City of Saint John Common Council Special Meeting AGENDA Monday, January 27, 2014 5:00 p.m. Council Chamber Please use Chipman Hill entrance S'il vous plaît utiliser l'entrée Chipman Hill

Pages 1.

Call to Order

2.

The Scope of Impact of the Energy Sector on New Brunswick and more specifically Saint John 2.1

Energy and Economic Development: Summary

2.2

The Energy Sector in New Brunswick: Presentation

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Energy and Economic Development: Summary The presentation to Council on January 27, 2014 will cover two main topics: 1.

An overview of the energy sector in New Brunswick

2.

Energy and economic development – how the energy sector impacts the economy and how it can be used to foster further economic growth

1. The energy sector in New Brunswick The energy sector in New Brunswick includes a wide variety of activities including oil and gas extraction, electricity generation, energy distribution, petroleum refining and other Energy Sector GDP Per Capita (2012) services (Statistics Canada definition). In 2012, the energy sector Chained (2007) dollars generated $2.32 billion worth of real gross domestic product (GDP) in New Brunswick or about seven percent of provincial GDP. It has dropped moderately in recent years due to lower natural gas extraction. Compared to other provinces, New Brunswick’s energy sector is larger than Quebec, Nova Scotia, Ontario and Prince Edward Island relatively smaller than Manitoba, British Columbia, Saskatchewan, Newfoundland and Labrador and Alberta. Mainly as a result of oil and gas extraction, Saskatchewan and Alberta have very large energy sectors. It’s important to understand the difference between energy ‘output’ and energy GDP – or the value added activity in the provincial economy. The oil refinery in Saint John generated over $10 billion worth of international exports in 2012 but it required $9 billion worth of imported oil (rough numbers). The difference is the real GDP creation in New Brunswick.

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Source: Statistics Canada CANSIM Table 379-0030

The industry directly employs approximately 7,600 people across the province with a heavy concentration in Saint John. Energy-related utilities employ approximately 3,700 people; the oil refining sector employs 1,500; oil and gas exploration employs 800 persons; energy-related construction employs 600 persons (in a typical year); and other energy firms – pipelines, LNG, etc. employ an estimated 1,000 persons. Refined petroleum products account for the bulk of energy exports. In 2012, there were $10.3 billion worth of international exports from this sector. Oil and gas extraction amounted to $202 million and electric power $51 million1. Key segments of the industry: NB Power is New Brunswick’s primary electricity utility. Electricity is generated at 13 facilities and delivered via power lines, substations and terminals to more than 390,000 direct and indirect New Brunswick homes, businesses and facilities. NB Power’s generation division operates 12 hydro, coal, oil and diesel-powered generating stations with an installed net capacity of 2,853 MW. It’s generation division supplies approximately 75 per cent of in-province load. It also exports energy to neighbouring New England, Quebec, Prince Edward Island and Nova Scotia markets. Enbridge Gas New Brunswick is the main provider of natural gas to residential, commercial and industrial firms. EGNB has over 781km of pipeline servicing 10 communities in southern New Brunswick. The firm serves more than 11,500 customers in Saint John, Fredericton, Dieppe, Dorchester, Moncton, Oromocto, St. George, St. Stephen, Riverview, Sackville and Dorchester. NOTE: Natural gas single use franchises granted by the provincial government to the largest natural gas users account for 70%-80% of all natural gas used in New Brunswick. Key industry players:  NB Power  Enbridge Gas NB  Maritimes & Northeast Pipeline  Brunswick Pipeline  Irving Oil  Emera Inc. 1

Natural gas exports through New Brunswick but from Nova Scotia are counted as Nova Scotia export

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The Maritimes & Northeast Pipeline (M&NP) is a 1,101-kilometre mainline transmission pipeline built to transport natural gas from developments offshore Nova Scotia to markets in Atlantic Canada and the northeastern United States. A joint venture of Spectra Energy (77.53%), Emera Inc. (12.92%), and ExxonMobil (9.55%), M&NP is headquartered in Halifax. The Brunswick Pipeline is 145-kilometer, 30-inch diameter pipeline transmission system that currently delivers natural gas from the CanaportTM (LNG) terminal in Saint John to markets in Canada and the US northeast. Irving Oil, a privately-held regional energy processing, transporting, and marketing company headquartered in Saint John, is also a key industry player. The company has over 900 fueling locations, ten distribution terminals, and a delivery fleet of tractor-trailers serving wholesale, commercial, and retail customers in Atlantic Canada, Quebec, and New England. It’s Saint John refinery is the largest in Canada, stretching over 780 acres. The firm is a partial owner of Canaport LNG and is expanding into the provision of compressed natural gas (CNG) to large industry clients not located near the natural gas pipeline infrastructure. Emera Inc. owns the Brunswick Pipeline; owns and operates Bayside Power - a 260 MW gas-fired combined cycle power plant located in Saint John; is part owner of the Maritimes & Northeast Pipeline; and is an investor in Fredericton-based Atlantic Hydrogen Inc. The natural gas exploration and production sector has been active in New Brunswick for over a decade. There are nine firms with active oil and gas exploration agreements in the province with Corridor Resources Inc. and Potash Corporation of Saskatchewan having the only active wells. SWN Resources Canada, Inc. is in a testing and research phase. Emerging energy production sectors:  Oil and Gas Extraction - There is an estimated 70 TCF of gas in the McCully and Stoney Creek fields. 

