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Environmental Benefits of Natural Gas

Natural gas is the cleanest fossil fuel available. Burning natural gas results in lower levels of sulfur dioxide (SO2), carbon dioxide (CO2), nitrous oxides (NOx) and particulate matter than either oil or coal, which, when used in the production of electricity and for industrial purposes, reduce air quality. This is particularly relevant in East Saint John, where oil is used at the Irving refinery and by NB Power and where topography and climate also contribute to raising ground-level concentrations of SO2.

Heavy oil emits three times the SO2 that natural gas does, while CO2 emissions are 1.5 times and NOX emissions are 5 to 15 times higher from heavy oil than from natural gas. Any conversions from oil to natural gas, either directly or to produce electricity, would be, therefore, a positive step in reducing harmful air emissions.

Westcoast Energy is preparing to develop NB Power's Courtenay Bay No. 3 generating unit as a gas-fired system. Although the rated capacity of the plant will not change with re-powering of the unit, its operations will. Westcoast is planning to sell the plant's capacity to NB Power for the five winter months and to increase existing operations at Courtenay Bay to accommodate exporting power into the Northeastern United States for the remaining seven months. The Courtenay Bay No. 3 project will displace No. 6 fuel oil with 45,000 MMBtu/day of natural gas. Air emissions are projected to decrease by 10,000 tonnes of SO2, 200,000 tonnes of CO2, and 1,500 tonnes of NOX during the five months of winter operation. Steam sales to Irving Paper will reduce emissions further, which should help to improve air quality in Saint John throughout the year. These reductions in air emissions will assist the province in its goal of reducing overall emissions of greenhouse gases.

Required Changes to Legislation

The following Acts of the Province of New Brunswick affect some aspects of the natural gas industry in New Brunswick:

     

  • •Assessment Act, R.S.N.B. 1973, c. A-14

  • •Gas Distribution Act, S.N.B. 1981, c. G-2.1

  • •Gas Public Utilities Act, S.N.B. 1982, c. G-2.2

  • •Municipalities Act, R.S.N.B. 1973, c. M-22

  • •Pipe Line Act, S.N.B. 1976, c. P-8.1

  • •Public Utilities Act, R.S.N.B. 1973, c. P-27

The province has legal and legislative jurisdiction over the distribution of gas in New Brunswick. This jurisdiction extends over every aspect of gas distribution from the "city gate" connection with the federally regulated main line or lateral right up to the meter on the consumers' premises. The jurisdiction includes regulation of safety, technical construction standards, franchise agreements, and fees and charges made by an LDC.

While the committee does not wish to comment in detail on the present coverage and possible amendments that may be required under each of the Acts, the areas that need to be addressed include: providing for different types of franchises and fees, for unbundling, for flexibility in ratemaking, and PUB cost recovery.

The City of Moncton raised a question about the validity of the natural gas distribution rights of Moncton Utility Gas, a utility that stopped serving customers in 1991. The committee recommends legislation be introduced that would terminate these rights without compensation.

The committee is also concerned that existing statutes may need to be amended to protect the interests of municipalities. Amendments should provide for clearly enhanced rights for municipalities relative to the use of local streets and other municipal real property, the ability to charge property taxes for distribution property, and the ability to recover all direct and indirect costs relating to the natural gas infrastructure, minus any property tax revenue. If municipalities have the capabilities to provide services to the LDC, such as meter reading services, the municipalities should be able to offer the services for a fee.

The committee recommends a comprehensive review of these pieces of legislation. Such a review should be conducted once the government has agreed on the policies it will adopt for the establishment and operation of the natural gas industry in New Brunswick.

Centre for Excellence

The committee heard testimony on the need to be fully informed of the new applications, technology adaptations, development, and commercialization of natural gas. This testimony also focused on the need for a natural gas technology centre to train fire fighters and provide safety and certification to accommodate this new industry. A Centre for Excellence for gas could also assist in achieving maximum penetration of, and benefits from, this new fuel in New Brunswick.

We understand that Canadian and U.S. trade organizations, including the Canadian Gas Association, the Gas Research Institute, and the American Gas Association, are addressing key issues in the industry. But we also recognize the need to ensure these areas of research and development meet the needs of New Brunswickers and Maritimers. We are also well aware that the opportunities and challenges posed by the industry in New Brunswick, Maine, and Nova Scotia are very similar, and that a Centre for Excellence could serve all three jurisdictions.

Accordingly, the committee recommends a Centre for Excellence be established to draw upon the resources of the natural gas industry and key stakeholders to address this new form of energy in the province. The committee sees New Brunswick playing the lead role in establishing a centre in the province by working with key parties to plan and fund research and development that would have particular application to New Brunswick and adjacent jurisdictions. The committee calls for setting up an action committee to outline the research and identify sources of funds. Among the potential sources of funds are the Canadian Gas Association, the Sable Island Producers, the Government of Canada, M&NE, franchised distribution companies in New Brunswick, the American Gas Association, and the Gas Research Institute.

The committee further recommends that the action committee report back to the government with a detailed plan by February 1, 1999. Finally, the committee suggests the topic of a Centre for Excellence be addressed in the Stage II Request for Proposals evaluation.




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