Shale gas investment to hit 6-year low
$779K expected from petroleum licences and leases this year down 30% from last year
Investment in New Brunswick shale gas licences and leases is expected to decline to a six-year low this year, figures show, as exploration companies move slower than expected to lock up rights to provincial gas resources.
Despite the optimistic outlook of government officials, companies still aren't clear if the province has enough accessible natural gas to warrant development, said Sheri Somerville, a natural gas adviser with the Canadian Association of Petroleum Producers.
"When they find out what's below there, below the ground, below the earth's surface — what kind of reserves we're looking at — at that time, they will make decisions on how they'll move forward," Somerville told CBC News.
Budget documents show the province expects to raise $779,000 from petroleum licences and leases this year, a 30 per cent decline from last year, and the lowest amount since 2007-2008.
The revenue decline comes as companies drop rights to search some areas for petroleum and give up on leases to develop other areas.
Positive messaging continues
Falling investments in the province's natural gas potential come despite political messages from government that development of the resources is becoming more, not less likely.
"New Brunswick is poised on the brink of historic opportunities in energy," Finance Minister Blaine Higgs said during last month's budget speech. "We know large scale reserves exist in the province."
Premier David Alward continued the optimistic talk this week, during his own speech on the government's budget.
"Our government believes energy will be a game changer in the economic development of our province for many years to come," Alward said.
"The development of our own domestic gas resources, upgrades to the LNG facility and the exports of natural gas could result in billions of dollars in additional investments in New Brunswick," he said.
But companies are not scrambling to lock up rights to provincial gas fields.
Last year, the province budgeted to receive $2.5 million in revenue from licences to search for shale gas and other petroleum deposits deposits and from lease payments on the most promising sites.
But actual revenues were less than half that when Moncton-based SWN Resources failed to convert any of the licences it has to search for gas into actual leases, as government had expected.