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Alberta Energy is looking at possible solutions to natural gas pipeline constraints in the province, including introducing legislation to enable creating a new Crown corporation to address the issue
This Artticle and More by Chris Varcoe Here
Alberta has a long history of trying to fix what it sees as problems vexing the province’s oil and gas system through government intervention.
It often goes awry.
Think about the bi-provincial upgrader, the Sturgeon refinery, an ill-fated investment in Keystone XL or leasing rail cars to move more crude by train.
Each was meant to address a significant issue, such as trying to expand access for a clogged oil transportation system or creating more value for Alberta’s bitumen bounty.
“Some of those ones (were) longer-term issues. You can see a problem, as government, and you’re trying to find a way to deal with it,“ Richard Masson, former chief executive of the Alberta Petroleum Marketing Commission, said Monday.
“The first rule of government is do no harm — you’ve always got to think about that.”
Yet, as former Alberta energy minister Sonya Savage put it, there’s often a natural tension on exactly what role governments should take, noting companies strive to enhance shareholder returns, while governments want to generate more royalties and create jobs.
Any intervention needs to be done carefully.
“It makes me very nervous, because there is not a great track record,” Savage said.
“But (if) the private sector is not prepared to invest in projects that are in the public interest — and have public merit and benefits — then I’m not opposed to the government looking and researching.”
And that leads us to a leaked cabinet document, first reported by the Narwhal last week, that shows Alberta Energy is looking at possible solutions to natural gas pipeline constraints in the province, including introducing legislation to enable creating a new Crown corporation to address the issue.
It arrives as gas demand increases, from more LNG exports, electricity generation and to meet growing data centre requirements.
“Immediate, co-ordinated and targeted action is needed by the government of Alberta to address natural gas constraints, and ensure that Albertans receive the most value while maintaining a reliable energy system,” states the report, which was obtained by the Herald.
Key drivers of the problem are insufficient gas transportation capacity, a lack of competition for such infrastructure and federal regulatory oversight of the matter, the report states.
It points out that TC Energy’s Nova Gas Transmission Line (NGTL) system is fully subscribed until 2029, “with no future capacity confirmed beyond 2030, and speed to service is uncertain.”
The massive NGTL system moves an average of 15 billion cubic feet (bcf) of gas per day, gathering it from producers and connecting it to various markets.
“Insufficient gas transmission capacity risks significant lost investment in Alberta,” the document states.
“Given the extensive discussions with TC Energy since 2024 that have produced no viable solutions to date, and the time-sensitive opportunities available to Alberta, escalatory and direct measures are now required.”
Among a series of potential options, the report states, are establishing legislation to enable setting up Crown corporations, including one that could help plan new natural gas infrastructure, along with a new commercial Crown entity that could construct, own or backstop pipelines.
It also contemplates legislative changes to impose a “must serve-must invest” requirement for designated gas utilities to invest in new facilities, or taking steps to enable more competition in gas infrastructure and delivery.
NDP Leader Naheed Nenshi told reporters Friday that the government’s proposal would amount to an attempt to “nationalize the natural gas transmission industry,” because the premier thinks she knows how to operate the natural gas system better than the people who work in the industry.
On her weekend call-in radio program, Premier Danielle Smith seemed to put the idea of creating new Crown corporations on the back burner.
“If one player isn’t able to feed our entire market . . . then we’re going to look to some of the other private providers to do it,” Smith said.
“We would (be) very unlikely (to) have to create a Crown corporation to do it.”
A statement by Alberta Energy said “governments routinely examine a wide range of policy, regulatory and legislative options when considering complex issues, and internal materials do not represent government decisions.”
On Monday, TC Energy didn’t directly address the provincial report in its own statement, but noted the Calgary-based company has invested more than $15 billion over the past decade on expanding the NGTL system.
These steps have increased its capacity by two bcf a day.
It is also seeing a generational opportunity in demand for its system, fuelled by LNG facilities, electricity generation and industrial use, it said.
“TC Energy is prepared to keep investing in NGTL and expand the system to meet the scale of opportunity in front of Alberta and Canada,” the company said.
With benchmark gas prices in Alberta trading well below other hubs in North America, more pipelines are needed, said Chris Carlsen, CEO of Birchcliff Energy, a mid-sized natural gas producer.
“We need egress. The province obviously can recognize that,” Carlsen said Monday.
“In an ideal world, yeah, it’s built by the private sector, I think that’s what everybody would want, but I think they recognize there’s a problem . . . and we should be examining all (options).”
Phil Hodge, CEO of Pine Cliff Energy, said the Calgary-based junior gas producer has spoken with some data centre developers about potential projects, and a key concern for them is speed to market and getting access to gas needed for power generation.
But the process can take years to get a new delivery point approved, he said.
“The idea of more infrastructure being built that allows us to be able to move more of our product . . . will be approved and applauded,” by some within industry, said Hodge.
“There will be some that are not wanting the government to be doing this . . . I think the devil is in the details.”
Chris Varcoe is a Calgary Herald columnist.
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COMMENTARY: Varcoe: ‘Do No Harm’: Should Alberta Step in to Fix Gas System Constraints, Given Past Energy Interventions?