’s shortened geochemistry and seismic testing season, SWN used 200 workers from across Atlantic Canada, about two-thirds of those from New Brunswick. They also used the services of about 70 small businesses in the region, spending about $4 million at those firms which ranged from trucking companies to restaurants to hotels to hardware stores.

The bigger boon to local business will be when SWN begins actually drilling for gas, which has yet to begin as they are still in the exploratory stages of looking for the gas, as well as carrying out environmental impact assessments on any areas they might want to drill. However, this second delay in their exploration program will also push back any potential drilling, Alexander said.

The provincial government is gradually coming out with new regulations and a new royalty scheme for the emerging shale gas industry, with some industry groups saying the new royalty regimen is potentially one of the most expensive in Canada and somewhat confusing. The regulatory changes have been promoted by government as the strictest in the nation. Those changes received second reading in the Legislature just as Alexander was telling the Times & Transcript that his company was pulling the plug on this year’s exploration efforts, but he stressed that neither of those developments played a role in SWN’s decision.

“We’re not afraid of robust regulations,” he said, underlining that his industry needs stability and certainty in order to thrive in New Brunswick. SWN remains “completely committed” to its New Brunswick program, he said, and will use the time off from actually looking for shale gas to take part in the consultation process that is presently unfolding regarding new royalties and regulations.

For example, a government public consultation tour of the province will offer residents an open house for an hour and a half where New Brunswickers can speak with members of the natural gas group about exploration, development or other shale gas concerns, after which a second hour-and-a-half public meeting will be held. That tour begins Wednesday in Chipman, then moves on to Stanley, Salisbury, Hillsborough, Grand Falls, Bathurst, Bouctouche and Blackville.

In Fredericton, the opposition Liberals say SWN’s decision shows how the governing Conservatives have bungled the shale gas file.

“The government can’t seem to get its act together,” Liberal natural resources critic Denis Landry said.

“As we have always said, there should be a moratorium. Then we need a special committee from the legislative assembly to tour the province. We need an open process for this.”

The provincial government proposed last month 116 different changes to rules policing the oil and gas industry.

“If you look what is going on right now,” Landry said, “on one hand they are saying they will introduce new regulations. But what we got earlier this month were 116 recommendations – not regulations. A lot of people are waiting to see how tough the new regulations will be but at the end of the day, we had only recommendations. I think since day one, the minister has always said they would come with new, tighter regulations and 20 months later we still don’t have them. I think this confusion is part of what is happening now with SWN.”

Northrup called SWN’s decision “very unfortunate.”

“But on the other side of the coin we are pleased they are committed to staying in New Brunswick in the future.”

Northrup said he is looking into the circumstances that led to SWN’s decision, but said his government wouldn’t rush into decisions on gas exploration.

“We’re taking our time and taking the steps to do this right,” Northrup said.

The minister invoked the memory of Windsor Energy, which last year did seismic testing in Sussex without town council’s approval, sparking an uproar, as one reason why caution should be exercised on the shale gas file and said he would be talking shortly to SWN and others exploring for gas.

“I’ll be sitting down with Tom and other industry people in the next couple of weeks.”