AT LEAST SOME of the current provincial policies related to natural gas ought to be changed as bearing little or no relationship to today’s realities.

A few years ago, the prevailing assumption was that natural gas was not only a finite resource but one that was being rapidly depleted and far too expensive to be seen as a significant energy resource to be tapped in Ontario.

As a consequence, the current Ontario government is sticking to its plan to shut down the province’s remaining coal-fired power plants by 2014 and relying on the private sector to provide replacement energy through a variety of projects, including wind farms, solar power, energy from waste and perhaps a few small-scale power plants fuelled by natural gas.

However, the supply-demand situation for natural gas has changed so dramatically in the last few years that most of the McGuinty government’s policies make as little sense as its failure to work with the federal government on developing at least two new nuclear plants for “base load” electricity.

While the price of natural gas had soared to the point where it was no longer competitive for use in generating power, that’s clearly no longer the case, and the abundance of supplies in Western Canada and the Arctic alone would make it easy for Ontario to enter into long-term contracts that would justify converting the Nanticoke and Lambton generating stations, with their combined capacity of 12,000 megawatts, to natural gas rather than close them.

Similarly in need of change is the current (and long-standing) provincial policy preventing “rural” gasification. Under that policy, natural gas lines will never be extended to any home in the province unless the cost of the extension is paid in advance or the homeowner( s) involved can prove that sales revenue from the extension will cover the cost and thus have no impact on other consumers’ gas bills.

As a result of this policy, natural gas is currently available only in towns like Orangeville and Shelburne and in subdivisions and other rural properties that happen to be close to an existing pipeline.

Clearly, had the same policy been followed for electricity, Ontario would never have had the rural electrification program that we enjoyed in the 1940s and 1950s, which saw virtually every farm in Southern Ontario having access to the power grid at affordable prices. (Today, the only farms lacking electricity are Amish-owned.)

As we see it, every Ontario homeowner ought to be have access to natural gas, with the cost of pipeline extensions being recovered on a longterm basis and shared equally by the homeowner, the Province and other natural gas consumers.

Another area where natural gas ought to be encouraged is in the transportation sector. Although it has long since been established that internal combustion engines can be made to perform well on either propane or natural gas, current provincial policy has not led to the provision of more than a handful of natural gas fill-up stations. And most of these are in Toronto and patronized mainly by taxicab firms.

Perhaps the main argument against promotion of natural gas as an alternative to other energy sources is that it, like coal, is not found in abundance within the province. One recent estimate is that although Ontario currently has more than 1,000 producing gas wells (mainly near and in Lake Erie) they supply only about 2 per cent of current consumption.

However, it seems even that could change in the not-too-distant future.

Perhaps as a result of recent finds in Pennsylvania and New York State, there is a race on in Ontario to stake out a claim to Ontario’s shale gas reserves, with at least three companies purchasing land or buying gas rights.

One, Mooncor Oil & Gas Corp., announced in May 2008 that it had begun an “aggressive land acquisition” in southwestern Ontario, wants to tap into the province’s largely ignored large reservoirs of shale gas, and aims ultimately to purchase 100,000 acres and gain exclusive access to the gas.

The new gas rush in North America and Europe involves extraction of “unconventional” natural gas. Norfolk County on Lake Erie, Kettle Point on Lake Huron and the Blue Mountains have been pinpointed as sites with the greatest shale gas potential.

Of course, there’s a sticky problem for the Blue Mountain area, which has been identified as having Ontario’s best shale gas potential – the fact it’s part of the Niagara Escarpment. However, some development and resource extraction activities are already permitted on the escarpment.

But even without increased local production there is clearly a plentiful supply elsewhere in Canada, with even Quebec and Nova Scotia currently seen as soon becoming self-sufficient in natural gas.

Accordingly, we see development of provincial policies that encourage natural gas exploitation and consumption as long overdue, whether or not there is a realistic potential of Ontario one day having supplies that will meet the local demand.