Natural Gas:

Shell Canada's Pierce discusses opportunities for partnerships with the U.S. on shale exploration

Should the United States and Canada work together on hydraulic fracturing technology and shale gas exploration? During today's OnPoint, Susannah Pierce, head of government relations for Shell Canada Ltd. and the incoming chairwoman of the Canadian American Business Council, addresses safety concerns surrounding fracking and discusses the economic impacts of expanded shale exploration.

Transcript

Monica Trauzzi: Hello and welcome to OnPoint. I'm Monica Trauzzi. Joining me today is Susannah Pierce. Susannah is the head of government relations for Shell Canada Limited and the incoming chair of the Canadian American Business Council. Susannah, thanks for coming on the show.

Susannah Pierce: Thanks for having me.

Monica Trauzzi: Shale gas exploration and hydraulic fracturing are front and center in the energy policy debate, both here in the United States and in Canada. How are the U.S. and Canada handling shale gas exploration differently?

Susannah Pierce: Well, I think what it really comes down to is at what stage of development each of the plays are in. Frankly, there's been shale gas development for years, but now it's starting to get a lot of public attention and regulatory and legislative attention. And so in terms of where both countries are, I think we're on the similar path, which I also think creates an opportunity for some collaboration, both in terms of best practice, process, regulatory development, as well as public awareness. A lot of what we see happening in Canada hinges off what's happening in the United States. But I also would like to think that there's a lot of good things that are happening in Canada, as well is in the United States, that can be shared cross-border. And part of what CABC is trying to do is trying to make sure that some of those best practices and knowledge transfer is happening.

Monica Trauzzi: OK, so talk a bit more about the opportunities for a relationship between the U.S. and Canada here. How significant is it? I mean can the countries work separately or do they absolutely need to work together to move forward?

Susannah Pierce: Well, they can work either way. I think what probably is the most efficient and effective would be that if we work together. As you know, Canada and the United States have the largest trading relationship between each other. I think on the order of about $525 billion a year are traded between our two nations. And I think in terms of public awareness and expectations we have the similar type of belief that government has a role to play. The public is involved and should be aware of what industry is doing. And so that in terms of communicating as well as establishing regulatory policy, I think there's great opportunities for efficiency and alignment between the two countries.

Monica Trauzzi: Is shale gas simply being rebranded as green or is it actually something that can compete on the same plane as renewables?

Susannah Pierce: Well, I think that we'll always have to remember that shale gas is natural gas and is a fossil fuel and so it depends on how you're looking at it. If you're looking at it from a carbon intensity or a carbon emissions point of view, certainly gas does have more carbon emissions than a renewable project might. But there are advantages to natural gas, certainly as you look at other forms of power generation, in particular today coal. And so when you relate it to other fossil fuels, certainly it is the cleanest burning fossil fuel. It also is a very good source of energy for the interruptible types of wind for example or renewable energy such as wind, where you need to have a consistent baseload and natural gas could provide that. So they're very complementary.

Monica Trauzzi: There are some serious questions about the environmental impacts of fracking, in particular the impacts on water supplies. How is Shell addressing the technology to ensure that there are limited impacts on water?

Susannah Pierce: Well, you know, what I'd like to do in this circumstance is ask that Shell, Russ Ford, who will be speaking tomorrow at the CABC conference, to comment specifically on that. Because Shell is establishing some best practices in those regard and Russ will speak tomorrow at the CABC conference and so I'd encourage folks to come there to hear about that.

Monica Trauzzi: What do you believe are the economic impacts on the United States and Canada moving forward with shale gas exploration? What kind of numbers are you looking at?

Susannah Pierce: Well, we're looking at significant numbers. I think one of the numbers that I've seen recently just comparing, in terms of how much investment goes into natural gas to how many jobs, is on the order of for every billion cubic feet a day of gas that's developed, it's about a billion dollars' worth of economic activity. So you can see there's a very significant contribution in terms of that gas development. We're seeing on the order of tens of thousands of jobs being created in the regions in which gas -- or natural gas, shale gas is being explored and developed. I know that in, for example, Canada and Northeast BC, where we have significant shale gas plays, we're seeing lots of interest and lots of job opportunity. And that also, I think, creates an opportunity which the CABC is engaged with, which is looking at opportunities for both U.S. and Canadian labor to take advantage of these opportunities for shale gas development.

Monica Trauzzi: How does a company like yours weigh the risks versus benefits of moving forward with new energy technologies, especially considering all the energy disasters that we've seen recently?

Susannah Pierce: Well, I think we'd have to probably just take a step back and recognize that there has been a series of disasters that have taken place. In terms of how Shell looks at it, I think what we've realized is that we really need to do a better job of helping the public understand, both understand what the risks are, how we're mitigating those risks and then also be aware and accepting of the fact that energy is needed and that as we look to growth, you know, by 2050, we might have to double the amount of energy we produce. And, therefore, in terms of what we need to sustain in terms of risk, we need to manage that risk, but recognize that we'll still need the energy. So we need to move forward, but we need to make sure that the public is accepting and aware of what those risks are and that we manage and mitigate effectively.

Monica Trauzzi: In New York state there's a moratorium on exploration of the Marcellus Shale formation. Do you expect local municipalities to continue to move forward with those kinds of moratoriums?

Susannah Pierce: Well, I guess I can't really speak for New York State or municipalities in New York State, but I will say this, again, part of my role of CABC chair is to take a look at where there are consistencies in terms of public reaction to various certain industries that are in both countries. I think what we've seen in the United States and Canada is some reaction to some of this new shale development in Quebec, the problems of Quebec. We have a two-year moratorium and that moratorium was essentially established to make sure that regulatory policy could catch up to standards and processes and also help the public feel comfortable about it. Again, I think the best practice for industry, and, again, something which CABC will be promoting, is to make sure that they do a better job informing the public about what this really is, what the resource is, what the process is, how they can remain informed about what the industry is doing in their backyard. So what will individual municipalities do? I think a lot of that depends on how the industry approaches it, as well as how the government approaches it in terms of establishing regulatory practice.

Monica Trauzzi: What are your expectations for pricing of natural gas in the short term? We've heard some estimates that it may -- we may see it go up to around six dollars. What are your expectations?

Susannah Pierce: I think I'm going to have to say I can't speculate on that. I think that there are a lot of factors at play.

Monica Trauzzi: What's the business opportunity that shale gas provides for a company like yours?

Susannah Pierce: Well, I think there's great business opportunity, not only for a company like mine, Shell, but also for all the companies that, again, are going to be speaking tomorrow at CABC. What you'll see is there are opportunities for innovation, both in terms of technology development and dealing with some of these concerns, water usage for example. There's opportunities for companies which want to basically provide services and contractors to work in some of these developments. There's great opportunities there. And then, of course, there's opportunities for a company like mine and Exxon and others that see advantages to drilling and producing that gas to provide to consumers across North America.

Monica Trauzzi: OK, we'll end right there. Thank you for coming on the show. Nice to see you.

Susannah Pierce: Thank you.

Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.

[End of Audio]

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