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City of Saint JohnCommon Council Special Meeting

AGENDA

Monday, January 27, 20145:00 p.m.

Council ChamberPlease 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 specificallySaint John

2.1 Energy and Economic Development: Summary 1 - 9

2.2 The Energy Sector in New Brunswick: Presentation 10 - 68

1

The City of Saint John

Séance du conseil communal

Le lundi 27 janvier 2014

Salle du conseil, 17 h

Comité plénier

1. Ouverture de la séance

2. Impact du secteur de l'énergie sur le Nouveau-Brunswick et plus précisément sur

Saint John

2.1 Énergie et développement économique : Résumé

2.2 Le secteur de l'énergie au Nouveau-Brunswick : Présentation

18. Levée de la séance

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

services (Statistics Canada definition). In 2012, the energy sector

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.

Energy Sector GDP Per Capita (2012) Chained (2007) dollars

Source: Statistics Canada CANSIM Table 379-0030

1

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

2

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.

3

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.

4

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.

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.

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

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


5

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.

6

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.

7

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-My-

Backyard) 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.

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.

Seeking Sustainable Energy Sector

Economic Development

8

© 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]

9

mailto:[email protected]

The Energy Sector in New

Brunswick

Prepared by:

David Campbell

Jupia Consultants Inc.

1 10

© 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]

11

mailto:[email protected]

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

3 12

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

4 13

Energy GDP Contribution

5

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

$12,174 $12,411

$21,025

$-

$5,000

$10,000

$15,000

$20,000

$25,000

ON NS QC NB MB BC SK NL AB


Energy Sector GDP Per Capita (2012)

Chained (2007) dollars

14

Energy Sector: Adding Value

6


Oil and Gas Imports/Petroleum Refinery Exports ($Billions)

$3.1

$9.1

$3.8

$10.3

$-

$2.0

$4.0

$6.0

$8.0

$10.0

$12.0

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Oil and Gas Extraction Imports Petroleum Refinery Exports

15

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.

7

*Doesn’t include services or retail sales.

16

Energy Sector Productivity (2012)

8 Source: Statistics Canada CANSIM Table 383-0029.

Labour productivity (chained (2007) dollars per hour)

Energy Sector Utilities

Business Sector

CAN $ 225 $ 172 $ 48 Newfoundland & Labrador $ 525 $ 135 $ 68 Prince Edward Island n/a $ 67 $ 29 Nova Scotia $ 273 $ 190 $ 35 New Brunswick $ 160 $ 112 $ 37 Quebec $ 319 $ 344 $ 44 Ontario $ 120 $ 107 $ 44 Manitoba $ 173 $ 87 $ 43 Saskatchewan $ 284 $ 213 $ 58 Alberta $ 233 $ 150 $ 69 British Columbia $ 181 $ 176 $ 44

NB variance from CDN avg. -29% -35% -23%

17

Energy Sector Firms (2012)

9

Source: Statistics Canada CANSIM Table 551-0003.

Industry (NAICS) # of Firms % of CDN

Total

Conventional oil and gas extraction [211113] 7 0.1%

Oil and gas contract drilling [213111] 5 0.3%

Services to oil and gas extraction [213118] 9 0.1%

Hydro-electric power generation [221111] 10 2.5%

Fossil-fuel electric power generation [221112] 9 5.7%

Nuclear electric power generation [221113] 3 11.5%

Other electric power generation [221119] 7 1.5%

Electric bulk power transmission and control [221121] 3 5.2%

Electric power distribution [221122] 11 3.1%

Natural gas distribution [221210] 2 0.4%

Oil and gas pipeline and related structures construction [237120] 9 0.4%

Petroleum refineries [324110] 1 2.5%

Petroleum and petroleum products merchant wholesalers [412110] 55 2.5%

Total firms 131

18

Energy Exports (International)

10


$ Millions

$51 $202

$10,299

$-

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

ElectricPower

Generation

Oil and GasExtraction

PetroleumRefineries

$108 $32

$8,523

$-

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

ElectricPower

Generation

Oil and GasExtraction

PetroleumRefineries

2008 2012

19

Energy Production by Type (% of CDN

Total)

11


1.7% 1.4% 2.0% 1.7% 1.8% 1.8%

1.5% 1.0%

0.7% 0.8% 1.0%

7.9% 7.3%

7.9%

8.5% 8.1%

6.8% 6.2% 6.4%

7.1%

5.1% 5.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Primary electricity, hydro and nuclear Secondary electricity, thermal

20

Energy Production by Type (% of CDN

Total)

