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2014-01-27_Agenda Packet--Dossier de l'ordre du jourV AL City of Saint John Common Council Special Meeting AGENDA Monday, January 27, 2014 5:00 p.m. Council Chamber Please use Chipman Hill entrance S'il vous plait utiliser 1'entree Chipman Hill 1. Call to Order 2. The Scope of Impact of the Energy Sector on New Brunswick and more specificall Saint John 2.1 Energy and Economic Development: Summary 2.2 The Energy Sector in New Brunswick: Presentation The City of Saint John Seance du conseil communal Le lundi 27 j anvier 2014 Salle du conseil, 17 h Comite plenier 1. Ouverture de la seance 2. Impact du secteur de Pe'nergie sur le Nouveau - Brunswick et plus precisemej Saint John 2.1 Energie et developpement economique : Resume 2.2 Le secteur de Pe'nergie au Nouveau - Brunswick : Presentation 18. Levee de la seance U N I V E R S I T Y OF N E W B R U N S W I C K S A I © Copyright University of New Brunswick 2014 -All rV reserved. These materials may not be published, broad rewritten or redistributed in whole or part with out the e; written permission. Contact I s : • Energy and Economic Development: Summary The presentation to Council on January 27, 2014 will cover two main topics: 1. An overview of the energy sector in New Brunswick 2. Energy and economic development — how the energy sector impacts the economy and hog foster further economic growth 1. The energy sector in New Brunswick The energy sector in New Brunswick includes a wide variety of activities including oil and gas ex generation, energy distribution, petroleum refining and other services (Statistics Canada definition). In 2012, the energy sector Energy Sector GDP Per C generated $2.32 billion worth of real gross domestic product (GDP) Chained (2007) d, in New Brunswick or about seven percent of provincial GDP. It has dropped moderately in recent years due to lower natural gas extraction. Compared to other provinces, New Brunswick's energy sector is larger than Quebec, Nova Scotia, Ontario and Prince Edward Island relatively smaller than Manitoba, British Columbia, Saskatchewan, Newfoundland and Labrador and Alberta. Mainly as a result of oil and gas extraction, Saskatchewan and Alberta have very large energy sectors. It's important to understand the difference between energy o Ln ° �D tD O1 'output' and energy GDP — or the value added activity in the Q1 provincial economy. The oil refinery in Saint John generated over ON NS QC NB MB BC $10 billion worth of international exports in 2012 but it required $9 billion worth of imported oil (rough numbers). The difference is the Source: Statistics Canada CANSIP real GDP creation in New Brunswick. The industry directly employs approximately 7,600 people across the province with a heavy concentr� Energy - related utilities employ approximately 3,700 people; the oil refining sector employs 1,500; oil exploration employs 800 persons; energy - related construction employs 600 persons (in a typical year firms — pipelines, LNG, etc. employ an estimated 1,000 persons. Refined petroleum products account for the bulk of energy exports. In 2012, there were $10 international exports from this sector. Oil and gas extraction amounted to $202 million and electric p Key segments of the industry: NB Power is New Brunswick's primary electricity utility. Electricity is generated at 13 facilities and c lines, substations and terminals to more than 390,000 direct and indirect New Brunswick homy facilities. NB Power's generation division operates 12 hydro, coal, oil and diesel - powered generatii installed net capacity of 2,853 MW. It's generation division supplies approximately 75 per cent of also exports energy to neighbouring New England, Quebec, Prince Edward Island and Nova Scotia ma Enbridge Gas New Brunswick is the main provider of natural gas to residential, commercial and indt has over 781km of pipeline servicing 10 communities in southern New Brunswick. The firm serves customers in Saint John, Fredericton, Dieppe, Dorchester, Moncton, Oromocto, St. George, St. S Sackville and Dorchester. NOTE: Natural gas single use franchises granted by the provincial government to the largest natural for 70% -80% of all natural gas used in New Brunswick. Key industry players: • NB Power • Enbridge Gas NB • Maritimes & Northeast Pipeline • Brunswick Pipeline • Irving Oil • Emera Inc. 1 Natural gas exports through New Brunswick but from Nova Scotia are counted as Nova Scotia expor The Maritimes & Northeast Pipeline (M &NP) is a 1,101 - kilometre mainline transmission pipeline natural gas from developments offshore Nova Scotia to markets in Atlantic Canada and the northeas A joint venture of Spectra Energy (77.53°/x), Emera Inc. (12.92 %), and ExxonMobil (9.55%), M &NP i. Halifax. The Brunswick Pipeline is 145 - kilometer, 30 -inch diameter pipeline transmission system tha natural gas from the CanaportTM (LNG) terminal in Saint John to markets in Canada and the US north Irving Oil, a privately -held regional energy processing, transporting, and marketing company heac John, is also a key industry player. The