Bruce Bartlett
New Brunswick Telegraph Journal
January 22, 2002

Big industrial users of electricity and those in line for construction jobs want NB Power to spend $747 million converting Coleson Cove to burn Orimulsion.

But the province of New Brunswick, city of Saint John and environmental groups were not so supportive Monday as Public Utilities Board (PUB) hearings into the proposal ended.

Board chairman David Nicholson said he hopes to deliver an oral recommendation on the project next Monday at 11 a.m.

Last week senior NB Power executives had to justify their plans in public for the first time because of a change to the law passed five years ago.

They are seeking a recommendation from the PUB to spend the money to convert the 1,000-megawatt plant west of Saint John to Orimulsion, a low-cost fuel available only from Venezuela.

The problem with Orimulsion, a slurry of bitumen and water, is that it produces just as much carbon dioxide, the greenhouse gas, as the heavy oil now burned at Coleson Cove, said David Coon of the Conservation Council of New Brunswick, in his summation Monday.

In August 2001, the New England governors and Eastern Canadian premiers agreed to reduce greenhouse gases in the region to 1990 levels by 2010.

But this has been ignored by NB Power, which is trying to sell the project because it can reduce sulphur dioxide and nitrogen oxide, said Mr. Coon.

“Fair economic analysis can not take place when there is selective use of anticipated pollution reduction targets,” he said.

Coleson Cove can reduce its sulphur dioxide emissions, without any construction, just by changing fuel, said Mr. Coon. He questioned why the project is being pushed now when waiting will lead to a better understanding of where carbon dioxide limits will be set.

The province and the Conservation Council are often seen on opposite sides of issues, but on Monday they seemed to be reading from the same page.

Peter Hyslop, a lawyer acting for the Department of Natural Resources and Energy, referred to Mr. Coon as his “colleague.”

“There is some validity to Mr. Coon’s point that perhaps we are here a little early,” he said.

The issue of what the carbon dioxide limits will be in 10 years have not been factored into NB Power’s studies, said Mr. Hyslop.

The utility says the cost of Orimulsion is so low it can pay off the $747-million conversion in six or seven years. It also wants to sign a 20-year contract with Bitor America, the fuel supplier, but won’t release the fuel price because Bitor wants to keep it confidential.

The province has calculated the value of the 20-year fuel contract at around $4.5 billion, said Mr. Hyslop.

He urged the power company to make sure it could get out of the contract if greenhouse gas emissions are taxed over the next 10 years, as seems likely.

NB Power has ruled out using natural gas, which has lower greenhouse gas emissions, because it says the price is too unstable.

Mr. Hyslop said the province is concerned NB Power has used an unusually high price for natural gas, based on a price blip last year, in ruling it out.

The city of Saint John endorsed the province’s position that the natural gas option be given more consideration.

The fact that Orimulsion is only available from one plant in the world also concerns the province. The Dalhousie power plant already uses it, and if Coleson Cove is converted, 55 per cent of New Brunswick’s power will come from Orimulsion.

“There is incredible risk associated with this set of parameters,” said Mr. Hyslop.

The PUB should ask NB Power to state what it would do if carbon dioxide credits are traded at $100 per tonne and also insure the contract with Bitor has adequate exit clauses if carbon taxes rise, he said.

Mr. Hyslop also said the province would like NB Power to find an equity partner to join it in the Coleson Cove project.

Representatives of the major pulp and paper producers in the province, including J.D. Irving, Fraser Papers and UPM-Kymmenne Miramichi Inc., all called for the project to go ahead because of its potential to keep electricity prices low.

Pat Darrah of the Saint John Construction Association said he strongly supports the project, because it would create 2,150 person years of work over two years.

Bill MacMackin, president of the Saint John Board of Trade, also supported the conversion because of the economic benefits and the long-term increase in port traffic. The port could see 40 more fuel ships per year which would increase revenue up to $2 million he said.