BRIGHTON: Natural gas, electricity may be a bad mix | The Chronicle Herald

The Liberal government has put fracking in the too-hard basket — for now.

While there may be a slight chill on existing onshore exploration following the open-ended “ban” on fracking, I have little doubt that any party in power will play ball if the market should ever dictate that drilling for shale gas in Nova Scotia is an attractive proposition.

Right now, other matters in the energy and power sector demand public attention.

These are outlined in a SWOT analysis (standing for “strengths, weaknesses, opportunities, and threats”) of the electricity sector, prepared by London Economics International LLC in Boston and published online Thursday by the Energy Department.

This and a slew of other technical reports lay the groundwork for a provincewide, month-long consultation on electricity, which kicks off next week.

Under strengths and opportunities, the consultants list the short-term availability of natural gas from Deep Panuke and the plan to import shale gas from the United States via the Maritimes and Northeast Pipeline, which is partly owned by Emera Inc.

They also note the province’s “favourable geology” for storing natural gas in salt caverns.

A year ago this week, Alton Natural Gas Storage LP, owned by AltaGas Ltd., received approval to construct a gas storage facility in salt caverns in Colchester County. Drilling was scheduled to begin in August this year.

The facility would allow gas to be bought, stored and released at the most favourable times in the market.

Another AltaGas subsidiary, Heritage Gas Ltd., intends to use the facility to gain more price control in the distribution of natural gas in Nova Scotia.

The consultants suggest gas storage could help Nova Scotia Power Inc. reduce power rates, by providing a hedge against high winter prices for natural gas. Cheaper gas could be acquired when demand is lower in summer.

Storage capacity in Nova Scotia could also leverage opportunities in the New England market, they suggest, because that region has no underground gas storage and “is in the same gas-capacity constrained situation as Nova Scotia in the winter.”

Yet any advantage that could be gained from gas storage is complicated by Emera’s part in the regional energy market.

The consultants point to Emera’s ownership of Nova Scotia Power as a weakness in the power sector, because the parent company “may have priorities other than minimizing Nova Scotia ratepayer costs.” This may be especially true in the transportation and use of natural gas.

Emera owns other power assets in Atlantic Canada and has a stake in the natural gas business. The utility is regulated, but even so, the authors maintain Emera “could influence decisions made by NSPI to benefit other parts of Emera.”

Under “threats,” the report points to pressure on power rates coming from the cost of fossil fuels, the cost of acquiring investment capital for infrastructure and energy projects, which is set to rise, and the possible early retirement of coal plants under the renewable energy regime.

These are among the matters for discussion as the electricity roadshow gets underway.

via BRIGHTON: Natural gas, electricity may be a bad mix | The Chronicle Herald.