The government estimates a “major find” of natural gas could net the province more than $200 million per year in annual royalties. This would be on top of the tens of millions of dollars’ worth of potential tax revenues.



Biomass energy – much of this biomass is being used already by the forest products sector.



Wind energy – already 400 MW of installed capacity in place across the province.



Biofuels from sugar beets. The Atlantic Council for Bioenergy Co-operative is advocating for the construction and operation of 13 plants in Atlantic Canada which would create 9,000 jobs, $1.5 billion in GDP and generate $273 million in tax revenues.

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Other important energy players include: ExxonMobil which has over 1,000 employees in New Brunswick servicing clients across the western hemisphere; Siemens which operates a major smart grid R&D facility in Fredericton and the province’s engineering firms – particularly in Saint John – that have developed energy-related expertise. There are also IT firms with energy products such as Saint John-based ShiftEnergy. Finally, the Atlantica Centre for Energy is an important energy sector advocacy organization.

2. Energy and Economic Development The energy sector is foundational to the modern economy. Access to diverse forms of energy at competitive costs is critical to the success of the provincial economy. In the past 10-15 years, there has been over $5 billion worth of new investments in the energy sector including: 

A major upgrade to the Irving Oil refinery



The new Canaport liquefied natural gas (LNG) receiving and regasification terminal



The Emera Brunswick Pipeline that delivers the LNG to markets in Canada and the US northeast



A new international power line from New Brunswick into Maine



The build out of the McCully natural gas field near Sussex



The refurbishment of the Point Lepreau nuclear energy facility



New wind energy investments across the province



The continued rollout of the Enbridge Gas NB natural gas distribution system

As shown in the chart, electric power engineering construction GDP in New Brunswick has been the third highest in Canada in recent years (adjusted for the size of the population) as a result of the Lepreau refurbishment, wind energy investments, etc.

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Energy is high value economic activity Because of the substantial capital investment and the technical nature of the energy sector, it is high value economic activity. As an example, energy related careers such as petroleum engineers, power engineers, oil and gas well drillers, electrical power line workers and power system electricians earn a substantial premium over the average worker in the labour market. For example, an oil and gas well driller across Canada will earn 50 percent more than the average full time worker.

Electric Power Engineering Construction GDP Per Capita Annual average expenditure 2007-2012 Chained (2007) dollars

The industry also generates substantial revenue for governments. In 2010, energy royalties contributed $2,480 per capita to the Newfoundland and Labrador government budget and $1,573 to the Alberta government budget. The same year, energy-related royalties generated $6 per capita in New Brunswick. This doesn’t include the taxes paid by the energy sector. Source: Statistics Canada CANSIM Table 379-0030 In general, all ‘have’ provinces in Canada generate a substantial portion of provincial government revenues from oil and gas and other energy resource royalties. All of the have-not provinces (defined as those requiring fiscal equalization from the federal government), have very little energy resource royalties. In 2011, 23 percent of the New Brunswick government’s revenue came from the federal equalization program. That same year, energy and other royalties accounted for 21 percent of the Saskatchewan government’s annual revenues. The Saint John Energy Cluster  Electricity production: nuclear, oil and natural gas-based generation 

Petroleum products refining



Liquefied natural gas (LNG)



Gas pipeline infrastructure



Skilled workforce with expertise in construction and operations



Specialized engineering capacity; industry consulting services; and other business services

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

Energy-related education



Atlantica Centre for Energy



NB Department of Energy

Energy as a driver of economic development: Why does it matter? New Brunswick needs high value economic activity to generate employment and tax revenue. The provincial government is running substantial deficits and is burdened by a large public debt. In addition, the province remains heavily reliant on fiscal equalization. The provincial economy has not created any net new jobs since 2008. As a result, there has been an uptick in outward migration – particularly among younger New Brunswickers. An example of the link between economic activity and the investment in public services is shown below. The generation of $100 million worth of tax and royalty revenue will cover the salaries of more than 1,400 nurses or 1,500 school teachers. This level of revenue pays for almost the entire budget of the Department of Natural Resources. $100 million of tax/royalty revenue pays for: 

The salaries of more than 1,400 nurses



The salaries of more than 1,500 school teachers



The salaries of 650 doctors



The salaries of 1,700 social workers



Almost the entire Department of Natural Resources budget



Two thirds of the entire Department of Public Safety budget



One third of the entire Post-Secondary Education, Training and Labour department budget



Over half of the total amount paid out to NB families each year through social assistance

New Brunswick’s economy is heavily reliant on energy The New Brunswick economy is particularly reliant on diverse supplies of competitive energy. Many of the province’s key industries – including forest products, petroleum products manufacturing, potash mining, truck transportation and food manufacturing are significant users of energy.