12


0.08%

0.15% 0.14%

0.11%

0.09%

0.00%

0.02%

0.04%

0.06%

0.08%

0.10%

0.12%

0.14%

0.16%

2007 2008 2009 2010 2011

Natural Gas

21

Energy Demand by Type (% of CDN Total)

13


2001 2011 Total primary and secondary energy 2.6% 2.3% Total coal 0 0.03% Natural gas 0.4% 0.7% Gas plant natural gas liquids (NGL's) 10.8% 1.6% Primary electricity, hydro and nuclear 2.9% 2.6% Steam 0.8% n/a Coke 1.1% 0.5%

Total refined petroleum products 3.6% 3.6% Motor gasoline 2.7% 2.8% Kerosene and stove oil 2.0% 1.0% Diesel fuel oil 4.0% 3.7% Light fuel oil 5.6% 9.4% Heavy fuel oil 8.5% 12.9% Petroleum coke 0.0% n/a Aviation gasoline 1.8% 2.2% Aviation turbo fuel 1.3% 1.0%

22

Energy Inflation (CPI) (2002 = 100)

14 Source: Statistics Canada CANSIM Table 326-0020

Electricity

80

90

100

110

120

130

140

Jul-

00

Feb

-01

Sep

-01

Ap

r-0

2

No

v-0

2

Jun

-03

Jan

-04

Au

g-0

4

Mar

-05

Oct

-05

May

-06

Dec

-06

Jul-

07

Feb

-08

Sep

-08

Ap

r-0

9

No

v-0

9

Jun

-10

Jan

-11

Au

g-1

1

Mar

-12

Oct

-12

May

-13

Canada New Brunswick

23


15


Fuel oil and other fuels

90

110

130

150

170

190

210

230

250

270

Jul-

00

Feb

-01

Sep

-01

Ap

r-0

2

No

v-0

2

Jun

-03

Jan

-04

Au

g-0

4

Mar

-05

Oct

-05

May

-06

Dec

-06

Jul-

07

Feb

-08

Sep

-08

Ap

r-0

9

No

v-0

9

Jun

-10

Jan

-11

Au

g-1

1

Mar

-12

Oct

-12

May

-13


24


16


Gasoline

90

110

130

150

170

190

210

Jul-

00

Feb

-01

Sep

-01

Ap

r-0

2

No

v-0

2

Jun

-03

Jan

-04

Au

g-0

4

Mar

-05

Oct

-05

May

-06

Dec

-06

Jul-

07

Feb

-08

Sep

-08

Ap

r-0

9

No

v-0

9

Jun

-10

Jan

-11

Au

g-1

1

Mar

-12

Oct

-12

May

-13


25



All Energy

80

90

100

110

120

130

140

150

160

170

180

Jul-

00

Feb

-01

Sep

-01

Ap

r-0

2

No

v-0

2

Jun

-03

Jan

-04

Au

g-0

4

Mar

-05

Oct

-05

May

-06

Dec

-06

Jul-

07

Feb

-08

Sep

-08

Ap

r-0

9

No

v-0

9

Jun

-10

Jan

-11

Au

g-1

1

Mar

-12

Oct

-12

May

-13


26

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 in-province load through sales to Distribution.

– It also exports energy to neighbouring New England, Quebec, Prince Edward Island and Nova Scotia markets.

18 27


• 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.

19 28


20 29


21 30

Key Industry Player: Enbridge Gas NB

22

Enbridge Gas New Brunswick has over 781km of pipeline servicing

10 communities in southern New Brunswick.

31

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.

23 32

Key Industry Player: Maritimes &

Northeast Pipeline

24

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

http://www.google.ca/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=ozuJgRsOr1Sf4M&tbnid=pSJyujXBtbhW4M:&ved=0CAUQjRw&url=http://www.spectraenergy.com/Operations/Canadian-Natural-Gas-Pipelines/MaritimeNortheast-Pipeline/&ei=KLeaUa25CI_u9ASQyID4Dg&bvm=bv.46751780,d.dmg&psig=AFQjCNGzC0iP0EVclvfIKW2Zo5T5L-K_iQ&ust=1369180321909474

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.

25 34

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.

26 35

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.

27 36

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

28 37

Emerging Sector: Oil and Gas Extraction

29

Source: New Brunswick

Department of Energy & Mines.

• 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.

The Potential Shale Gas Development

Area in New Brunswick

38

Emerging Sector: Biomass Energy

30

Annual Potential

Harvest (GMT/year)

Residual Forest

Biomass and Bark

39

Wind Energy

31 40

Wind Energy

32

NB Power – Wind power purchase agreements

41

Other Important Energy Players

• ExxonMobil

• Siemens

• Engineering firms

• Energy-related software developers (i.e.

