Natural gas will change everything: Cabot Martin

James
James McLeod
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Offshore resource would be better choice than developing Muskrat Falls, lawyer says

Cabot Martin speaks to members of the Rotary Club of St. John's Thursday. — Photo by Keith Gosse/The Telegram

Natural gas is going to change everything, Cabot Martin says.

Speaking to Rotarians in St. John’s, Martin said the provincial government would be wise to change its plans for Muskrat Falls, and make way for the “natural gas revolution.”

Martin is a prominent Newfoundland lawyer, and is currently involved in the burgeoning natural gas industry as president and CEO of Deer Lake Oil & Gas.

After studying the U.S. natural gas industry extensively, Martin said, he’s convinced energy prices are about to come down drastically as the United States begins to export the cheap, plentiful hydrocarbon.

“The United States is going to be a major exporter of natural gas in the liquified form as LNG, and the prices are going to be very, very competitive. And from the numbers that I’ve done, it’s very competitive with Muskrat Falls — in fact, significantly cheaper,” he said. “One of the impacts of this is that both natural gas and oil prices will trend downward. It is a fundamental law of economics that if you get more supply, your price goes down. And when you get 10 times as much supply, you’d better watch your price.”

But nevermind the U.S. for a moment, Martin said, there’s a homegrown source of natural gas in the offshore, as part of the White Rose oilfield.

“Nalcor has not conducted due diligence in its examination of this option, the White Rose option,” he said. “They can wave their options all they want, but they can’t produce one single study by a competent engineering firm to focus on this option. And White Rose gas happens to be probably the most viable long-term energy resource that we have in this province.”

Using gas

Within hours of Martin giving his speech at Rotary, Paul Barnes, speaking for the Canadian Association of Petroleum Producers, contacted The Telegram to explain why natural gas production at White Rose isn’t going to work.

“Currently the natural gas that is associated with the oilfields that are in production in the offshore at the moment is being used to enhance the oil production and ultimate recovery of oil from the existing discoveries,” Barnes said, “So the gas is being used for that. It’s not being lost. It’s actually being put back into the reservoir for future use. But it’s being used currently to get the oil out.”

Barnes said the oil companies are looking at a way to someday commercially produce inexpensive natural gas offshore. However, he said that with U.S. supply driving the price down, it’s even harder to make the case for producing it offshore.

Option excluded

Martin said the Public Utilities Board (PUB) should be charged with doing a full examination of whether natural gas is a cheaper means than Muskrat Falls of bringing power to Newfoundland.

Currently, he said, the terms of the PUB review specifically exclude any discussion of natural gas.

“I will be presenting to the board next week, and I will not be able to use the phrase natural gas,” Martin said. “If I say natural gas, Andy Wells is going to hit me over the head with his gavel.”

jmcleod@thetelegram.com

Twitter: TelegramJames

Organizations: Public Utilities Board, Canadian Association of Petroleum Producers

Geographic location: United States, White Rose, Newfoundland

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Recent comments

  • Gerald Saunders
    December 05, 2012 - 09:14

    Heard Cabot Martin on the Open Line this morning. I agree with him 100 %. Also I sincerely believe this project should go back to the PUB AND there should be a referendum. Let the people decide...WHY THE BIG RUSH ???

  • David
    February 20, 2012 - 11:57

    Lawyers aren't even any good for what they do know, let alone what they don't. His technical opinion on oil and gas is worth exactly what he's paid to give it.

  • John Smith
    February 19, 2012 - 09:52

    You see any change to the upper churchill contract is 30 years away. We can't wait 30 years, we will run into problems in five years. Nalcor is mandated by law to look ahead and make sure we have enough power in the future. They did, and have identified Muskrat falls as the lowest cost option. When the current contract with the UC runs out, the best thing to do would be to renegotiate a deal with QH. That would generate the most income for the province. In the meantime we need to build muskrat, so that we can stabalize rates, which have increased 60% since 1998. On average a person who heats with electricity will see a 15 dollar a month increase, then stable for the next 50 years or so. You should do some reading on the subject. Lots of info out there, for those who want to take the time to read it.