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Any significant increase in energy costs undermines the competitiveness of these industries. According to research done by KPMG, electricity costs for energy-intensive manufacturers in New Brunswick are above average compared to other jurisdictions across North America. In addition, natural gas costs for manufacturers are the highest in North America. New Brunswick households are also sensitive to energy cost inflation. The average New Brunswick household spends over $2,700/year on energy and water costs for their principal accommodation or 4.5 percent of their total household expenditure s- the third highest among the 10 provinces across Canada.

Energy and economic development: 2013-2020 Energy infrastructure investment was a major driver of the provincial economy over the past 15 years and the lack of this investment is one of the reasons the economy has witnessed the worst GDP growth in Canada since 2008. The energy sector could see more investment and job creation in the coming years. There are several important initiatives in the ‘pipeline’ that could spur growth including: 

Shale gas and oil development. There is still no guarantee there is a commercially viable industry in New Brunswick (beyond Corridor Resources) and considerable public resistance could curtail investment. However, the government and key industry leaders remain bullish on the prospects of the industry. Significant commercial exploration is likely several years away.



The proposed Energy East Pipeline. This large scale project still requires regulatory approval and is not guaranteed. The plan calls for development to start in 2015.



The proposed Canaport Energy East Marine Terminal. This $400 million project is reliant on the Energy East Pipeline. Assuming the go ahead for that project, the plans calls for development to start in 2015.



An LNG export terminal. This is currently a fairly speculative project as supply bottlenecks and competing projects constrain development potential.



Electricity infrastructure upgrades. It is possible that Colson Cove may be converted to natural gas and refurbishment of Mactaquac could start in the latter part of the decade if NB Power decides to go ahead.



Cluster development efforts (i.e. Saint John energy start-up incubator, smart grid, etc.)



Renewable energy. The investment picture is murky.

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Energy and community acceptance Now more than ever, energy projects with environmental impacts need a social license for development. There is a heightened concern for the potential side effects and risks associated with projects such as natural gas exploration and production; oil pipelines and even electricity infrastructure. Wind energy production infrastructure has generated significant community backlash in Nova Scotia and those concerns have rippled into New Brunswick. It is important to separate NIMBYism (Not-In-MyBackyard) from broader environmental concerns. Both are important but require separate responses. In New Brunswick it is also important to understand and address the concerns of aboriginal groups. The protests associated with SWN Resources’ exploration in Kent County were the subject of international media attention. The potential shale gas development industry has also re-engaged the rural/urban divide debate across the province.

Seeking Sustainable Energy Sector Economic Development

One thing is for sure. If we are to develop the shale gas sector or any other new energy sector we will need highly reputable, good corporate citizens. The example of Repsol and its integration into the Saint John community is one such example.

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© Copyright University of New Brunswick 2014 - All rights reserved. These materials may not be published, broadcast, rewritten or redistributed in whole or part with out the express written permission. Contact [email protected]

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The Energy Sector in New Brunswick Prepared by: David Campbell Jupia Consultants Inc.

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© Copyright University of New Brunswick 2014 - All rights reserved. These materials may not be published, broadcast, rewritten or redistributed in whole or part with out the express written permission. Contact [email protected]

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Overview of this presentation • This topic focuses on the size and scope of the energy sector in New Brunswick including: – Size, scope and economic impact of the energy sector: GDP, employment, supply chain, etc. – Main industry players – Other considerations

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3

Energy Sector: Defined • Statistics Canada defines the energy sector using the following North American Industry Classification System (NAICS) codes: • NAICS - 211 Oil and Gas Extraction • NAICS - 2121 Coal Mining • NAICS - 212291 Uranium Ore Mining • NAICS - 213111 Oil and Gas Contract Drilling • NAICS - 213118 Services to Oil and Gas Extraction • NAICS 2211 Electric Power Generation, Transmission and Distribution • NAICS - 2212 Natural Gas Distribution • NAICS 32411 Petroleum Refineries • NAICS - 486 Pipeline Transportation 13

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Energy GDP Contribution Energy Sector GDP Per Capita (2012) Chained (2007) dollars $25,000

$21,025 $20,000 $15,000

$12,174 $12,411

$10,000

$5,000

$2,319 $2,449 $2,736 $1,706 $906 $1,454

$-

ON

NS

QC

NB

MB

BC

SK

NL

AB

Source: Statistics Canada CANSIM Table 379-0030 14

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Energy Sector: Adding Value Oil and Gas Imports/Petroleum Refinery Exports ($Billions) Oil and Gas Extraction Imports

Petroleum Refinery Exports

$12.0 $10.3 $9.1

$10.0 $8.0 $6.0

$4.0

$3.8 $3.1

$2.0 $2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Source: Statistics Canada CANSIM Table 379-0030 15

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Energy Sector: Employment* • Energy utilities and generation: 3,700 jobs • Oil refining: 1,500 jobs • Oil and gas exploration: 800 jobs • Energy-related construction: 600 jobs

• Other energy players: 1,000+ job

• With well above average employment multipliers.

