Jim Emberger - Commentary, Telegraph-Journal, Daily Gleaner August 24, 2018

At a recent oil and gas industry conference, Terry Spencer, head of natural gas infrastructure company, ONEOK, told the audience: “One of these days, one of these big ol’ fracs will be operated with nobody there..... We are as an industry working towards where we can operate 24/7, unattended.”

He wasn’t forecasting the distant future.

In 2016, the Houston Chronicle was already reporting,“These new rigs, using sophisticated software and robotics, could reduce the number of people working in the oil patch by up to 40 per cent.”  The article continues: “The Holy Grail [is] to not have to touch the pipe and totally automate the process.”

The 2014 fossil fuel crash forced companies to slash the number of drilling rigs and lay off 440,000 workers. Although the number of rigs is slowly growing back, analysts say that half the workers may never return.

That’s because the fracking industry, despite its growth, has always been mired in debt – the Wall Street Journal calculates US$280 billion. To have any chance of reaching profitability, the industry must cut costs, meaning eliminating jobs and increasing automation.

For example, SWN, the American company once exploring in New Brunswick, has announced it will layoff 200 workers to save on annual personnel costs of $65 million.

Since the fracking industry has always sold itself as a source of high-paying, blue-collar jobs, it doesn’t publicize that many of those jobs are now disappearing.  Replacing workers with machines is masked as “efficiencies” and “cost-savings,” and, with no apparent sense of shame, as “worker safety measures.”

Industry debt also leads to numerous bankruptcies and company closures, posing financial threats to taxpayers and landowners in the form of thousands of abandoned, often leaking, gas and oil wells.

Governments should have demanded sufficient funds from the industry in advance to cover the costs of closing wells, but did not. Industry claimed it couldn’t afford the upfront cost.  Now, bankruptcy laws that give creditors first access to the assets of insolvent companies leave little money to remediate abandoned wells.

Saskatchewan’s auditor general estimates the problem will cost the province $4 billion, while Alberta, with its hundreds-of-thousands of wells, faces a mind-numbing $47 billion in future costs.  Saskatchewan has already asked Ottawa for a few hundred million until they can figure out a long-term plan, so we can surmise that federal and provincial taxpayers will be on the hook for bailout money.

Any taxpayer bailout will be a bitter pill, as the industry already receives billions from Canadian taxpayer subsidies, another fact not discussed. The International Monetary Fund estimates that Canada’s subsidies to the natural gas industry are 44-per cent greater than its foreign aid payments.

The British Columbia government, for instance, offers exemptions from income, sales and climate taxes, provides lower electricity rates, and offers extremely generous “royalty credits for fracking operations.”  The Energy Ministry calculates that these “credits” equal nearly $5 billion in lost royalty revenue.

Despite generous subsidies, Alberta (our largest gas producer) has seen royalties plummet 90 per cent since 2008: from $5 billion down to $500 million.This explains why the Petroleum Services Association of Canada just announced a decrease in Canadian natural gas drilling this year, citing low natural gas prices and reduced demand.It noted: “Many companies are sitting at near break-even points or are still in negative territory.... This is not sustainable from a business continuity and competitiveness perspective,” and explains the “lack of attractiveness for investment.”

These subsidies, debts and job losses occur in tandem, with multiple economists warning that market forces may turn Canada’s billions of dollars of fossil fuel infrastructure into worthless “stranded assets” by 2030.

All of this news comes from industry or government sources.

So why would conservatives, economists and various chambers of commerce members who write newspaper commentaries promoting shale gas not address any of these issues? One would expect that, as businesspeople, they would be aware of the industry’s financial and trade news.

What are we to think when they endlessly repeat the meaningless phrase “responsible resource development” while displaying no more detailed knowledge about shale gas economics than they do about its health and environmental threats?

Should we pin our economic hopes on an industry built on subsidies, debt and potentially huge costs to taxpayers, one that provides fewer jobs with each passing year, while putting our health, environment and climate at risk?

Or, should we instead keep the moratorium on fracking, and choose a business sector with an economic case that is booming with jobs and prospects. Clean Energy Canada’s recent study of a basic energy efficiency plan for New Brunswick shows that by 2030 we could increase GDP by $5 billion and create 25,879 jobs.

Going beyond the basic plan, and adding renewable energy, makes those numbers skyrocket. These aren’t imaginary figures. Jobs in energy efficiency and renewable energy far outnumber those in the fossil fuel industries, while ensuring a healthier, more sustainable, future.

Jim Emberger is spokesperson for the New Brunswick Anti-Shale Gas Alliance (NoShaleGasNB. ca)
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