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.”
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.
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.”