ENERGY: Tell me again why we are closing Dalhousie Generating Station.

BACKGROUND ON DALHOUSIE

Economy

• 1928 - January 31, 2008 – economy dominated by pulp and paper mill built to produce newsprint by the New Brunswick International Paper Co. Various ownership changes to 2007 merger of Bowater and Abitibi Consolidated merger resulted in closure. Hundreds were left without jobs and were forced to move.
• 2008 - Pioneer Chemicals closed a processing plant on the western edge of the town.
• 2010 - Only remaining industry is Heavy Fuel Oil-powered electrical generating station operated by NB Power.

Population:

About 50-50 French- English, declining steadily.

Census Population Change (%)

• 2006 3,676 ▼6.4%
• Adjustment 3,928 ▼1.2%
• 2001 3,975 ▼11.7%
• 1996 4,500 ▼5.8%
• 1991 4,775

DALHOUSIE GENERATING STATION

• Commissioned: 1969
• Decommissioning date: 2010 (Previously 2024)
• Capacity: 300 MW – 1 unit X 100 MW, 1 unit X 200 MW. (9% of 2008 NB Power generating capacity. (By comparison Hydro Quebec has a capacity of 36,810 MW about 10 times NB Power.)
• Fuel: Heavy Fuel Oil (Number 5 fuel oil and Number 6 fuel oil are called heavy fuel oils – what remains of the crude oil after gasoline and the distillate fuel oils are extracted through distillation.) Note: Dalhousie was converted to use orimulsion in 1994 and used this fuel until Venezuela ceased production at the end of 2006. The plant now uses heavy oil as it did previously. Babcock & Wilcox retrofit a single-module, wet limestone FGD scrubber to Dalhousie to allow for consumption of orimulsion. Sources say plant can also burn bunker C and Petcoke.
• Financials: No detailed financials or cost analyses available. Where are they? Why is this proceeding without public scrutiny?

ISSUE 1. WHAT’S THE RUSH?

Although the current Government and the new NB Power management has placed a 2010 deadline on the decommissioning or disposal of DGS, it was actually commissioned to run until 2024. Dalhousie was the third station in Canada to install a “scrubber” which is used to remove sulphur dioxide from flue gases. It is one of the cleanest burning in the world. In addition, sources indicate that it burns Bunker C, #6 or heavy crude at prices between $40 and $80 per barrel. There is currently enough fuel to run through next winter and there is no need to rush.

ISSUE 2. WHERE ARE THE NUMBERS?

Current and historical financial statements and cost analyses for options are required for comparison and analysis BEFORE any decisions are made on the disposal of DGS. The process should be public and transparent and, ultimately, should go before open sessions of the EUB. No public asset should be occupied or sold without public input and scrutiny. Where are the numbers?

If there is a problem with the feed from Quebec (as recently occured) then Dalhousie‘s 300 MWs is essential to the grid. In its absence we will have to purchase the shortfall. If so, where will that energy come from and at what price. What are the contractural factors, if any, dictating that?

Apparently one of the boilers is in need of repair. What is the timing and cost for this upgrade. Would that cost be applicable to a transfer to gas in as much as that type of refit has been done in as little as 5 months. Boiler one is converted and takes over from boiler 2 as it is converted. Net result is 2 boilers under natural gas?

ISSUE 3. CONVERSION TO NATURAL GAS – IS IT POSSIBLE? YES.

Manitoba Hydro converted the Selkirk Generating station to natural gas in 5 months. The $30 million project included alterations to both units consisting of the installation of 16 high efficiency natural gas burners, fuel control equipment, a burner safety system and the replacement of boiler pressure parts. A natural gas transmission line was also constructed to supply gas for the station. The switch from coal to natural gas virtually eliminated emissions of mercury and other metals, sulphur dioxide and particulate matter.

Emissions Coal Natural Gas Percentage

(Tonnes/year) (Tonnes/year) reduction

PM (Particulate Matter) 1,306 8 99.4%

SO2 (Sulphur Dioxide) 771 3 99.6%

NOx (Nitrogen Oxides) 565 60 89.4%

Greenhouse Gases 223,128 120,621 45.9%

The Selkirk Generating Station, like Manitoba Hydro’s other thermal generating station

Coal fired units taken out of service: March 2002

Units placed back in service on natural gas: July 2002

Capacity: 121 megawatts (MW)

Number of units: two

Fuel: Natural gas

ISSUE 4: IS THERE A GAS SUPPLY? YES

Gas could be provided from existing New Brunswick sources through existing and new piplines. Studies were carried out in the seventies by Q&M Pipelines that established the feasibility of reaching the Dalhousie area without undue environmental impacts. Currently the Maritimes and Eastern Pipeline and the McCully field are close enough for consideration as a sources of natural gas, provided the costs and terms are within reasonable ranges. The development of industry and retention of existing industries may well depend on how New Brunswick manages the distribution of its energy assets in this region.

The potential for local sources in the Gaspe – Dalhousie area are great as Petrolia and others investigate there and offshore to Anticosti. PETROLIA WRITES: It is interesting to note that a thermal power plant is located in the vicinity of Petrolia’s permits. Before 2006, the 300 MW Dalhousie power station operated on Orimulsion, a mixture of bitumen and water. Venezuela stopped producing it in 2006, and since that time, the plant has been using heavy oil. Petrolia estimates that it would take 23 Bcf (billion cubic feet) of natural gas per year to completely replace the petroleum used by this power plant. For both Petrolia and northern New Brunswick, a natural-gas discovery would obviously have considerable economic consequences.

ISSUE 5. THE DALHOUSIE GENERATING STATION AS A KEY COMMUNITY ASSET.

In the past, New Brunswick has sold it’s assets very cheaply or for no return at all, sending the profits offshore while we are exploited by our Achilles’ Heel, the continual need for “job creation”. In fact retention of profits within the province of New Brunswick from the use of public assets would have made us a wealthy long ago, instead of one filled with workers who seek jobs at or near the minmum wage while shareholders in companies at home and abroad reap huge benefits from our weakness. As an example, a recent report on developing the McCully natural gas into a community asset indicated that Alberta charges a 40% royalty while we here in NB only charge a 10% royalty. Tough business type us New Brunswickers!

If our resources are available on a “New Brunswickers first” basis, then the Dalhousie Generating station could not only fulfill its traditional role, but could, as suggested for Sussex, fill a regional role by supplying affordable energy for the development of light industry attracted by favourable operating costs and a distribution system tied to the existing port.

If natural gas finds do occur in the Chaleur area, you can be sure that pipelines will be build to send it south. The citizens of New Brunswick must move now to ensure that they are involved in the process, that they profit from the ownership of their resources and that these resources are used first for the development and sustainability of their communities and the broader New Brunswick needs.

This is a fundamental change in how we do business and is a foundational position of the People’s Alliance of New Brunswick.