CCPA-NS report

Canada's natural gas exports flow out of Canada through an 80% loophole
August 8, 2002

HALIFAX--A publication released today by the Canadian Centre for Policy Alterntives--Nova Scotia (CCPA-NS) concludes that it is time for the federal government to fulfil its mandate to protect the interests of all Canadians, and not just those of the oil and gas industry. According to the authors of the study "Scotian Gas: Breaking the Free Trade Consensus" New Brunswick's challenge before the National Energy Board has let Canadians see behind the veil of "market based procedures" that has allowed oil and gas companies to circumvent the safeguards that are supposed to protect Canada's long term energy needs. For the first time since the deregulation of natural gas and the NAFTA deal on energy, there is an important challenge to the consensus that Canada's needs would or should be met in a continental energy market.

A key mandate of the National Energy Board (NEB) is to ensure that gas exports occur only when they are surplus to Canadian needs. According to the authors of the report, researcher Fred Wilson (Communications, Energy and Paperworkers Union), and trade lawyer Steven Shrybman, "Oil and gas companies have taken advantage of gaping loop-holes in NEB regulatory procedures to undermine the public interest safeguards in Canada's national energy legislation."

The huge increase in natural gas exports to the US, according to Fred Wilson, "has not been through NEB export license applications that are reviewed at hearings to determine if the exports are surplus to Canada's needs. 80% of the increase in exports (90% of Nova Scotia's exports) take place pursuant to short term orders granted without public notice or hearing. When 80% of Canada's natural gas is being exported through a regulatory loophole it seems that the requirements of the NEB Act are being effectively circumvented, allowing producers and exporters to avoid compliance with the surplus and public interests safeguards of the Act."

"It is not surprising," according Wilson and Shrybman, "that New Brunswick has called upon the NEB to cease granting short-term orders for Scotian offshore gas in light of the difficulty it has had in establishing gas service to many of its residents and industries."

The report finds that what New Brunswick wants from the NEB at this time does not violate NAFTA. According to Shrybman, "it is crucial, given NAFTA obligations that involve maintaining proportional export flows regardless of supply shortfalls in Canada, that new exports of our scarce natural gas resources are genuinely surplus to our present and future needs. It is not possible for Canada to simply 'turn off the tap' if it discovers that it has over-committed Canada's non-renewable energy resources to export markets."

The CCPA-NS report revives a dormant debate in Canada about one of the most significant costs of free trade, guaranteeing the US ongoing access to Canadian energy resources, regardless of how scarce they may become.

Attached Documents: