Copyright of the Daily Oil Bulletin 2018
Ottawa’s Takeover Of Trans Mountain A Model For Natgas Infrastructure
A founding member of a new organization that is proposing several initiatives to improve the fortunes of Western Canada’s struggling natural gas industry says producers, government officials and others should view Ottawa’s takeover of the Trans Mountain pipeline as a model that should be copied for the natural gas sector.
Bill Gwozd, who helped found the newly-created The Centre for Gas and Liquids Monetization (CGLM) and who formerly held senior positions with natural gas-focused Ziff Energy Group and the Calgary-based division of Solomon Associates LLC, said he believes the federal government’s move to spend $4.5 billion to buy the existing Trans Mountain pipeline and the initial phases of a tripling of its capacity to move oil to the West Coast is an example of the activist approach he would like to see governments assume in the gas sector.
“I’m a big believer in government involvement in [energy] infrastructure,” he said. “The issues are too big for one company to face, which was the case with the Trans Mountain project [which the government bought from Kinder Morgan Canada Limited]. To truly develop the LNG opportunity [on the British Columbia coast] we need government involvement.”
Gwozd points to the precedent established by the late Peter Lougheed, when he led an ostensibly Conservative government in Alberta as premier.
The Lougheed government was very proactive, helping to kickstart the oilsands industry by imposing nominal royalties until investment payouts in the projects were recovered. It also leveraged the platform of the Alberta Gas Trunk Line to develop Alberta’s petrochemical industry.
Gwozd said the provincial governments in Canada, which hold mineral rights and so benefit directly from oil and gas development, need to take a much more activist role in that development than, for example, governments do in the U.S.
Aside from the historic examples of governments having done so in Canada, there are numerous examples worldwide, he said.
For example, a proactive government in Trinidad played a direct role in the development of that nation’s strong natural gas industry and the same thing occurred in Peru, where a massive natural gas pipeline was built across the Andes Mountains.
“In Canada the oilsands grew because of government involvement,” said Gwozd. “We [members of the CGLM board] believe the activity [to develop the natural gas sector] has not proceeded on pace and we want to see the process expedited.”
Government involvement, which would be focused on the development of LNG projects, might involve direct investment in the projects or in pipelines feeding those projects, he said.
Gwozd said there are other examples in Canada, including the creation of a government-promoted marketing group to promote the development of Canada’s maple syrup sector, the development of the Canada Wheat Board and numerous other similar initiatives.
Government was also heavily involved in the development of Canada’s national railroad and its extension to B.C., which agreed to enter Confederation based on the promise from Ottawa that rail would be extended to the province.
Gwozd, long a bull regarding Canada’s ability to develop LNG projects — he testified at several National Energy Board (NEB) hearings into proposed plants — continues to be so.
He believes demand for gas in Asia will continue to justify the development of several LNG export plants on the West Coast.
He said the CGLM will focus on the entire “value chain” of the gas sector, including the midstream sector, LNG plant developers and others. It has board members from Alberta, Houston, Ottawa and B.C. It has attracted the support of 70 companies and will soon be developing its website and taking other steps to establish itself.
Gwozd said board members will meet about four times a year and there will frequent studies and other initiatives aimed at advancing the prospects of the sector.
“We plan to be vocal about promoting the growth of the natural gas sector,” he said.