Updated: Wed, 31 Jul 2013 13:02:41 GMT | By Michael Tutton, The Canadian Press, thecanadianpress.com

Look south for natural gas: Nova Scotia study



HALIFAX - Natural gas consumers in Nova Scotia will likely have to look to increased exports from Pennsylvania over the next decade as supplies decline offshore, a study prepared for the provincial government says.

The $85,000 study was commissioned by the NDP government after natural gas prices tripled in December — creating soaring costs for large users like hospitals and universities — due to shortages of local supply.

The study by ICF Consulting Canada released Thursday says it's expected supplies from EnCana's (TSX:ECA) Deep Panuke offshore project will come on stream this year, making prices less volatile this winter.

However, it predicts in most scenarios that the province's gas needs will exceed local production regularly within the next 10 years as Deep Panuke production declines.

The authors say suppliers of natural gas in the province should consider contracting for lower priced gas from the Marcellus basin of shale gas in the northeastern United States.

The study says the gas could be imported by reversing the flow of the Maritimes and Northeast Pipeline, the pipeline currently used to export Sable Island Offshore Project gas to New England.

"This would ensure a reliable source of gas as well as avoid the price volatility in New England," says the report.

The report says the pipeline owned by Spectra Energy has studied the possibility of reversing natural gas flow. A spokesman from the Maritimes and Northeast Pipeline was unavailable for comment.

The study also said it may be possible to import gas at less expensive times of year such as summer and store it in 700-metre deep salt basins near the pipeline in Nova Scotia, though such storage facilities haven't been built.

Energy Minister Charlie Parker said it is up to the energy industry to come up with projects that might increase the natural gas supply to Nova Scotia.

"Our role is to work co-operatively with major consumers of the product," said Parker. "Our role is to facilitate."

The study was due at the end of March. But Parker said revisions were made to the report after discussions between his officials and the consultant about the amount of natural gas that would be used in the Maritimes.

Jamie Baillie, the leader of the Progressive Conservative party, said the government should aggressively promote methods of obtaining natural gas from Pennsylvania while also increasing use of domestically produced natural gas.

"The time for studying this is over," he said. "The time for getting on with it is now."

Baillie said Nova Scotia's government should pass legislation requiring Nova Scotia Power to use natural gas from Sable Island to generate electricity in the province.

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