*Doesn’t include services or retail sales. 16

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Energy Sector Productivity (2012) Labour productivity (chained (2007) dollars per hour)

CAN Newfoundland & Labrador Prince Edward Island Nova Scotia New Brunswick Quebec Ontario Manitoba Saskatchewan Alberta British Columbia NB variance from CDN avg.

Energy Sector $ 225 $ 525 n/a $ 273 $ 160 $ 319 $ 120 $ 173 $ 284 $ 233 $ 181

Utilities $ 172 $ 135 $ 67 $ 190 $ 112 $ 344 $ 107 $ 87 $ 213 $ 150 $ 176

Business Sector $ 48 $ 68 $ 29 $ 35 $ 37 $ 44 $ 44 $ 43 $ 58 $ 69 $ 44

-29%

-35%

-23%

Source: Statistics Canada CANSIM Table 383-0029. 17

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Energy Sector Firms (2012) Industry (NAICS) Conventional oil and gas extraction [211113] Oil and gas contract drilling [213111] Services to oil and gas extraction [213118] Hydro-electric power generation [221111] Fossil-fuel electric power generation [221112] Nuclear electric power generation [221113] Other electric power generation [221119] Electric bulk power transmission and control [221121] Electric power distribution [221122] Natural gas distribution [221210] Oil and gas pipeline and related structures construction [237120] Petroleum refineries [324110] Petroleum and petroleum products merchant wholesalers [412110] Total firms

% of CDN # of Firms Total 7 0.1% 5 0.3% 9 0.1% 10 2.5% 9 5.7% 3 11.5% 7 1.5% 3 5.2% 11 3.1% 2 0.4% 9 0.4% 1 2.5% 55 2.5% 131

Source: Statistics Canada CANSIM Table 551-0003. 18

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Energy Exports (International) $ Millions 2008

2012

$12,000

$12,000

$10,299

$10,000

$8,523

$10,000

$8,000

$8,000

$6,000

$6,000

$4,000

$4,000

$2,000

$2,000

$-

$108

$32 $-

Electric Oil and Gas Petroleum Power Extraction Refineries Generation

$51

$202

Electric Oil and Gas Petroleum Power Extraction Refineries Generation

Source: Statistics Canada CANSIM Table 379-0030 19

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Energy Production by Type (% of CDN Total) Secondary electricity, thermal Primary electricity, hydro and nuclear 9.0% 8.0%

8.5% 7.9%

7.9%

8.1%

7.3%

7.1%

6.8%

7.0%

6.2%

6.4%

6.0%

5.1%

5.0%

5.0%

4.0% 3.0% 2.0% 1.7%

2.0%

1.7%

1.4%

1.8%

1.8%

1.5% 1.0%

1.0%

0.7%

0.8%

1.0%

0.0% 2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

Source: Statistics Canada CANSIM Table 329-0050 20

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Energy Production by Type (% of CDN Total) Natural Gas 0.16%

0.15%

0.14%

0.14% 0.12%

0.11%

0.10% 0.08%

0.09% 0.08%

0.06% 0.04% 0.02% 0.00% 2007

2008

2009

2010

2011

Source: Statistics Canada CANSIM Table 329-0050 21

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Energy Demand by Type (% of CDN Total) 2001 2.6% 0 0.4% 10.8% 2.9% 0.8% 1.1% 3.6% 2.7% 2.0% 4.0% 5.6% 8.5% 0.0% 1.8% 1.3%

Total primary and secondary energy Total coal Natural gas Gas plant natural gas liquids (NGL's) Primary electricity, hydro and nuclear Steam Coke Total refined petroleum products Motor gasoline Kerosene and stove oil Diesel fuel oil Light fuel oil Heavy fuel oil Petroleum coke Aviation gasoline Aviation turbo fuel

2011 2.3% 0.03% 0.7% 1.6% 2.6% n/a 0.5% 3.6% 2.8% 1.0% 3.7% 9.4% 12.9% n/a 2.2% 1.0%

Source: Statistics Canada CANSIM Table 329-0050 22

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Source: Statistics Canada23CANSIM Table 326-0020

