Former Alberta energy CEO says natural gas Crown corp. could be bad for private sector

The former CEO of the Alberta Petroleum Marketing Commission says the idea of a Crown corporation to build out natural gas pipeline infrastructure could push out private investment.

This from Richard Masson comes after a provincial cabinet report was recently released about the overhaul and eventual expansion of the province's natural gas pipeline market.

Great West Media has obtained a copy of the report, which noted the NOVA Gas Transmission Ltd. system is expected to be at full capacity until 2029, with no future capacity after 2030.

The report also notes that the province has met with TC Energy to rectify this and several other matters, but notes TC Energy's solutions "are not guaranteed to ensure timely, sufficient access to natural gas solutions across the province."

To Masson, the reason we're at this point is that demand for energy products has grown faster than many in the industry expected.

"All these things are new sources of demand that weren't really anticipated in the planning cycles of TC (Energy) or the other providers in the last few years," he said. "Part of the challenge when you end up with economic conditions that create a boom, call it, is that many people propose projects, but not all of them can be built or get built."

The report notes data centres as a particular area of interest, with a major data centre project being built by Meta in the Industrial Heartland north of Edmonton. That facility is slated to be powered by a yet-to-be-built natural gas plant.

One of the plans floated in the report involved establishing a Crown Corporation to build natural gas pipelines, although the idea was recently dismissed by Premier Danielle Smith on her weekly provincewide radio show.

"I think there's enough private sector interest that we would not have to go to what they do in other provinces," said Smith. "We would very unlikely have to create a Crown Corporation to do it."

Masson said establishing a Crown agency to handle this file could be problematic.

"If you're going to start to change the rules of the system, does that scare off the capital that you expect, right?" said Masson. "Because the Crown corp isn't going to take over 100 per cent of building natural gas. They don't have the people, they don't have the money, they don't have the skill set."

The report noted that TC Energy's discussions with the province made it clear that the Calgary-based energy giant was seeking a similar rate of return on its investments to that it gets from its projects in the United States.

Setting up a Crown corporation or government agency would be problematic, but Masson said it also invites a conversation about the competitiveness of the energy sector's business.

"I think this is where governments and regulators need to have a hard look at it and say, 'Have we made building in Canada uncompetitive?' Because if it is uncompetitive, you know, on a risk-adjusted return basis, and I'm not saying that it is, then you won't be able to track the capital you need," said Masson. "That's an area where I think government can have a productive voice, just talking about the returns and whether they're competitive or not.

In response, TC Energy said it is prepared to continue expanding the NGTL and to meet the demands of Alberta and Canada.

"The key is working together to bring forward credible solutions, capital and capacity quickly enough to support Alberta’s growth and enable Canada to unlock the opportunity to meet the moment," said the Calgary-based energy giant in a statement.

While the Alberta government didn't explicitly confirm the contents of the report, it did say that internal materials are not representative of government decisions.

"We are working with industry, including the natural gas infrastructure owners, to better understand these issues and identify practical solutions that support future growth and investment," said a statement from the Ministry of Energy and Minerals.

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David Boles, Local Journalism Initiative Reporter, St. Albert Gazette.