Hydraulic fracturing and horizontal drilling technologies … (have) increased and diversified the gas supply.

Not only is hydraulic fracturing environmentally sound, it has economic and, perhaps surprisingly for some, environmental benefits. As with all industrial activity, there are risks. More information about those risks and how to mitigate them can be found in the Myths vs Facts section of this website.

Economic Benefits

Shale development has the potential to be an “economic force” for New Brunswick, resulting in jobs, and work for local businesses as well as increases to gross domestic revenue (GDP) and tax revenues.

Workers on site at Corridor Resources 2014 hydraulic fracturing operations. Since 1998, Corridor Resources and is partners have spent $500 million on New Brunswick operations and estimate that approximately 25% stayed in the local area. (Photo courtesy of Stephan MacLellan)
Workers on site at Corridor Resources 2014 hydraulic fracturing operations. Since 1998, Corridor Resources and its partners have spent $500 million on New Brunswick operations and estimate that approximately 25% stayed in the local area. (Photo courtesy of Stephan MacLellan)

Some reports have gone so far as to estimate that if the oil and gas industry were to expand in New Brunswick to a level where it was producing 200 wells per year it would sustain nearly $1.6 billion worth of annual provincial GDP and 4,400 full time equivalent jobs – at well above average wages – each year. It is also estimated the shale gas industry would generate $310 million worth of tax revenue each year, in addition to any royalties. More money to the Province means more money for government spending on social programs, healthcare and infrastructure.

Corridor Resources has developed some modeling on how a developing industry could evolve and what it could mean for local benefits. The chart below shows a theoretical evolution of an industry developing at a reasonable pace, which we would expect could be the case in New Brunswick. As it demonstrates, the percentage of local benefits grows proportionately with the investment.

Year 1 Year 2 Year 3 Year 4 Year 5 Year 10
Cost / Well* $10,000,000 $9,000,000 $8,000,000 $7,000,000 $6,000,000 $5,000,000
No. of Wells 5 10 20 30 40 50
Total Company Investment $50,000,000 $90,000,000 $160,000,000 $210,000,000 $240,000,000 $250,000,000
Percentage of Local Benefits 26% 37% 48% 59% 69% 80%
Total Amount of Local Benefits $13,000,000 $33,300,000 $76,800,000 $123,900,000 $165,600,000 $200,000,000

* Please note these are just drilling and completion costs and do not include capital for equipping wells, processing facilities or gathering systems.

Environmental Benefits

The benefits of shale development are not just economic, there are clear environmental advantages too. For instance, the Intergovernmental Panel on Climate Change, recognized as the world’s leading climate science authority, concluded in its latest assessment that “hydraulic fracturing and horizontal drilling technologies … (have) increased and diversified the gas supply” and are “an important reason for a reduction of greenhouse gas emissions in the United States.”

And as Environment Canada pointed out, it’s thanks to natural gas that the “electricity generating sector is the largest contributor to total emissions reductions” in Canada. In addition to being a cleaner burning energy option, natural gas is a lower cost energy option, helping consumers to save money.

A well that is hydraulically fractured also has a small environmental footprint. The average gas well has a 2m by 2m surface footprint and several wells can be on located on one pad (which typically measures about 4 acres). Well pads will eventually be restored to their natural environment.

It is also important to remember that our Province has some of the most stringent and comprehensive hydraulic fracturing regulations in place anywhere in North America, working together with companies to ensure responsible and safe development.

reduced co2
Source: Energy In Depth, PDF file

Driven by safe shale development, Canada is experiencing an economic revitalization. From widespread job creation, to consumer savings through lower energy costs and local community improvements, natural gas has undeniably enhanced our entire country.

It is important to note though, that these widespread benefits have not come at the expense of operational safety, public health or environmental protection.

Here are just a few of the substantial economic and environmental impacts of shale development on Canada:

  • Increased Tax Revenue: $285 billion will be collected in taxes across the country from Western Canadian natural gas production over the next 25 years. (Canadian Energy Research Institute)
  • Robust Employment: In Canada, the oil and natural gas industry currently directly and indirectly employs more than 550,000 Canadians and is a key element of our national economy. (Canadian Association of Petroleum Producers)
  • Reawakened Supply Chain: The anticipated $386 billon in natural gas sector investment from 2012 to 2035 will generate $364.3 billion in additional GDP, more than 131,000 new jobs per year, and increased tax revenues. (Conference Board of Canada)
  • Manufacturing Rebirth: Effects will predominantly be focused in areas where natural gas is produced, but Canada’s manufacturing, construction, and services industries will benefit every province. (Conference Board of Canada)
    Important Investment: In addition to the stimulus generated by investment, natural gas production is expected to contribute a cumulative $576 billion to Canada’s economy between 2012 and 2035, supporting another 129,000 jobs per year. (Conference Board of Canada)
  • Consumer Benefits: Canadian natural gas consumers will continue to benefit as natural gas prices remain significantly lower than all other forms of energy. (Conference Board of Canada)
  • Federal and Provincial Impact: The impact on federal and regional government finances will also be significant. Together, federal and provincial real personal income taxes will increase by $148 million between 2012 and 2035, while higher profits will bolster corporate income tax collections up by $102 million. (Conference Board of Canada)
  • Future Opportunity: Some reports have gone so far as to estimate that if the oil and gas industry were to expand in New Brunswick to a level where it was producing 200 wells per year it would sustain nearly $1.6 billion worth of annual provincial GDP and 4,400 full time equivalent jobs – at well above average wages – each year. It is also estimated the shale gas industry would generate $310 million worth of tax revenue each year, in addition to any royalties. (Government of New Brunswick)
  • Air Quality Enhancement: Hydraulic fracturing and horizontal drilling technologies are an important reason for a reduction of GHG emissions in the United States. (Intergovernmental Panel on Climate Change)
  • Significant Emission Reductions: Environment Canada has acknowledged that thanks to natural gas the “electricity generating sector is the largest contributor to total emissions reductions” in Canada. (Environment Canada)
  • Renewable Partner: Natural gas has an important role to play in complementing low-carbon energy solutions by providing the flexibility needed to support a growing renewable component in power generation.” (International Energy Agency)
  • Abundant and Affordable: Natural gas from tight formations, requiring hydraulic fracturing, now accounts for more than 25% of Canada’s natural gas supply. (Canadian Energy Research Institute)
  • Limited Environmental Footprint: Development sites only require a small amount of land to drill multiple wells. Following the capping of the well lease sites are typically restored to their natural environment.