May-13

Oct-12

Mar-12

Aug-11

Jan-11

Jun-10

Nov-09

Apr-09

Sep-08

Feb-08

Jul-07

Canada

Dec-06

May-06

Oct-05

Mar-05

Aug-04

Jan-04

Jun-03

Nov-02

Apr-02

Sep-01

Feb-01

Jul-00

Energy Inflation (CPI) (2002 = 100)

Electricity New Brunswick

140

130

120

110

100

90

80

14

Energy Inflation (CPI) (2002 = 100) Fuel oil and other fuels Canada

New Brunswick

270 250

230 210 190 170 150 130 110 May-13

Oct-12

Mar-12

Aug-11

Jan-11

Jun-10

Nov-09

Apr-09

Sep-08

Feb-08

Jul-07

Dec-06

May-06

Oct-05

Mar-05

Aug-04

Jan-04

Jun-03

Nov-02

Apr-02

Sep-01

Feb-01

Jul-00

90

Source: Statistics Canada CANSIM Table 326-0020 24

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25

May-13

Oct-12

Mar-12

Aug-11

Jan-11

Jun-10

Nov-09

Apr-09

Sep-08

Feb-08

Jul-07

Canada

Dec-06

May-06

Oct-05

Gasoline

Mar-05

Aug-04

Jan-04

Jun-03

Nov-02

Apr-02

Sep-01

Feb-01

Jul-00

Energy Inflation (CPI) (2002 = 100) New Brunswick

210

190

170

150

130

110

90

Source: Statistics Canada CANSIM Table 326-0020

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Energy Inflation (CPI) (2002 = 100) All Energy

Canada

New Brunswick

Source: Statistics Canada26CANSIM Table 326-0020

May-13

Oct-12

Mar-12

Aug-11

Jan-11

Jun-10

Nov-09

Apr-09

Sep-08

Feb-08

Jul-07

Dec-06

May-06

Oct-05

Mar-05

Aug-04

Jan-04

Jun-03

Nov-02

Apr-02

Sep-01

Feb-01

Jul-00

180 170 160 150 140 130 120 110 100 90 80

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Key Industry Player: NB Power • NB Power: New Brunswick’s primary electricity utility. • Electricity is generated at 13 facilities and delivered via power lines, substations and terminals to more than 390,000 direct and indirect New Brunswick homes, businesses and facilities. • NB Power’s generation division operates: – 12 hydro, coal, oil and diesel-powered generating stations with an installed net capacity of 2,853 MW. – Generation supplies approximately 75 per cent of inprovince load through sales to Distribution. – It also exports energy to neighbouring New England, Quebec, Prince Edward Island and Nova Scotia markets. 27

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Key Industry Player: NB Power • The firm’s nuclear division operates and maintains a CANDU 6 - 660 MW reactor at the Point Lepreau Generating Station. • The Station provides approximately 25 per cent of New Brunswick 's electrical energy requirements. • It also sells five per cent of its energy production to Maritime Electric Company, Limited. • The Transmission & System Operator division maintains and operates 49 terminals and switchyards that are interconnected by over 6,849 km of transmission lines ranging in voltage from 69 kV to 345 kV. • The system is interconnected with electrical systems in North America, including Quebec, Maine, Nova Scotia and Prince Edward Island.

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19

Key Industry Player: NB Power

29

20

Key Industry Player: NB Power

30

21

Key Industry Player: Enbridge Gas NB Enbridge Gas New Brunswick has over 781km of pipeline servicing 10 communities in southern New Brunswick.

31

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Key Industry Player: Enbridge Gas NB • Enbridge Gas New Brunswick (now 100% owned by Enbridge Inc.) has a 20 year renewable agreement with the provincial government • IT is a regulated utility that distributes natural gas to residential, commercial, institutional, and industrial customers in New Brunswick. • The firm covers: Saint John, Fredericton, Dieppe, Dorchester, Moncton, Oromocto, St. George, St. Stephen, Riverview, Sackville and Dorchester. • Serves more than 11,500 customers. 32

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Key Industry Player: Maritimes & Northeast Pipeline

M&NP is a 1,101-kilometre mainline transmission pipeline built to transport natural gas from developments offshore Nova Scotia to markets in Atlantic Canada and the northeastern United States. A joint venture of Spectra Energy (77.53%), Emera Inc. (12.92%), and ExxonMobil (9.55%), M&NP is headquartered in Halifax. 33

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Key Industry Player: Brunswick Pipeline •

•

The Brunswick Pipeline is 145-kilometer, 30-inch diameter pipeline transmission system that currently delivers natural gas from the CanaportTM (LNG) terminal in Saint John to markets in Canada and the US northeast. Except for seven above-ground facilities, the pipeline is buried for its entire length and extends through southwest New Brunswick to an interconnection with the Maritimes & Northeast Pipeline transmission system at the Canada-US border near St. Stephen, NB.

