Betting on Natural Gas Brings Public Concerns

I am a lawyer, not a scientist or an engineer. My task is to ask questions. Today's questions should be dealt with by the two leading contending B.C. parties before the May election but my guess is that they will trust the public to remain basically uninformed thus unable to provoke any political issues.

Revenues to our government largely come from our resources. Fish are in the dumper and forestry, a big player, is subject in large measure to exports, largely to the United States, whose appetite depends on housing starts which in turn depend upon consumers having enough money to build houses. If you believe that the U.S. faces worsening financial problems, you are forced to imagine a less than rosy picture for lumber markets below the line.

Regardless of what I've noted so far, the cash cow for the B.C. government has been, and hopefully will be, natural gas.

Risk one: What if boom goes bust?

But the volatile price commanded for natural gas makes planning problematic, to say the least.

Finance Minister Michael de Jong, at a recent press conference stated, "Government will need to find $241 million in 2012-13, $389 million in 2013-14 and $483 million in 2014-15 to manage the natural gas market impact on royalty revenues. Government is committed to implementing measures to mitigate the impacts of declining natural gas revenues and deliver a balanced budget in 2013-14 as required by law." 

My obvious first questions are, "Can we find these revenues and, considering the questions I'm about to raise, how and where from?" 

The new kid on the block is fracking where one drills vertically through shale then horizontally and using water laced with chemicals, drives the gas up drill holes to be captured and piped.

B.C. has two major shale gas plays, one at Montney, near Fort St John, and another at Horn River in the northeast corner of the province.

As I see it, normally these finds would be great news -- if not for the fact that these reservoirs are being discovered all over the world. Indeed, reserves exist right across Canada and in the United States. 

The gas game has and will be hugely altered -- Bazhenov, in Russia, is a humungous shale oil and gas reserve, and China itself has huge reserves.

To put it mildly, cheaper natural gas found by fracking is driving world prices down to where B.C. can likely expect fewer customers for less of their natural gas. If the price goes too low, it may keep companies from investing further in the costs of production.

Risk two: Fracking's impacts

Now some questions for Premier Clark and NDP Leader Adrian Dix.

Before we get into monetary questions, what are the water requirements to accomplish the fracking process? We know that huge quantities of water are required. Where will it come from? 

Considering the amount of chemicals put into this water, where will it go?

What about the link researchers are finding between fracking and earth tremors?

None of these questions have been answered and common sense tells us that the answers to these questions should be required before any drilling approvals.

Demand answers

Back to the obvious monetary question. With market-skewing matters happening so quickly around the world, will we have any viable reservoirs ourselves when our overseas customers either have their own gas or reservoirs much closer than we are?

How will Finance Minister de Jong deal with proposed gas revenues in his upcoming budget? 

After the fraudulent 2009 election budget which fell $1.2 billion short, how can Minister de Jong assure us that despite falling gas prices he's still going to present a balanced budget?

Is it just barely possible -- I know that this is a naive question -- that the BC Liberal government will evaluate the situation, speak frankly and truthfully to the public, saying that we're in trouble, and then lay out a plan to make the best of it?

We the public are entitled to know the answers to these questions.

Alas, I fear that Christy Clark and Adrian Dix will prefer to see these and other allied questions slither past the May election. 

It will be the task of the media -- all of it -- to hold the government's feet to the fire and extract the truth, in detail, and not try to finesse the matter past voting day.