company has over 900 fueling locations, ten distributio delivery fleet of tractor - trailers serving wholesale, commercial, and retail customers in Atlantic Ca New England. It's Saint John refinery is the largest in Canada, stretching over 780 acres. The firm i! Canaport LNG and is expanding into the provision of compressed natural gas (CNG) to large industry near the natural gas pipeline infrastructure. Emera Inc. owns the Brunswick Pipeline; owns and operates Bayside Power - a 260 MW gas -fired con plant located in Saint John; is part owner of the Maritimes & Northeast Pipeline; and is an investor it Atlantic Hydrogen Inc. The natural gas exploration and production sector has been active in New Brunswick for over a deca firms with active oil and gas exploration agreements in the province with Corridor Resource Corporation of Saskatchewan having the only active wells. SWN Resources Canada, Inc. is in a to phase. Emerging energy production sectors: • Oil and Gas Extraction - There is an estimated 70 TCF of gas in the McCully and Stoney Creek f • The government estimates a "major find" of natural gas could net the province more than $2 in annual royalties. This would be on top of the tens of millions of dollars' worth of potential t • Biomass energy — much of this biomass is being used already by the forest products sector. • Wind energy — already 400 MW of installed capacity in place across the province. • Biofuels from sugar beets. The Atlantic Council for Bioenergy Co- operative is advocating fc and operation of 13 plants in Atlantic Canada which would create 9,000 jobs, $1.5 billion in $273 million in tax revenues. Other important energy players include: ExxonMobil which has over 1,000 employees in New Brunsw across the western hemisphere; Siemens which operates a major smart grid R &D facility in H province's engineering firms — particularly in Saint John — that have developed energy - related experti There are also IT firms with energy products such as Saint John -based ShiftEnergy. Finally, the P Energy is an important energy sector advocacy organization. 2. Energy and Economic Development The energy sector is foundational to the modern economy. Access to diverse forms of energy at c critical to the success of the provincial economy. In the past 10 -15 years, there has been over $5 b investments in the energy sector including: • A major upgrade to the Irving Oil refinery • The new Canaport liquefied natural gas (LNG) receiving and regasification terminal • The Emera Brunswick Pipeline that delivers the LNG to markets in Canada and the US northea • A new international power line from New Brunswick into Maine • The build out of the McCully natural gas field near Sussex • The refurbishment of the Point Lepreau nuclear energy facility • New wind energy investments across the province • The continued rollout of the Enbridge Gas NB natural gas distribution system As shown in the chart, electric power engineering construction GDP in New Brunswick has been t Canada in recent years (adjusted for the size of the population) as a result of the Lepreau refurbish investments, etc. Energy is high value economic activity Because of the substantial capital investment and the technical nature of the energy sector, it is high value economic activity. As an example, energy related careers such as petroleum engineers, power engineers, oil and gas well drillers, electrical power line workers and power system electricians earn a substantial premium over the average worker in the labour market. For example, an of and gas well driller across Canada will earn 50 percent more than the average full time worker. The industry also generates substantial revenue for governments. In 2010, energy royalties contributed $2,480 per capita to the Newfoundland and Labrador government budget and $1,573 to the Alberta government budget. The same year, energy - related royalties generated $6 per capita in New Brunswick. This doesn't include the taxes paid by the energy sector. Electric Power Engineering Constructia Annual average expenditure 2007 -201, Chained (2007) dollars N O N L Ln A W lD NS NL ON PE MB BC SK In general, all 'have' provinces in Canada generate a Source: Statistics Canada CANSIM Table 371 substantial portion of provincial government revenues from oil and gas and other energy resource royalties. All of the have -not provinces (defined as those equalization from the federal government), have very little energy resource royalties. In 2011, 23 PE Brunswick government's revenue came from the federal equalization program. That same year, ener royalties accounted for 21 percent of the Saskatchewan government's annual revenues. The Saint John Energy Cluster • Electricity production: nuclear, oil and natural gas -based generation • Petroleum products refining • Liquefied natural gas (LNG) • Gas pipeline infrastructure • Skilled workforce with expertise in construction and operations • Specialized engineering capacity; industry consulting services; and other business services • Energy - related education • Atlantica Centre for Energy • NB Department