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Key Industry Player: Irving Oil • Irving Oil is a privately-held regional energy processing, transporting, and marketing company headquartered in Saint John • It has U.S. marketing operations in Portsmouth, New Hampshire. • The company has over 900 fueling locations, ten distribution terminals, and a delivery fleet of tractor-trailers serving wholesale, commercial, and retail customers in Atlantic Canada, Quebec, and New England. • The Saint John refinery is the largest in Canada, stretching over 780 acres. • It is a partial owner of Canaport LNG and expanding into the provision of compressed natural gas (CNG) to large industry clients not located near the natural gas pipeline infrastructure.

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Key Industry Player: Emera Inc. • Owns the Brunswick Pipeline. • Owns and operates Bayside Power - a 260 MW gas-fired combined cycle power plant located in Saint John. • Part owner of the Maritimes & Northeast Pipeline.

• An investor in Fredericton-based Atlantic Hydrogen Inc.

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Emerging Sector: Oil and Gas Extraction • Active gas operations: – Corridor Resources Inc./ Potash Corporation of Saskatchewan

• Oil and natural gas agreements (some under review): – – – – – – – –

Pétrolia Inc. PetroWorth Resources Inc. Pétrolia Inc. Windsor Energy Inc. SWN Resources Canada, Inc. Contact Exploration Inc. Irving Oil Limited Beneficial Energy Group 37

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Emerging Sector: Oil and Gas Extraction The Potential Shale Gas Development Area in New Brunswick •

There is an estimated 70 TCF of gas in the McCully and Stoney Creek fields.

•

The government estimates a “major find” of natural gas could net the province more than $200 million per year in annual royalties.

•

This would be on top of the tens of millions of dollars’ worth of potential tax revenues. Source: New Brunswick Department of Energy & Mines.

38

29

Emerging Sector: Biomass Energy Annual Potential Harvest (GMT/year) Residual Forest Biomass and Bark

39

30

Wind Energy

40

31

Wind Energy NB Power – Wind power purchase agreements

41

32

Other Important Energy Players • ExxonMobil

• Siemens • Engineering firms

• Energy-related software developers (i.e. ShiftEnergy) • Atlantica Centre for Energy 42

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Energy and Economic Development

43

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Energy Infrastructure Investments • $5 billion+ in new investments in the energy sector since the early 2000s including: • A major upgrade to the Irving Oil refinery • The new Canaport liquefied natural gas (LNG) receiving and regasification terminal • The Emera Brunswick Pipeline that delivers the LNG to markets in Canada and the US northeast • A new international power line from New Brunswick into Maine • The build out of the McCully natural gas field near Sussex • The refurbishment of the Point Lepreau nuclear energy facility • New wind energy investments across the province • The continued rollout of the Enbridge Gas NB natural gas distribution system 44

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Energy Infrastructure Investments Electric Power Engineering Construction GDP Per Capita Annual average expenditure 2007-2012 Chained (2007) dollars $350

$321

$300

$276

$250

$227

$202

$200

$154 $158 $159

$150 $100

$73

$88

$97

NL

ON

$50 $NS

PE

MB

BC

SK

NB

Source: Statistics Canada45CANSIM Table 379-0030

AB

QC 36

Energy is high value economic activity Average Annual Income: Selected Energy-Related Occupations* Petroleum engineers

$176,598

Supervisors, petroleum, gas processing and utilities

$93,515

Petroleum, gas and chemical process operators

$91,119

Power engineers and power systems operators

$89,703

Oil and gas well drillers, servicers, testers

$86,764

Electrical power line and cable workers

$85,062

Power system electricians

$85,005

All full time workers

$58,129

*Canada-wide. Source: Statistics Canada 2011 National Household Survey. 46

37

Energy is high value economic activity Energy Revenue by Province Per Capita Contribution to Provincial Budgets (2009-2010)*

47

38

Energy is high value economic activity Non-Renewable Resource Royalties* as a percentage of total provincial revenue

*And related direct revenue from resource extraction. Source: Provincial budget documents482011-2012.

39

Energy is high value economic activity Breakdown of Provincial Government Revenue by Source

*Includes forestry-related royalties. Source: Provincial budget documents 2011-2012. 49

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Energy is high value economic activity The Long Energy Supply Chain (# of Firms*)

*This does not include the hundreds of firms that support the sector including construction, engineering, legal, human resources, finance and other business services. Source: Canadian Business Patterns (2011). Statistics Canada.

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Energy is high value economic activity FTE Job Multipliers: Total Jobs per Direct Job (Canada) Petroleum Refineries and Other Petroleum and Coal Products Manufacturing Oil and Gas Extraction Motor Vehicle Manufacturing Particle Board, Fibreboard, and Waferboard Mills Crude Oil and Other Pipeline Transportation Pulp Mills Potash Mining Pipeline Transportation of Natural Gas Oil and Gas Engineering Construction Natural Gas Distribution Electric Power Generation, Transmission and Distribution Power Boiler and Heat Exchanger Manufacturing Electric Power Engineering Construction Amusement and Recreation Industries Other Administrative and Support Services Retail Trade Offices of Physicians Performing Arts, Spectator Sports and Related Industries Source: Statistics Canada51Input/Output Tables 2008.

