By July 19, 2017 Read More →

Alberta news brief July 18: Industry to blame for its pipeline problems – 7Gen founder Carlson

Pat Carlson, founder, Seven Generations Energy. Photo: Alberta Oil.

Also in this brief: Canada’s uncertain role in the global LNG market, TransAlta says Rona Ambrose will help it become Canada’s “leading clean power company”

Pat Carlson, founder of innovative natural gas producer Seven Generations Energy, tells Bloomberg that the Canadian industry should stop blaming “environmentalists, First Nation communities or the government for its failure to get LNG export infrastructure built. It should blame itself.”

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“A pipeline to the Pacific and an LNG project on the Pacific, where the people along the route are involved — they’re owners, they’re builders — I don’t know that that’s been put forward,” Carlson said.

The industry maverick founded 7Gen, as the company is commonly called, in 2008 and included a strong community engagement process as a core component of the corporate culture. As a result, 7Gen has widespread support among First Nations and local communities it interacts with.

David MacPhee is the CEO of the Aseniwuche Winewak Nation’s development corporation. He says it was early days for Seven Generations when Carlson introduced himself, explained that the company wanted to build relationships with the community—and then followed through on all his promises. Elders were taken on well-site tours, which is important, because the company’s super pads reduce the environmental disruption compared with conventional sites.

“They’ve always been a very transparent company,” MacPhee says. “It’s a very comfortable relationship. I would say that our nation has granted them social licence.”

Businesses can’t rely on government to bulldoze community objection to natural gas production, LNG projects, or pipelines, Carlson told Bloomberg News. Instead, governments should provide “a final examination of operations that have already been mostly agreed on.”

Industry hasn’t tried the 7Gen approach to building support among affected stakeholders yet, but that may be the next big opportunity.

“Maybe it has and I just don’t know about it, but I suspect it hasn’t, and I suspect there’s an opportunity there,” said Carlson who stepped down as CEO of the Calgary-based natural gas producer last month.

That philosophy helped Seven Generations build its Kakwa River Project in northwest Alberta, he said. It has also helped the company’s shares outperform its peers.

A project that needs government assistance to overcome local resistance represents a failure of the free-market system and a step toward a state-controlled economy, Carlson told Bloomberg.

And industry should work to convince environmentalists that getting Canadian natural gas to the coast fights climate change by cutting China’s dependence on dirtier coal, he said.

Canada’s uncertain role in the global LNG market – National Energy Board

Canada has an abundance of natural gas and produces far more natural gas than it needs to meet domestic demand. Traditionally, the United States (U.S.) has been the primary export market for excess Canadian gas, but growing shale gas production in the U.S. has reduced this demand.

Woodfibre LNG being built near Squamish, BC.

Consequently, Canadian (and U.S.) producers have been seeking overseas markets for their natural gas in the form of liquefied natural gas (LNG) exports. Price differentials between North American gas and global LNG have also been large enough to justify the facility development and long-range transportation costs related to LNG trade, although these differentials have been decreasing.

There have been a number of LNG projects proposed in Canada on the West and East Coasts. According to the province of B.C., a reported $20 billion has been spent on the LNG industry in British Columbia (B.C.). Despite this, Canada has yet to emerge as a significant participant in global LNG markets. There are no LNG export projects currently under construction in Canada, and only one of the smaller projects has decided to move ahead.

No proposed projects on the U.S. West Coast are currently under construction and there may still be an opportunity for Canadian west coast projects to take the lead in this region. However, the U.S. is an active player in global LNG markets with multiple LNG export terminals operating and under construction in the Gulf of Mexico.

Global LNG trade is increasing. The strongest LNG demand growth is in Asia, while most near to medium-term increases in global supply will come from capacity already under construction in Australia and the U.S. However, changing LNG market dynamics, including lower prices and fierce competition, have led to considerable uncertainty among all LNG projects.

Canada is a late entrant to global LNG markets and the next several years will be critical to the development of the Canadian LNG industry. Canadian projects have certain advantages, including abundant and relatively low cost natural gas supplies. In addition, west coast Canadian LNG projects have a shorter shipping distance to Asian markets compared to U.S. gulf coast facilities, and east coast Canadian projects have a shorter shipping distance to Europe.

Disadvantages facing Canadian projects include high costs to develop projects in remote locations with limited infrastructure, and, where the construction of new pipelines is required to supply the necessary gas. With LNG prices falling in recent years, the margins needed to justify this type of capital-intensive development have eroded. Increased competition has also made it difficult for Canadian projects to sign long-term supply contracts.

TransAlta says Ambrose will help it become Canada’s “leading clean power company”

Calgary-based TransAlta Corp. (TSX: TA; NYSE: TAC) has appointed the Honourable Rona Ambrose, former leader of the Conservative Party of Canada, to its board of directors effective July 13, the company announced in a press release.

Rona Ambrose, former leader of the Conservative Party of Canada. Photo: Rona Ambrose/Facebook.

“On behalf of our Board, it is my pleasure to welcome Rona,” said Ambassador Gordon Giffin, board chair.

“We believe that Rona’s extensive public policy experience and demonstrated ability to bring people of divergent views together for a common purpose will strengthen our Board. Her experience, along with her Alberta roots, will also help further our strategy of becoming Canada’s leading clean power company through good governance, operational excellence, and growth.”

The Honourable Rona Ambrose was the former Leader of Canada’s Official Opposition in the House of Commons and acted as Minister of the Crown across nine government departments, including serving as Vice Chair of the Treasury Board and Chair of the cabinet committee for public safety, justice and aboriginal issues.

In addition to serving as an independent director, the Honourable Rona Ambrose is a Global Fellow at the Wilson Centre Canada Institute in Washington D.C. focusing on key Canada-U.S. bilateral trade and competitiveness issues.


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