of Energy Energy as a driver of economic development: Why does it matter? New Brunswick needs high value economic activity to generate employment and tax revenu government is running substantial deficits and is burdened by a large public debt. In addition, thi heavily reliant on fiscal equalization. The provincial economy has not created any net new jobs since there has been an uptick in outward migration — particularly among younger New Brunswickers. An example of the link between economic activity and the investment in public services is shown beli of $100 million worth of tax and royalty revenue will cover the salaries of more than 1,400 nurs teachers. This level of revenue pays for almost the entire budget of the Department of Natural Resou $100 million of tax /royalty revenue pays for: • The salaries of more than 1,400 nurses • The salaries of more than 1,500 school teachers • The salaries of 650 doctors • The salaries of 1,700 social workers • Almost the entire Department of Natural Resources budget • Two thirds of the entire Department of Public Safety budget • One third of the entire Post - Secondary Education, Training and Labour department budget • Over half of the total amount paid out to NB families each year through social assistance New Brunswick's economy is heavily reliant on energy The New Brunswick economy is particularly reliant on diverse supplies of competitive energy. Mar key industries — including forest products, petroleum products manufacturing, potash mining, truck food manufacturing are significant users of energy. Any significant increase in energy costs undermines the competitiveness of these industries. Acc done by KPMG, electricity costs for energy- intensive manufacturers in New Brunswick are above av other jurisdictions across North America. In addition, natural gas costs for manufacturers are th America. New Brunswick households are also sensitive to energy cost inflation. The average New Brunswick over $2,700 /year on energy and water costs for their principal accommodation or 4.5 percent of th expenditure s- the third highest among the 10 provinces across Canada. Energy and economic development: 2013 -2020 Energy infrastructure investment was a major driver of the provincial economy over the past 15 ye this investment is one of the reasons the economy has witnessed the worst GDP growth in Canada sir The energy sector could see more investment and job creation in the coming years. There are initiatives in the 'pipeline' that could spur growth including: • Shale gas and oil development. There is still no guarantee there is a commercially viab Brunswick (beyond Corridor Resources) and considerable public resistance could curtail invE the government and key industry leaders remain bullish on the prospects of the inc commercial exploration is likely several years away. • The proposed Energy East Pipeline. This large scale project still requires regulatory aK guaranteed. The plan calls for development to start in 2015. • The proposed Canaport Energy East Marine Terminal. This $400 million project is reliant Pipeline. Assuming the go ahead for that project, the plans calls for development to start in 2 • An LNG export terminal. This is currently a fairly speculative project as supply bottlenel projects constrain development potential. • Electricity infrastructure upgrades. It is possible that Colson Cove may be converted t refurbishment of Mactaquac could start in the latter part of the decade if NB Power decides t • Cluster development efforts (i.e. Saint John energy start -up incubator, smart grid, etc.) • Renewable energy. The investment picture is murky. Energy and community acceptance Now more than ever, energy projects with environmental impacts need a social license for develop heightened concern for the potential side effects and risks associated with projects such as natural € production; oil pipelines and even electricity infrastructure. Wind energy production infrastruct significant community backlash in Nova Scotia and those concerns have rippled into New Brunswick. It is important to separate NIMBYism (Not- In -My- Backyard) from broader environmental concerns. Both are important but require separate responses. In New Brunswick it is also important to understand and address the concerns of aboriginal groups. The protests associated with SWN Resources' exploration in Kent County were the subject of international media attention. The potential shale gas development industry has also re- engaged the rural /urban divide debate across the province. One thing is for sure. If we are to develop the shale gas sector or any other new energy sector we will need highly reputable, good corporate citizens. The example of Repsol and its integration into the Saint John community is one such example. Seeking Sustainable Energy Se, Economic Development Social Impacts Bearable Equitablc Environmental Impacts Sustainable Ecc Viable I rr © Copyright University of New Brunswick 2014 - All rights reser% These materials may not be published, broadcast, rewritten or redistributed in whole or part with out the