Action Needed To Avert Alberta Natural Gas Crisis, CEOs Say In Open Letter To Kenney
The following is an open letter sent to Alberta Premier Jason Kenney, signed by the CEOs of nine producers.
Dear Premier Kenney:
We implore the Government of Alberta to take swift and decisive action to restore a balanced and orderly market for AECO in order to capture a fair market price for Albertans’ natural gas resource and, at the same time, help avert a crisis in the natural gas sector which could result in widespread corporate failures, significant job loss and a further deterioration in investor confidence that will impair the Alberta gas sector’s ability to participate in any future recovery.
Collectively, our companies represent over 2 bcf per day of Alberta natural gas production. We are entrepreneurs, builders and job creators who have worked hard to create a world-class energy economy in our province and we are confident that our perspectives represent a significant number of Alberta natural gas producers.
The Alberta natural gas sector has endured a prolonged period of distressed and highly volatile prices at the AECO/NIT hub. The federal regulator has failed to regulate the Nova Gas Transmission Ltd. system for the benefit of the greater public interest and a liquidity crisis looms for many producers in the wake of the Supreme Court of Canada’s recent Redwater decision. It is imperative that the Government of Alberta intercedes as the viability of the Alberta natural gas sector is in jeopardy and on our current trajectory the consequences will be dire for the many Albertans that rely upon the natural gas sector directly and indirectly to support their communities.
The foundation was laid several years ago for what currently plagues this sector, so the issues and the associated options to resolve them are complex. Even amongst producers, some characterize any government action as a violation of conservative market principles whereas others think it is incumbent upon the government to engage more actively and defend the broader public interest in periods of market failure. Notwithstanding these different perspectives we are very pleased to report that through collaboration among many industry stakeholders, including leadership from within your government, we have presented a proposed solution that would achieve the objectives of restoring balance to the Alberta gas market at no net cost to Alberta’s royalty revenues while honouring producers’ existing marketing commitments.
The proposed program would have Alberta gas producers commit to manage their working interest production on an entirely voluntary basis when required to do so in order to balance supply with system capacity and thereby restore normalized market conditions within the province. It is vital, on behalf of Alberta’s natural gas sector and the tens of thousands of hardworking Albertans whose jobs are at stake, that you show bold leadership at this moment and provide your full support to this proposed solution.
Simon Bregazzi, president and CEO, Jupiter Resources Ltd.; Brent Eshleman, president and CEO, Bellatrix Exploration Ltd.; Darren Gee, president and CEO, Peyto Exploration & Development Corp.; Phil Hodge, president and CEO, Pine Cliff Energy Ltd.; Andy Mah, president and CEO, Advantage Oil & Gas Ltd.; Wes Morningstar, CEO, Canlin Energy Corporation; Jim Riddell, president and CEO, Paramount Resources Ltd.; Jason Skehar, president and CEO, Bonavista Energy Corporation; Chris Slubicki, president and CEO, Modern Resources Inc.