ShiftEnergy)

• Atlantica Centre for Energy

33 42

Energy and Economic

Development

34 43

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

35 44

Energy Infrastructure Investments


$73 $88 $97

$154 $158 $159

$202 $227

$276

$321

$-

$50

$100

$150

$200

$250

$300

$350

NS NL ON PE MB BC SK NB AB QC

Electric Power Engineering Construction GDP Per Capita

Annual average expenditure 2007-2012 Chained (2007) dollars

45


37

Average Annual Income: Selected Energy-Related Occupations*

$58,129

$85,005

$85,062

$86,764

$89,703

$91,119

$93,515

$176,598

All full time workers

Power system electricians

Electrical power line and cable workers

Oil and gas well drillers, servicers, testers

Power engineers and power systems operators

Petroleum, gas and chemical process operators

Supervisors, petroleum, gas processing andutilities

Petroleum engineers

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

38

Energy is high value economic activity Energy Revenue by Province

Per Capita Contribution to Provincial Budgets (2009-2010)*

47


39

*And related direct revenue from resource extraction. Source:

Provincial budget documents 2011-2012.

Non-Renewable Resource Royalties* as a percentage of total provincial revenue

48


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

Breakdown of Provincial Government Revenue by Source

49


41

*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.

The Long Energy Supply Chain (# of Firms*)

50


42

Petroleum Refineries and Other Petroleum and Coal Products Manufacturing 9.1 Oil and Gas Extraction 6.1 Motor Vehicle Manufacturing 5.8 Particle Board, Fibreboard, and Waferboard Mills 5.3 Crude Oil and Other Pipeline Transportation 4.8 Pulp Mills 4.4 Potash Mining 4.1 Pipeline Transportation of Natural Gas 4.0 Oil and Gas Engineering Construction 3.2 Natural Gas Distribution 2.8 Electric Power Generation, Transmission and Distribution 2.6 Power Boiler and Heat Exchanger Manufacturing 2.5 Electric Power Engineering Construction 2.4 Amusement and Recreation Industries 1.6 Other Administrative and Support Services 1.6 Retail Trade 1.5 Offices of Physicians 1.5 Performing Arts, Spectator Sports and Related Industries 1.4

Source: Statistics Canada Input/Output Tables 2008.

FTE Job Multipliers: Total Jobs per Direct Job (Canada)

51


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

43 52


• $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

44 53

New Brunswick’s economy is heavily

reliant on energy

45

$51

$89

$131

$149

$186

$202

$202

$229

$319

$372

$400

$502

$709

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

Electric Power Generation

Fishing

All Other Miscellaneous Manufacturing

Non-Ferrous Metal Rolling, Drawing, Extruding…

Copper, Nickel, Lead and Zinc Ore Mining

Oil and Gas Extraction

Animal Aquaculture

Frozen Food Manufacturing

Sawmills and Wood Preservation

Other Non-Metallic Mineral Mining and Quarrying

Paper Mills

Pulp Mills

Seafood Product Preparation and Packaging

Top N.B. International Merchandise Exports ($millions) – 2012*

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

New Brunswick’s economy is heavily reliant on energy

46

Electric power generation, transmission and distribution 41.1 100.2 Water transportation 24.6 131.6 Pipeline transportation 23.2 64.5 Pulp, paper and paperboard mills 21.8 79.4 Air transportation 19.3 128.0 Basic chemical manufacturing 18.6 101.7 Primary metal manufacturing 17.5 75.3 Truck transportation 14.7 97.0 Cement and concrete product manufacturing 14.2 71.5 Miscellaneous non-metallic mineral product manufacturing 14.0 72.5 Petroleum and coal products manufacturing 13.6 90.6 Transportation margins 13.2 89.7 Travel and entertainment 11.4 113.1 Rail transportation 11.1 72.5 Transit and ground passenger transportation 10.8 89.4 Support activities for agriculture and forestry 10.6 170.9 Converted paper products manufacturing 10.4 72.2 Distilleries 10.1 89.5

2008 1990=100

Source: Statistics Canada CANSIM Table 153-0031.

