Nova Scotia Presents at National Energy Board

Nova Scotia told the National Energy Board today, July 26, that New Brunswick has failed to make a case for changes to Canada's natural gas export rules.

"New Brunswick has failed to prove that the open market is not working," said Energy Minister Gordon Balser in Halifax. The Department of Energy testified today before the National Energy Board in Fredericton.

"All the parties at this hearing have identified one major problem -- not access to gas, but, rather, a lack of new long- term supplies from Nova Scotia's offshore," said Mr. Balser. "Finding new gas reserves is a priority and Nova Scotia's position is that public policies should encourage exploration.

About 3,000 Nova Scotians work directly in the offshore industry, and $1.56 billion has been committed for offshore exploration.

The hearings began on July 15 and are expected to conclude during the week beginning Monday, July 29.

NOTE TO EDITORS: The text of Nova Scotia's opening statement at the National Energy Board hearings in Fredericton follows.

Nova Scotia's Role at the Hearing Nova Scotia brings to this hearing a unique perspective. No other intervener has as broad an interest or point of view. The people of our province will be most directly affected by future offshore oil and gas exploration, infrastructure development and by the use of natural gas in our homes, businesses and new industries. As resource owners and users we must balance each of these perspectives.

Issues Before the National Energy Board When Nova Scotia decided to intervene in this hearing, we understood the applicant's concerns were narrowly focused. The applicant alleged a specific market problem. Having made what we took to be a serious allegation, we expected the applicant would bring forward clear evidence that would support its allegation that there was a structural problem in the market or that participants in the market were dealing in bad faith.

We expected clear evidence that the parties trying to help make the case for laterals to Northern New Brunswick have been and continue to be unfairly denied access to the natural gas. In short we expected clear evidence that this evolving market had failed. We did not expect to encounter unsubstantiated allegations of potential, hypothetical, ill-defined market problems. Nevertheless, that now appears to be the New Brunswick case.

Had the applicant provided clear evidence of a market problem or bad faith negotiations to substantiate the case it originally outlined in its application of February 28, 2002, we understood the National Energy Board would then examine the case for revising the short-term export rules to address the specific problem established. We expected a clear description of how these rule changes would address the problem proven in clear evidence.

Nova Scotia Position Nova Scotia has seen no substantive evidence to support New Brunswick's claim of market failure, problem or bad faith. Nova Scotia has been concerned that the application was motivated by a desire to force gas into uneconomic markets to secure the benefits of infrastructure development. New Brunswick does not deny that it has been and still is looking for loads to anchor laterals into northern New Brunswick.

Nova Scotia continues to oppose the application before the board. We see it as an unnecessary impediment to a marketplace that is in fact working and growing as expected. Nothing we have heard over the past nine or ten days has caused us to change that view.

New Brunswick Proposal Based upon evidence introduced and testimony heard, Nova Scotia believes the proposal by the applicant would add more regulation, time and cost to an already heavily regulated industry.

The additional regulation proposed is not minor, but, according to the industry being regulated, introduces considerable delay and uncertainty. Approval of the application would have an adverse impact on opportunities in the market and for future offshore development.

Ironically, Nova Scotia also believes the changes proposed could act as a deterrent to Canadian buyers wanting to make long-term commitments. The existing use of short-term export orders allows Canadian buyers to lock in a supply for Canadian needs and then manage the risk of such a commitment while they work on projects that can use the supply long-term.

The proposal before the board would penalize the Nova Scotia offshore relative to other producing basins. Nova Scotia gas competes with western gas in US markets. Holding up Nova Scotia producers on short-term market opportunities while allowing western and other supply basins unfettered access is not good public policy.

Nova Scotia Proposal Nova Scotia shares New Brunswick's desire for more consumption of natural gas in our region. In support of this goal we have taken a number of steps in our recently released energy strategy to promote such use in Nova Scotia within the context of an open market.

Nova Scotia is committed to regional co-operation. We have emerging opportunities for such co-operation, including the Atlantic Energy Ministers' Forum, and we are members of ones that are showing renewed interest, such as the Conference of New England Governors and Eastern Canadian Premiers.

The parties to this hearing have all identified one major problem: not access to gas, but, rather, a lack of new long-term supplies from the Nova Scotia offshore area. Nova Scotia believes the National Energy Board should help support this important public policy priority by encouraging exploration. We believe keeping markets open helps achieve that. The NEB should specifically avoid introducing significant new regulatory procedures at this critical time of development for the offshore, for problems that are so far non-existent.

In summary, we believe that the record of this hearing does not demonstrate the existence of the problem outlined by New Brunswick. The board has administered its market-based procedure in its present form for more than 10 years. Those market-based procedures have benefited the development of oil and gas resources in the Canadian public interest. Nova Scotia sees no public justification from this proceeding to stray from that policy.

If the board determines through the course of this hearing that another issue may emerge in the future which will require regulatory change, we believe the board should frame that debate around a discussion paper which clearly identifies the issue and the suggested range of solutions.