It looks like New Brunswick will dodge the recession bullet this year, according to recent Bank of Montreal and Royal Bank of Canada reports.
With growth in gross domestic product expected to come in somewhere between 0.3% and 1.5%, the province is expected to lead the country in export growth this year. Part of the reason is that New Brunswick is finally weaning itself off the resources-based, recession-sensitive industries, such as forestry, that had driven its economy for decades. However, that’s not to say the province won’t face difficulties this year.
Since the recent radical contraction of the forestry industry, due to a rising loonie and falling prices for lumber, the province has been hunting for ways to diversify its economy.
One major contributor to the province’s good mood for 2009 is energy, with two significant announcements in December 2008: a possible investment by Hitachi Canada Ltd. to build a new nuclear reactor, specifically to serve the U.S. grid, and new discoveries of high-grade oil.
But even without any new reactors (which take years to get up and running and have generated controversy among environmentalists), energy exports are expected to increase by 9%, or $2.5 billion, as Saint John-based Canaport LNG LP starts pumping natural gas to the U.S. market in the next few months.
According to Peter Hall, chief economist at Export Development Canada, the recent slump in oil prices is going to have a “marked impact” on New Brunswick’s energy exports. However, “new export activity and a significantly lower Canadian dollar,” the agency also predicts, “will help to preserve overall growth in 2009.”
Then, there’s the enticing prospect of new oil finds. Halifax-based junior Corridor Resources Inc. has been bumping up its exploration in New Brunswick’s extensive Carboniferous Basin since 2006: Corridor recently announced the discovery of what Norman Miller, the company’s president, called a “potentially significant” oilpatch while drilling for natural gas. The company also found a reserve of seven billion cubic feet of gas at the site, located near Norton, in the south-central area of the province.
Whether that’s enough to turn New Brunswick into a “have” province still requires much more physical exploration.
At least one investment company has shown strong interest so far. Calgary-based Ittihad Capital Corp. paid $4.5 million to secure exploration rights from the province this past autumn, significantly more than the minimum bid of less than $250,000 set by the province. One of Ittihad’s directors has already suggested that the field may hold enough oil and gas to end New Brunswick’s “have-not” status.
It’s never been a secret that New Brunswick has oil, ever since a Pittsburgh prospector first discovered it in 1859. It’s just that it’s all tied up with shale and sandstone, and no one has ever been able to figure out how to extract it effectively and efficiently.
Modern technology seems to hold some promise, but developers admit that new methods of extraction will be required. There is progress: two chemical engineers at the University of New Brunswick are working on the development of a new fracturing method that will maximize the amount of oil released from the rock in which the deposits are located. Indeed, transforming New Brunswick’s former forestry- and mining-based economy to one that’s energy-based seems to be moving beyond the realm of rhetoric. IE
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