9.1 6.1 5.8 5.3 4.8 4.4 4.1 4.0 3.2 2.8 2.6 2.5 2.4 1.6 1.6 1.5 1.5 1.4 42

Energy is high value economic activity The Saint John Energy Cluster •

Electricity production: nuclear, oil and natural gas-based generation

•

Petroleum products refining

•

Liquefied natural gas (LNG)

•

Gas pipeline infrastructure

•

Skilled workforce with expertise in construction and operations

•

Specialized engineering capacity

•

Industry consulting services

•

Other business services

•

Energy-related education

•

Atlantica Centre for Energy

•

NB Department of Energy

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43

Energy is high value economic activity •

$100 million of tax/royalty revenue pays for:

– The salaries of more than 1,400 nurses – The salaries of more than 1,500 school teachers – The salaries of 650 doctors – The salaries of 1,700 social workers

– Almost the entire Department of Natural Resources budget – Two thirds of the entire Department of Public Safety budget – One third of the entire Post-Secondary Education, Training and Labour department budget

– Over half of the total amount paid out to New Brunswick families each year through Social Assistance

53

44

New Brunswick’s economy is heavily reliant on energy Top N.B. International Merchandise Exports ($millions) – 2012* Seafood Product Preparation and Packaging

$709

Pulp Mills

$502

Paper Mills

$400

Other Non-Metallic Mineral Mining and Quarrying

$372

Sawmills and Wood Preservation

$319

Frozen Food Manufacturing

$229

Animal Aquaculture

$202

Oil and Gas Extraction

$202

Copper, Nickel, Lead and Zinc Ore Mining

$186

Non-Ferrous Metal Rolling, Drawing, Extruding…

$149

All Other Miscellaneous Manufacturing

$131

Fishing

$89

Electric Power Generation

$51 $-

$100 $200 $300 $400 $500 $600 $700 $800

*Excluding refined petroleum products. Source: Statistics Canada. 54

45

New Brunswick’s economy is heavily reliant on energy Direct plus indirect energy intensity, by industry (Canada) Gigajoules per thousand current dollars of production 2008 Electric power generation, transmission and distribution Water transportation Pipeline transportation Pulp, paper and paperboard mills Air transportation Basic chemical manufacturing Primary metal manufacturing Truck transportation Cement and concrete product manufacturing Miscellaneous non-metallic mineral product manufacturing Petroleum and coal products manufacturing Transportation margins Travel and entertainment Rail transportation Transit and ground passenger transportation Support activities for agriculture and forestry Converted paper products manufacturing Distilleries

1990=100

41.1 24.6 23.2 21.8 19.3 18.6 17.5 14.7 14.2 14.0 13.6 13.2 11.4 11.1 10.8 10.6 10.4 10.1

Source: 55 Statistics Canada CANSIM Table 153-0031.

100.2 131.6 64.5 79.4 128.0 101.7 75.3 97.0 71.5 72.5 90.6 89.7 113.1 72.5 89.4 170.9 72.2 89.5 46

Electric power selling price index (1997=100) (non-residential) Electric power selling price under 5000kw Canada

New Brunswick

170 160 150 140 130 120 110 100 90

Source: Statistics Canada CANSIM Table 329-0050 56

Apr-11

Oct-10

Apr-10

Oct-09

Apr-09

Oct-08

Apr-08

Oct-07

Apr-07

Oct-06

Apr-06

Oct-05

Apr-05

Oct-04

Apr-04

Oct-03

Apr-03

Oct-02

Apr-02

Oct-01

Apr-01

Oct-00

Apr-00

80

47

Electric power selling price index (1997=100) (non-residential) Electric power selling price over 5000kw Canada

New Brunswick

160 150 140 130 120 110 100 90

Source: Statistics Canada 57CANSIM Table 329-0050

Apr-11

Oct-10

Apr-10

Oct-09

Apr-09

Oct-08

Apr-08

Oct-07

Apr-07

Oct-06

Apr-06

Oct-05

Apr-05

Oct-04

Apr-04

Oct-03

Apr-03

Oct-02

Apr-02

Oct-01

Apr-01

Oct-00

Apr-00

80

48

Annual Electricity Costs $000s (2012 estimate) Metal Fabrication Facility Based on monthly consumption/peak demand: 240,000 kWh and 780 kW Toronto

$302

Halifax

$283

Saint John

$246

Montreal

$232

Minneapolis

$168

Cleveland

$149

Little Rock

$147 $-

$50

$100

$150

$200

$250

$300

Source: KPMG Competitive Alternatives 2012. 58

$350 49

Annual Natural Gas Costs $000s (2012 estimate) Metal Fabrication Facility Based on monthly gas consumption of 28,895 m3 Saint John

$244

Montreal

$126

Cleveland

$115

Little Rock

$89

Halifax

$85

Toronto

$74

Minneapolis

$66 $-

$50

$100

$150

$200

$250

Source: KPMG 59 Competitive Alternatives 2012.