express written permit Contact mcooKD- nb.ca UN I V E R S I T Y OF N E W B R U N S W I C K S A I N The Energy Sector'in N Brunswick Prepared by: David Campbell Jupia Consultants Inc. UN I V E R S I T Y OF N E W B R U N S W I C K S A I N O Copyright University of New Brunswick 2014 -All rigl reserved. These materials may not be published, broac rewritten or redistributed in whole or part with out the e: written permission. Contact Q =@, L. U N I V E R S I T Y () F N E W B R U N-S W I C K 5 A I N Overview of this presenta- This topic focuses on the size and s of the energy sector in New Brunsw including: — Size, scope and economic impact of the enei sector: GDP, employment, supply chain, etc. — Main industry players — Other considerations U N I V E R S I T Y () F N E W E R U N S W I t: K S A I N Energy Sector: Definec • Statistics Canada defines the energy sector using the following North American Industry Classification Syst (NAILS) codes: • NAILS - 211 Oil and Gas Extraction • NAILS - 2121 Coal Mining • NAILS - 212291 Uranium Ore Mining • NAILS - 213111 Oil and Gas Contract Drilling • NAILS - 213118 Services to Oil and Gas Extracti( • NAILS 2211 Electric Power Generation, Transmit and Distribution • NAILS - 2212 Natural Gas Distribution U N I V E R S I T Y () F N F W B R U N S W I C K S A I N Energy GDP Contributic Energy Sector GDP Per Capita (2012) Chained (2007) dollars $251000 $20,000 $15,000 $10,000 $5,000 $906 $1,454 $1,706 $2,319 $2,449 $2,736 $12,174$12,41 U N I V E R S I T Y () F N F W B R U N S W I C K S A I N Energy Sector: Adding Va Oil and Gas Imports /Petroleum Refinery Exports ($BI $12.0 $10.0 $6.0 $4.0 $2.0 Oil and Gas Extraction Imports Petroleum Refinery Exports U N I V E R� I T Y () F N E W B R U N_S W I C K 5 A I N Energy Sector: Employm( • Energy utilities and generation: 3,700 jobs • Oil refining: 1,500 jobs • Oil and gas exploration: 800 jobs • Energy - related construction: 600 jobs • Other energy players: 1,000+ job • With well above average employment multipliers. U N I V E R S I T Y () F N E W E R U N 5 W I (: K S A I N Energy Sector Productivity (2 Labour productivity (chained (2007) dollars per Energy Bus Sector Utilities Se CAN $ 225 $ 172 $ Newfoundland &Labrador $ 525 $ 135 $ Prince Edward Island n/a $ 67 $ Nova Scotia $ 273 $ 190 $ New Brunswick $ 160 $ 112 $ Quebec $ 319 $ 344 $ Ontario $ 120 $ 107 $ Manitoba $ 173 $ 87 $ Saskatchewan $ 284 $ 213 $ Alberta � ��$ { 233 $ 150 $ British Columbia $ 181 $ 176 $ U N I V E R S I T Y () F N E W 6 R U N 5 W I (: K S A I N Energy Sector Firms (20' Ur lk Industry (NAICS) Conventional oil and gas extraction [211113] Oil and gas contract drilling [213111] Services to oil and gas extraction [213118] Hydro - electric power generation [221111] Fossil -fuel electric power generation [221112] Nuclear electric power generation [221113] Other electric power generation [221119] Electric bulk power transmission and control [221121] Electric power distribution [221122] Natural gas distribution [221210] Oil and gas pipeline and related structures construction [237120] Petroleum refineries [324110] Dnfrnloi im nnrl notrnloi im nrnrli irtc r- nnrrhnnt %eihnlocnInrc r 1 11 101 # of Firms 7 5 9 10 9 3 7 3 11 2 9 1 E�r, U N I V E R� I T Y () F N E W B R U N S W I C K S A I N Energy Exports $ Millions $12,000 $10,000 $8,000 $6,000 $4,000 $2,000 11: $8,523 $108 $32 Electric Oil and Gas Petroleum Power Extraction Refineries (Internatio $12,000 $10,000 $8,000 $6,000 $4,000 $2,000 2012 $51 $202 Electric Oil and Ga! Power Extraction U N I V E R S I T Y () F N E W 6 R U N 5 W I (: K S A I N Energy Production by Type (% of CI 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% Total) Primary electricity, hydro and nuclear 8.5% 7.9% 7.3% 1.7% 1.4% I A 7.9% 8.1% Secondary electricity, the 6.8% 7.1% 6.2% 6.4% 2.0% 1.7% 1.8% 1.8% o 1.0% 0.7% 0•' U N I V E R� I T Y () F N E W B R U N S W I C K S A I N Energy Production by Type (% of CI 0.16% 0.14% 0.12% 0.10% 0.08% 0.08% 0.06% 0.04% 0.02% 0.00% Total) Natural Gas 0.15% 0.14% 0.11% U N I V E R� I T Y () F N E W B R U N S W I C K S A I N Energy Demand by Type (% of CDN 1 Total primary and secondary energy Total coal Natural gas Gas plant natural gas liquids (NGL's) Primary electricity, hydro and nuclear Steam Coke Total refined petroleum products Motor gasoline Kerosene and stove oil Diesel fuel oil Light fuel oil 2001 2.6% 11 OMI& 0.4% 10.8% 2.9 0.8 1.1% 3.6% 2.7% 2.0% 4.0% 5.6% M Heavy fuel oil 8.5% 1; Petroleum coke 0.0% U N I V E R S I T Y () F N E W B R U N S W I C K S A I N Energy Inflation (CPI) (2002 = 10C Electricity Canada New Brunswick 140 130 120 110 100 .c .c 0 r-q r-q N N m d- d- Ln Ln l0 l0 I� W W m m 0 r-q r-1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0r-1 rH r-i U N I V E R S I T Y () F N E W B R U N S W I C K S A I N Energy Inflation (CPI) (2002 = 10( Fuel oil and other fuels 270 250 230 210 190 170 150 130 110 90 Canada New Brunswick O rl rl N N M �T d' Ln Ln l0 QO I� W W m m O rl rl r r) r"I r 1l r-*1 r-) r"I r", r-i r-% r"I r") r"I r i r-1 r t r-) r-li � � U N I V E R� I T Y () F N E W B R U N S W I C K S A I N Energy Inflation (CPI) (2002 = 10C Gasoline 210 190 170 150 130 110 .N Canada New Brunswick O rl r-I N N M d' lzl- Ln Ln l0 k.0 I� 00 00 m m O r-1 r-I 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 U N I V E R S I T Y () F N E W B R U N S W I C K S A I N Energy Inflation (CPI) (2002 = 10C All Energy 180 170 160 150 140 130 120 110 100 90 80 Canada New Brunswick 0 cv cv m d- � Ln Ln Q0 Qo � W W M m 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 , , , , , , , , , , , , , , , , U N I V E R S I T Y () F N E W E R U N 5 W I (: K S A I N Key Industry Player: NB Pc • NB Power: New Brunswick's primary electricity • Electricity is generated at 13 facilities and deli, power lines, substations and terminals to morE 390,000 direct and indirect New Brunswick ho businesses and facilities. • NB Power's generation division operates: — 12 hydro, coal, oil and diesel- powered generatin( with an installed net capacity of 2,853 MW. — Generation supplies approximately 75 per cent o province load through sales to Distribution. U N I V E R S I T Y () F N E W E R U N 5 W I (: K S A I N Key Industry Player: NB Pc • The firm's nuclear division operates and maintains a 6 - 660 MW reactor at the Point Lepreau Generating • The Station provides approximately 25 per cent of N Brunswick's electrical energy requirements. • It also sells five per cent of its energy production to P Electric Company, Limited. • The Transmission &System Operator division maint operates 49 terminals and switchyards that are interconnected by over 6,849 km of transmission lin( in voltage from 69 kV to 345 kV. • The system is interconnected with electrical system; America, including Quebec, Maine, Nova Scotia and Edward Island. U N I V E R S I T Y () F N E W E R U N 5 W I (: K S A I N Key Industry Player: NB Pc Statement of In- province Generation (millions of k`yh) 21 Hydro .. ............. ......Woof . Woof ........................ woe ....................►........ ►. off .....►.......I..... ►.....1 r • Nuclear s :Coal and petroleum coke • .' .......►.... VIP .......► ........................... .....►............ ...........1 Heavy fuel oil Purchases' Net generation and nurchases Losses - transformer and transmission Total energy available for distribution U N I V E R'4) 1 T Y () F N E W B R U N 5 W I C K S A I N Key NB P( Revenue Overview ......................... ............................... ................................. ............................... Revenue overview (in millions) 2011/12 2010/11 Sales of power ..................................................................... ............................... In- province $1,266: $1,246 i .......................................................................... ........................:...... .: Out -of- province 225: 250 i Transmission 90 ' 91 .. ............ .........................................................................:....... ..............:................ Miscellaneous 65 51 Total revenues $1,646 i $1,638 ..................... Per cent increase (decrease) year - over -year 0% c 3% In- province Sales of Power ....................................................................................... ............................... In- province sales of power (in millions) 2011/12 2010/11 Residential $569. $551 ...................................................................................................................:............ ......... ......................: Industrial 306:: 311 ...... ........ ........ ... .............. General service 271 264 ......................................................................................................:..................... :...... ..............: Wholesale 96 97 ... .. ................................................... .......I......:................ . Street lights and energy imbalance 24 23 Total $1,266 $1,246 U N I V E R S I T Y () F N E W B R U N S W I C K S A I N Key Industry Player: Enbridge C Enbridge Gas New Brunswick has over 781 km of pipeline ser 10 communities in southern New Brunswick. 5ner"c- V ►dstock 0 ) ilw Mactaquac Provincial Park Fr ton 1 1� .• Quispamsis Grand Rothesay Bay - Westfield Saint \ p int John Ste hen ' D a Beau E. Rive view Memrar Saii Sussex The Rocks o Provincial Park Cape Chignecto Provincial Park Kentville ills■ O - U N I V E R� I T Y () F N E W B R U N-S W I C K 5 A I N Key Industry Player: Enbridge C • Enbridge Gas New Brunswick (now 100% ol Enbridge Inc.) has a 20 year renewable agrE with the provincial government • IT is a regulated utility that distributes nature residential, commercial, institutional, and inc customers in New Brunswick. • The firm covers: Saint John, Fredericton, Dig Dorchester, Moncton, Oromocto, St. George Stephen, Riverview, Sackville and Dorchesti U N I V E R S I T Y () F N E W E R U N S W I (: K S A I N Key Industry Player: Maritime Maritimes & Northeast Pipeline Northeast Pipeline FREDERICTON Q MONCTON SAINT JOHN BANGOR O AUGUSTA O CONCORD O ORACUT 7-40fi�BEVEALY BOSTON HALIFAX POINT TUPPER GOLDSORO M &NP is a 1,101- kilometre ma transmission pipeline built to transport