Direct plus indirect energy intensity, by industry (Canada) Gigajoules per thousand current dollars of production

55

Electric power selling price index (1997=100)

(non-residential)


Electric power selling price under 5000kw

80

90

100

110

120

130

140

150

160

170

Ap

r-0

0

Oct

-00

Ap

r-0

1

Oct

-01

Ap

r-0

2

Oct

-02

Ap

r-0

3

Oct

-03

Ap

r-0

4

Oct

-04

Ap

r-0

5

Oct

-05

Ap

r-0

6

Oct

-06

Ap

r-0

7

Oct

-07

Ap

r-0

8

Oct

-08

Ap

r-0

9

Oct

-09

Ap

r-1

0

Oct

-10

Ap

r-1

1


56

Electric power selling price index (1997=100)

(non-residential)


Electric power selling price over 5000kw

80

90

100

110

120

130

140

150

160

Ap

r-0

0

Oct

-00

Ap

r-0

1

Oct

-01

Ap

r-0

2

Oct

-02

Ap

r-0

3

Oct

-03

Ap

r-0

4

Oct

-04

Ap

r-0

5

Oct

-05

Ap

r-0

6

Oct

-06

Ap

r-0

7

Oct

-07

Ap

r-0

8

Oct

-08

Ap

r-0

9

Oct

-09

Ap

r-1

0

Oct

-10

Ap

r-1

1


57

Annual Electricity Costs $000s (2012 estimate)

Metal Fabrication Facility

49 Source: KPMG Competitive Alternatives 2012.

Based on monthly consumption/peak demand: 240,000 kWh and 780 kW

$147

$149

$168

$232

$246

$283

$302

$- $50 $100 $150 $200 $250 $300 $350

Little Rock

Cleveland

Minneapolis

Montreal

Saint John

Halifax

Toronto

58

Annual Natural Gas Costs $000s (2012 estimate)

Metal Fabrication Facility

50 Source: KPMG Competitive Alternatives 2012.

Based on monthly gas consumption of 28,895 m3

$66

$74

$85

$89

$115

$126

$244

$- $50 $100 $150 $200 $250 $300

Minneapolis

Toronto

Halifax

Little Rock

Cleveland

Montreal

Saint John

59

Household Energy Costs (2009) Electricity for principal accommodation


$1,183

$1,941

$1,339

$1,347

$2,020

$1,314

$1,127

$1,087

$1,184

$1,139

$872

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

CAN

NL

PE

NS

NB

QC

ON

MB

SK

AB

BC

1.7%

3.4%

2.4%

2.2%

3.3%

2.2%

1.5%

1.6%

1.7%

1.3%

1.2%

0.0% 1.0% 2.0% 3.0% 4.0%

CAN

NL

PE

NS

NB

QC

ON

MB

SK

AB

BC

Avg. Household Expenditures % of Total Expenditures

60

Household Energy Costs (2009) Water, fuel and electricity for principal accommodation



$2,204

$2,629

$2,920

$2,459

$2,727

$1,561

$2,506

$2,068

$2,676

$2,839

$1,797

$- $1,000 $2,000 $3,000 $4,000

CAN

NL

PE

NS

NB

QC

ON

MB

SK

AB

BC

3.1%

4.6%

5.1%

4.0%

4.5%

2.6%

3.3%

3.1%

3.9%

3.3%

2.4%

0.0% 2.0% 4.0% 6.0%

CAN

NL

PE

NS

NB

QC

ON

MB

SK

AB

BC

61

Household Energy Costs (2009) Gasoline and other fuels for owned and leased automobiles

and trucks/vans



$2,218

$2,219

$2,229

$2,115

$2,414

$1,955

$2,360

$2,126

$2,491

$2,476

$2,085

$- $1,000 $2,000 $3,000

CAN

NL

PE

NS

NB

QC

ON

MB

SK

AB

BC

3.1%

3.9%

3.9%

3.5%

3.9%

3.3%

3.1%

3.2%

3.6%

2.9%

2.8%

0.0% 2.0% 4.0% 6.0%

CAN

NL

PE

NS

NB

QC

ON

MB

SK

AB

BC

62

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

54 63


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.

55 64

New Brunswick’s Shale Gas

Opportunity

56

Exports of Nova Scotia natural gas (as a % of total net production)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Mar

-00

Oct

-00

May

-01

Dec

-01

Jul-

02

Feb

-03

Sep

-03

Ap

r-0

4

No

v-0

4

Jun

-05

Jan

-06

Au

g-0

6

Mar

-07

Oct

-07

May

-08

Dec

-08

Jul-

09

Feb

-10

Sep

-10

Ap

r-1

1

No

v-1

1

Jun

-12

Jan

-13

Au

g-1

3

Source: Statistics Canada CANSIM Table 131-0001. 65


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

57 66


2013-2020

58

Seeking Sustainable Energy Sector Economic Development

67

QUESTIONS?

59 68

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