Powerful Opportunities

In 2008 the government of the day made a far-sighted investment of $15 million to examine hydrocarbon opportunities in previously unexplored opportunities in Nova Scotia’s offshore.

On January 20th the current government, which has continued the underlying strategy, was able to announce a major commitment by Shell Oil to further explore and drill wells in the deep offshore based on the work commissioned in 2008. Recent deep water successes in the Gulf of Mexico and offshore Brazil have shown that drilling in these areas can discover commercially viable deposits.

Nova Scotian taxpayers can have hopeful dreams of major oil discoveries but optimism needs to be tempered. Even at a drilling cost of $100 million or more per well the success rate is typically much less than 50%. In such circumstances a billion dollar commitment does not go very far.

Government policy needs to express the same enthusiasm for onshore opportunities in both oil and gas. The possibilities of a particular find may be smaller in scale but the cost per well is tiny by comparison. But there is a risk that a vocal minority will prevent evolution of a sensible policy framework.

Suppose a farmer were to park a supply of fertilizer (let’s say manure) too close to a watercourse. Heavy rains follow and a large part of the fertilizer washes into the river killing fish and otherwise degrading the water. If so, the farmer should be penalized and regulations examined to see if they need strengthening. But nobody would argue that we should put a moratorium on farming, or on the use of fertilizer.

Yet some activists are arguing that there should be a moratorium on drilling , in particular hydraulic fracturing  ( fracking), until it is proven to be 100% safe. In other words for ever.

It cannot be shown that fracking is 100% safe. It is not. Neither is flying in an airplane, having a vaccination, or walking down the street.  But the incidence rate of problems from fracking (chiefly by harming local water supplies) is remarkably low, and both the technology and the effectiveness of regulatory structures are improving.

In the unlikely event that a household well is damaged while fracking is occurring nearby the homeowner should be fully compensated. If the operator was not meeting standards further penalties should apply. But within that context onshore drilling should be welcomed.

No area of resource exploitation is without risk. Hydro dams prevent fish migrations and cause siltation of previously pristine rivers. The Ontario Federation of Agriculture has asked for a moratorium  on wind power development. Mining, particularly underground, is hazardous. So is commercial fishing. But Canada’s successful provinces have found a way to advance resource industries. Doing so is crucial to the prospects for rural Nova Scotia.

The Government is in the late stages of a review of hydraulic fracturing. The tone of its interim reports is constructive. It is to be hoped that the final result exhibits the same enthusiasm for development, within an appropriate regulatory regime, that has been reflected in the offshore announcement.

Locally produced gas, together with wind, provide the possibility of Nova Scotia becoming largely self-sufficient in power generation, while replacing coal plants as they reach the end of their useful lives.

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