Here a two recent news reports discussing the future of controversial shale gas development and very challenging distribution cost problems in New Brunswick.

New Brunswick gas customers pay the highest rates in North America. Notwithstanding these sky-high rates, the distribution utility has racked up a deferred cost account of almost $28,000 per current customer.  Local natural gas production, even if very successful, will have no impact on whether local consumers can benefit or not from the much cheaper supply of gas available across North America. The issues associated with NB’s sky-high gas rates relate to the cost of pipe, not the cost of the gas in the pipe. One of the largest structural challenges the gas distributor faces is New Brunswick’s unique industrial bypass policy that prevents smaller volume customers from accessing gas infrastructure developed to serve industrial customers. Another major challenge is the slow growth of the provincial economy, which reduces opportunities to make low cost customer additions.

There is hope for gas consumers in New Brunswick. The huge margin that now exists between the commodity cost of gas and the cost of oil creates a value proposition. Realizing this opportunity continues to represent a serious challenge.