$300

50

Household Energy Costs (2009) Electricity for principal accommodation Avg. Household Expenditures BC

BC

$872

AB

$1,184

1.7% 1.6%

$1,087

MB

ON

$1,127

ON

$2,020 $1,347

NS

PE

$1,339

PE $1,941

CAN $500

3.3% 2.2% 2.4%

NL

3.4%

CAN

$1,183 $-

2.2%

NB

NS NL

1.5%

QC

$1,314

NB

1.3%

SK

MB QC

1.2%

AB

$1,139

SK

% of Total Expenditures

$1,000 $1,500 $2,000 $2,500

0.0%

1.7% 1.0%

2.0%

3.0%

60 Canada CANSIM Table 203-0003. Source: Statistics

4.0% 51

Household Energy Costs (2009) Water, fuel and electricity for principal accommodation % of Total Expenditures

Avg. Household Expenditures BC

BC

$1,797

AB

$2,839

SK

$2,676

MB

$2,920

NL

$2,629

CAN $1,000

$2,000

$3,000

3.3% 2.6% 4.5% 4.0%

PE

5.1%

NL

4.6%

CAN

$2,204 $-

3.1%

NS

$2,459

PE

3.9%

NB

$2,727

NS

SK

QC

$1,561

NB

3.3%

ON

$2,506

QC

AB MB

$2,068

ON

2.4%

$4,000

0.0%

3.1% 2.0%

Source: Statistics Canada 61 CANSIM Table 203-0003.

4.0%

6.0% 52

Household Energy Costs (2009) Gasoline and other fuels for owned and leased automobiles and trucks/vans Avg. Household Expenditures

% of Total Expenditures

BC

BC

2.8% 2.9%

$2,085

AB

$2,476

AB

SK

$2,491

SK

MB

$2,126

ON

$2,360

QC

$2,414

NS

MB

3.2%

ON

3.1%

QC

$1,955

NB

3.6%

3.3%

NB

3.9%

NS

$2,115

3.5%

PE

$2,229

PE

3.9%

NL

$2,219

NL

3.9%

CAN

$2,218

CAN

$-

$1,000

$2,000

$3,000

0.0%

3.1% 2.0%

62 Source: Statistics Canada CANSIM Table 203-0007.

4.0%

6.0% 53

Energy and economic development: 2013-2020 What is in the ‘pipeline’?

• Shale gas and oil development – Still no guarantee there is a commercially viable industry – Considerable resistance could curtail investment

• Proposed oil pipeline: Energy East Pipeline – Requires regulatory approval – Plan calls for development to start in 2015

• Oil export terminal: Canaport Energy East Marine Terminal – Reliant on the Energy East Pipeline – Plan calls for development to start in 2015 63

54

Energy and economic development: 2013-2020 What is in the ‘pipeline’? • LNG export terminal – Supply bottlenecks and competing projects

• Electricity infrastructure upgrades: Colson Cove, Mactaquac, etc. • Cluster development efforts (i.e. Saint John energy start-up incubator, smart grid, etc.) • Renewable energy? – Biomass, wind, solar, small hydro, geothermal – Biofuels from sugar beets. The Atlantic Council for Bioenergy Co-operative is advocating for the construction and operation of 13 plants in Atlantic Canada which would create 9,000 jobs, $1.49 billion in GDP and generate $273 million in tax revenues. 64

55

New Brunswick’s Shale Gas Opportunity Exports of Nova Scotia natural gas (as a % of total net production) 100% 90%

80% 70% 60%

50% 40% 30%

20% 10%

Source: Statistics Canada CANSIM Table 131-0001. 65

Aug-13

Jan-13

Jun-12

Nov-11

Apr-11

Sep-10

Feb-10

Jul-09

Dec-08

May-08

Oct-07

Mar-07

Aug-06

Jan-06

Jun-05

Nov-04

Apr-04

Sep-03

Feb-03

Jul-02

Dec-01

May-01

Oct-00

Mar-00

0%

56

Energy and economic development: 2013-2020 • Now more than ever, energy projects with environmental impacts need a social license for development. • Separate NIMBYism from broader environmental concerns. • Aboriginal groups. • Rural/urban divide.

• We need highly reputable, good corporate citizens in the energy sector. – Large players: Repsol example – In the supply chain

66

57

Energy and economic development: 2013-2020 Seeking Sustainable Energy Sector Economic Development

67

58

QUESTIONS?

68

59