  • What about the Upper Churchill contract
    February 18, 2012 - 09:12

    What about the Upper Churchill contract that expires in 25 yrs? Wouldn't it be less costly for the residents of NfLd to plan on using that rather than building another more costly Lower Churchill at this point in time? Shouldn't the oil money be used to benefit NfLd residents instead of being spent on a business venture for shareholders that our residents will have to pay higher bills to forevermore?

  • Oil&GasGirlAbroad
    February 17, 2012 - 20:16

    Natural gas is a non-renewable resource. Hydroelectricity is a renewable resource. Where would you choose to put your money - in a project that will provide energy for decades if not centuries - or a project that has a 20-25 year lifespan? A no brainer!

  • John Smith
    February 17, 2012 - 18:55

    I checked out the web site for Mr. Martin's gas, company. Interesting read. Not hard to see why he's pushing gas...LOL All it would take is for the USA to put a ban on fracking, and that would be it. All the beutiful pictures of the Deer Lake valley. I wonder what those folks would think if they turned on their taps and gas came out with the water. What a foolish endeavor for a grown man.

  • Anon
    February 17, 2012 - 15:55

    Natural Gas? No fracking way. I'd sooner smoke a carton of cigarettes an hour than live in an environment contaminated with fracking fluid.

  • Maurice E. Adams
    February 17, 2012 - 14:48

    STAMP: Do you have a reference for those Court rulings? +++++ Also, OIL WORKER, please note that Cabot Martin was on radio today advising that gas is not used at White Rose for oil production, only at the other fields ---- and White Rose has, as I understand it, enough gas to last for many, many, many, decades.

  • Oil WOrker
    February 17, 2012 - 14:27

    Do these people do their homework before they speak??? Obviously not!! The three producing fields offshore newfoundland use the produced gas to maintain pressure in the reservoirs!! Sure lets go bring all this gas to shore and then kill production of oil!!! Genius idea!

  • Maurice E. Adams
    February 17, 2012 - 13:05

    Nalcor has already raised objections at the hearing and then the consumer advocate and the PUB both agreed that the issues were outside the terms of reference. Not a good indicator, especially when it comes to what can/will go into the PUB's written report.

  • STAMP
    February 17, 2012 - 11:42

    If Wells restricts Martin, or Martin restricts himself, from using the phrase 'natural gas' it will because one or both have adopted an unnecessarily narrow interpretation of the PUB's Terms of Reference. The island option includes continued reliance on the Holyrood generating station. It would be a regrettable oversight if opportunities to reduce the cost-per-kilowatt-hour of that component of the island option were not given serious consideration as part of the fair comparison exercise. Like him or not, one thing you can say about Wells is that he has never shown any timidity when it comes to colouring outside the lines. This would be a terrible time to start. Wells is intelligent enough to understand that, while there would be few if any repercussions from a decision to admit evidence or public input on the gasification of Holyrood, failure to do so would invite history to record this public review as little more than a farce. He will not want to be remembered as the guy who, wittingly or otherwise, allowed that farce to unfold. Barnes' comments on the other hand are an ostensible, if gratuitous, defence of member oil companies that would prefer not to be held accountable for the intrinsic value of the natural gas associated with their respective developments. Studies by MUN's Stephen Bruneau several years back concluded that natural gas could be delivered to the Holyrood plant at a price equivalent to five cents per kilowatt hour. This pricing would not only make natural gas an economical feedstock for converted thermal generation, but it would reduce Holyrood emissions by 500,000 tonnes per year. Any failure by the PUB to give serious consideration to a variable this significant would be grossly irresponsible. Martin and Wells are no doubt well aware of the Newfoundland court ruling several years ago that gave short shrift to any notion that review panels such as the PUB need feel unduly constrained by terms of reference in deciding what evidence they felt was relevant to the matter at hand.