natural gas from developments offshore Nova S to markets in Atlantic Canada the northeastern United States joint venture of Spectra Energy (77.53 %). Emera Inc. (12.92 %' U N I V E R S I T Y () F N E W B R U N 5 W I C K S A I N Key Industry Player: Brunswick • The Brunswick Pipeline is 145 - kilometer, 30 -inch diameter pipe transmission system that currently delivers natural gas from th CanaportTM (LNG) terminal in Saint John to markets in Canadc, the US northeast. • Except for seven above - ground facilities, the pipeline is buried entire length and extends through southwest New Brunswick ti interconnection with the Maritimes & Northeast Pipeline transn system at the Canada -US border near St. Stephen, NB. Ouobet Brunswick pipeline W Maritimes & Noetheast Pipeli • 145 km n bN*h Owbec • 30• ich dwrow (76 ? crnj Existing Compressor Station Now CM Brunswick New Compressor Station Prime Edward M Brunswick Pipeline F O Mairw AAawio VT 8 0 } Goldbo•o U N I V E R T Y () F N E W B R l) N_S W I C K S A I N Key Industry Player: Irving • Irving Oil is a privately -held regional energy processing, transporting, and marketing company headquartered in John • It has U.S. marketing operations in Portsmouth, New Hampshire. • The company has over 900 fueling locations, ten distribu terminals, and a delivery fleet of tractor - trailers serving wholesale, commercial, and retail customers in Atlantic Canada, Quebec, and New England. • The Saint John refinery is the largest in Canada, stretchii over 780 acres. • It is a partial owner of Canaport LNG and expanding into provision of compressed natural gas (CNG) to large indu nliAntc not InrratAr1 nAar thin nati iral nnQ ninAlinA infrnQtri it U N I V E R� 1 T Y () F N E W B R U N_S W I C K 5 A I N Key Industry Player: Ernera • Owns the Brunswick Pipeline. • Owns and operates Bayside Power - a 260 MW gas -fired combined cycle power plant located in Saint John. • Part owner of the Maritimes & Northeast Pipeline. • An investor in Fredericton -based Atlantic Hydrogen Inc. U N I V E R S I T Y () F N E W E R U N 5 W I t: K S A I N Emerging Sector: Oil and C Extraction • Active gas operations: — Corridor Resources Inc./ Potash Corporation of Saskatchewan • Oil and natural gas agreements (some under i — Petrolia Inc. — PetroWorth Resources Inc. — Petrolia Inc. — Windsor Energy Inc. — SWN Resources Canada, Inc. — Contact Exploration Inc. U N I V E R S I T Y () F N E W E R U N 5 W I t: K S A I N Emerging Sector: Oil and Gas Exti The Potential Shale Gas Development Area in New Brunswick ..�..� / 0 Campbelltoi I Ba •� &. Edmundston ��•� r % h op nACCuly Gas Held Stormy creek ON Held • There is an estimated of gas in the McCully < Stoney Creek fields. • The government estin "major find" of naturz could net the provinc( than $200 million per annual royalties. • This would be on top tens of millions of dol worth of potential tax revenues. U N I V E R S I T Y () F N F W B R U N S W I C K S A I N Emerging Sector: Biomass Er Edmund! M8111e U N I V E R� I T Y () F N E W B R U N_S W I C K S A I N Wind Energy Quebec alhousie - Lameque Caraquet Belledune Eel River Edmundston Bathurst] Ste.-Rose i� Sisson episiguit Fall Millban Iroquois •Saint -Andre Cari /� Grand Falls �� Newcastle � A Beechwood one e— Norton A. . Me r Kent Hills Regional Office I Nuclear Hydro Wind Thermal Combustion Turbine Terminal Interconnection 345 kV Lines 230 kV Lines 138 kV Lines Prince Edward � lsla No \/a Scotia U N I V E R T Y () F N E W B R U N S W I C K Wind Energy 5 A I N NB Power - Wind power purchase agreements Initial End Amount ¢ Agreement to purchase duration of date of energy . . agreement 25 years 2033 96 MW all the electrical energy of a .................................................... ............................... wind generation facility. .......... ............................... 5 years 2014 99 MW ` 90% of all the electrical ? energy of a wind generation facility. ............................................. ....................... :...................................................... : 20 years 2029 48 MW all the electrical energy of a • wind generation facility. 20 years 2029 51 MW ? all the electrical energy of a wind generation facility. .......... 25 years ......_:.., ......:........ 2034 45 MW ............... . ............................ ... all the electrical energy of a . . . . . . . . . . . . . . . . 4 . . . . . . 4 . . . . . . . . . wind generation facility- ............ ...........: 25 years ' 2035 54 MW all the electrical energy of a .....................................................................:........................ wind generation facility. ............................... U N I V E R� 1 T Y () F N E W B R L N S W I C K S A I N Other Important Energy PIS • ExxonMobil • Siemens • Engineering firms is Energy - related software developers ShiftEnergy) • Atlantica Centre for Energy U N I V E R� 1 T Y () F N E W B R U N-S W I C K S A I N Energy and conomi Development U N I V E R S I T Y () F N E W E R U N 5 W I (: K S A I N Energy Infrastructure Investrr • $5 billion+ in new investments in the energy sector the early 2000s including: • A major upgrade to the Irving Oil refinery • The new Canaport liquefied natural gas (LNG) recei) regasification terminal • The Emera Brunswick Pipeline that delivers the LNG markets in Canada and the US northeast • A new international power line from New Brunswick i Maine • The build out of the McCully natural gas field near Si • The refurbishment of the Point Lepreau nuclear ener facility • New wind energy investments across the province U N I V E R� 1 T Y () F N E W B R U N-S W I C K 5 A I N Energy Infrastructure InvestrT Electric Power Engineering Construction GDP Per C Annual average expenditure 2007 -2012 Chained (2007] $350 $300 $250 $200 $150 $100 $50 $g$ $97 $73 $154 $158 $159 mm $202 $2z7 $276 U N I V E R� 1 T Y () F N E W B R U N-S W I C K 5 A I N Energy is high value economic Average Annual Income: Selected Energy - Related Occupations* Petroleum engineers Supervisors, petroleum, gas processing and utilities Petroleum, gas and chemical process operators Power engineers and power systems operators Oil and gas well drillers, servicers, testers Electrical power line and cable workers Power system electricians $93,515 $91,119 $89,703 $86,764 $85,062 $85,005 U N I V E R S I T Y () F N E W B R U N-S W I C K 5 A I N Energy is high value economiccr Energy Revenue by Province Per Capita Contribution to Provincial Budgets (2009 -2010 N AB SK $653 QC $563 BC $228 � MAN $217 NS $161 ONT $91 NB $6 mma 1 $1,573 $2,480 $- $1,000 $2,000 $3,000 U N I V E R S I T Y () F N E W B R U N_S W I C K 5 A I N Energy is high value economic Non - Renewable Resource Royalties* as a percentage of total pros Equalization receiving provinces 61Provinces not requiring Equalization 40.0% 0 35.0% 24.3% 25.0% 21.2% 20.0% 15.0% 10.0% 7.5% % 5. -in, n 7n/ n r-01 1.5 U N I V E R� I T Y () F N E W B R U N-S W I C K S A I N Energy is high value economic ; Breakdown of Provincial Government Revenue by Sou New Brunswick Royalties* 1% Other 19% Equalization Property tax 23% 6% Other federal Sales tax transfers 15% 15% Personal income tax Corporate 18% income tax 3% Property tax 2% Saskatchewan Other 20% Sales tax 12% 14k.w, Corporate income tax 8% Royalties* 21% Other fed transfe 17% Personal income tax 20% U N I V E R� 1 T Y () F N F W B R U N 5 W I C K S A I N Energy is high value economic The Long Energy Supply Chain (# of Firms *) Industry Group: Saskatcl- Oil and Gas Extraction (conventional and non - conventional) 345 Mining Oil and Gas Contract Drilling Contract Drilling (except Oil and Gas) Services to Oil and Gas Extraction Other Support Activities for Mining Oil and Gas Pipeline and Related Structures Construction Mining & Oil and Gas Field Machinery Manufacturing Mining & Oil and Gas Well Machinery, Equipment & Supplies Wholesale - Distributors Total Firms: 86 2 0 S 12 1,064 64 16E 17 82 2,045 *This does not include the hundreds of firms that support the sector including con engineering, legal, human resources, finance and other business service: U N I V E R� I T Y () F N E W B R U N-S W I C K S A I N Energy is high value economic FTE Job Multipliers: Total Jobs per Direct Job (Cana Petroleum Refineries and Other Petroleum and Coal Products Manufacturing Oil and Gas Extraction Motor Vehicle Manufacturing Particle Board, Fibreboard, and Waferboard Mills Crude Oil and Other Pipeline Transportation Pulp Mills Potash Mining Pipeline Transportation of Natural Gas Oil and Gas Engineering Construction Natural Gas Distribution Electric Power Generation, Transmission and Distribution Power Boiler and Heat Exchanger Manufacturing Electric Power Engineering Construction Amusement and Recreation Industries Other Administrative and Support Services U N I V E R� I T Y () F N E W B R U N_S w I C K S A I N Energy is high value economic The Saint John Energy Cluster • Electricity production: nuclear, oil and natural gas -based generation • Petroleum products refining • Liquefied natural gas (LNG) • Gas pipeline infrastructure • Skilled workforce with expertise in construction and operations • Specialized engineering capacity • Industry consulting services • Other business services • Energy - related education • Atlantica Centre for Energy U N I V E R� I T Y () F N E W B R U N_S W I C K S A I N Energy is high value economic • $100 million of tax /royalty revenue pays for: — The salaries of more than 1,400 nurses — The salaries of more than 1,500 school teachers — The salaries of 650 doctors — The salaries of 1,700 social workers — Almost the entire Department of Natural Resources bt — Two thirds of the entire Department of Public Safety b — One third of the entire Post - Secondary Education, Tra Labour department budget — Over half of the total amount paid out to New Brunswi U N I V E R S I T Y () F N E W E R U N S W I (: K S A I N New Brunswick's economy is r reliant on energy Top N.B. International Merchandise Exports ($rnillioi Seafood Product Preparation and Packaging Pulp Mills Paper Mills Other Non - Metallic Mineral Mining and Quarrying Sawmills and Wood Preservation Frozen Food Manufacturing Animal Aquaculture Oil and Gas Extraction Copper, Nickel, Lead and Zinc Ore Mining Non - Ferrous Metal Rolling, Drawing, Extruding... All Other Miscellaneous Manufacturing Fishing $400 $372 $319 $229 $202 $202 $186 $149 $131 $89 $502 U N I V E R� 1 T Y () F N E W B R U N S W I C K 5 A I N New Brunswick's economy is heavily reliant c Direct plus indirect energy intensity, by industry (Cal Gigajoules per thousand current dollars of production Electric power generation, transmission and distribution Water transportation Pipeline transportation Pulp, paper and paperboard mills Air transportation Basic chemical manufacturing Primary metal manufacturing Truck transportation Cement and concrete product manufacturing Miscellaneous non - metallic mineral product manufacturing Petroleum and coal products manufacturing Transportation margins Travel and entertainment Rail transportation 41.: 24.( 23.: �21.< 17. 14.( 13.E 13.: 11.E 11.: U N I V E R S I T Y () F N E W B R U N S W I C K Electric power selling price index (non - residential) Electric power selling price under 5000kw Canada New Brunswick 170 160 150 140 130 120 110 100 90 80 5 A I N (199 0 0 N N m m d- Ln M Q0 110 r r- W W m m 0 0 o n o 0 o n o n o 0 0 0 0 o n o 0 0 U N I V E R S I T Y () F N E W B R U N S W I C K Electric power selling price index (non - residential) Electric power selling price over 5000kw Canada New Brunswick 160 150 140 130 120 110 100 Of 5 A I N (199 80 m 0 r-I r-I N N M rn RZ& RZ& L1) LIl LO lD I� I� 00 00 m M U N I V E R T Y () F N E W B R U N-S W I C K 5 A I N Annual Electricity Costs $000s (2012 e Metal Fabrication Facility Based on monthly consumption /peak demand: 240,000 kWV Toronto Halifax Saint John Montreal Minneapolis $168 Cleveland $149 Little Rock $147 $246 5232 $3 $283 iiNivF rtiiTV ()F NFw RRUNSwicrc Annual Natural Gas Costs $000s Metal Fabrication Fac Based on monthly gas consumption of 28,895 m3 Saint John Montreal Cleveland Little Rock $89 Halifax $85 Toronto $74 Minneapolis $66 $126 $115 S q I N (2012 ility $24Z U N I V E R S I T Y () F N E W B R U N-S W I C K 5 A I N Household Energy Costs (2( Electricity for principal accommodation Avg. Household Expenditures % of Total Expendii BC $872 BC 1.2% AB $1,139 AB 1.3% SK $1,184 SK 1.7% MB $1,087 MB 1.6% ON $1,127 ON 1.5% QC $1,314 QC 2.2 NB $2,020 NB NS $1,347 NS 2.2° PE $1,339 PE 2.4 NL $1,941 NL U N I V E R S I T Y () F N E W B R U N-S W I C K 5 A I N Household Energy Costs (2( Water, fuel and electricity for principal accommc Avg. Household Expenditures % of Total Expenditt BC 2.4% BC $1,797 AB 3.3% AB $21839 SK 3.9% SK $2,676 MB 3.1% M B $2,068 ON 3.3% ON $2,506 QC 2.6% QC $1,561 NB 4. NB $2,727 S N% 4.0 NS $2,459 PE PE $2,920 NL 4 NL $2,629 U N I V E R S I T Y () F N E W 6 R U N 5 W I (: K S A I N Household Energy Costs (2C Gasoline and other fuels for owned and leased au1 and trucks /vans Avg. Household Expenditures % of Total Expendii BC $2,085 BC 2.8% AB $2,476 AB 2.9% SK $2,491 SK 3. MB $2,126 MB 3.2i ON $2,360 ON 3.1% QC $1,955 QC 3.30,, NB $2,414 NB NS $2,115 NS 3._ PE $2,229 PE NI NL U N I V E R S I T Y () F N E W E R U N 5 W I (: K S A I N Energy and economic develop 2013 -2020 What is in the `pipeline'? • Shale gas and oil development — Still no guarantee there is a commercially viable — Considerable resistance could curtail investment • Proposed oil pipeline: Energy East Pipeline — Requires regulatory approval — Plan calls for development to start in 2015 • Oil export terminal: Canaport Energy East Ma Terminal — Reliant on the Energy East Pipeline U N I V E R S I T Y () F N E W E R U N S W I t: K S A I N Energy and economic develop 2013 -2020 What is in the `pipeline'? • LNG export terminal — Supply bottlenecks and competing projects • Electricity infrastructure upgrades: Colson Cove, Ma etc. • Cluster development efforts (i.e. Saint John energy ; incubator, smart grid, etc.) • Renewable energy? — Biomass, wind, solar, small hydro, geothermal — Biofuels from sugar beets. The Atlantic Council for Bic Co- operative is advocating for the construction and or 1 q nl0ntc in &+10n+it-% ('OnOtIO Xnihir+h mini drl pronto a nnr 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% U N I V E R S I T Y () F N E W B R U N S W I C K 5 A I N New Brunswick's Shale Ga Opportunity Exports of Nova Scotia natural gas (as a % of total net prod 0% �--T O O rj r-I N M M d' d' Ln (,o lz r�- r*- m m m O O r r-11 r-, r-, r-, e-,% e-,% r-, r-, r, r-, r, r-, r� r-, r-, r-, n .� .� U N I V E R S I T Y () F N E W E R U N S W I t: K S A I N Energy and economic develop 2013 -2020 • Now more than ever, energy projects with environmE impacts need a social license for development. • Separate NIMBYism from broader environmental co • Aboriginal groups. • Rural /urban divide. • We need highly reputable, good corporate citizens ir energy sector. — Large players: Repsol example — In the -qi innly rhain U N I V E R S I T Y () F N E W 6 R U N 5 W I t: K S A I N Energy and economic develop 2013 -2020 Seeking Sustainable Energy Sector Economic Deve Social Impacts Bearable Environmenta \ Impacts EquitaL Sustainable Viable Economic Impacts QUESTIONS?