Skip to main content

Randy Eresman, president and CEO of Encana


Two of Canada's highest-profile energy executives have publicly joined the fight against plans by TransCanada Corp. to shift fees for moving natural gas across the country, warning that the TransCanada proposal is perilous for the energy industry.

Siding with TransCanada could hurt some 200 natural gas producers and result in "less jobs created in Western Canada and less supply of gas in Western Canada" Canadian Natural Resources Ltd. vice-chairman Murray Edwards told a National Energy Board panel Monday in Calgary.

Randy Eresman, chief executive officer of Encana Corp., added that Canada's natural gas industry currently stands before an "opportunity to attract a lot of third-party investment" with much of that capital coming from overseas. But if TransCanada gets its way, he warned, some of those foreign investors might shy away. "Things like these changes could negatively affect their desire to want to invest in Western Canada."

Story continues below advertisement

The personal appearance by the two executives is unusual and comes amid an increasingly high-stakes debate over the future of the Mainline, the TransCanada network of pipe that has, since the 1950s, carried Western Canadian gas to central and eastern consumers. The Mainline has, in recent years, fallen victim to the declining fortunes of the Alberta natural gas industry, which has struggled to compete against huge new sources of natural gas located much closer to markets in Ontario, Quebec and New York.

As a result, the Mainline is now flowing half-empty, and TransCanada has asked the NEB to approve a new way of charging tolls that would see it offload some of Mainline costs on to the TransCanada pipeline network that carries gas around Alberta. Industry doesn't like it because only a small portion of the gas on the Alberta system moves on to the Mainline, so the cost of moving gas that never touches the Mainline would also rise.

But TransCanada says its proposal would raise Alberta tolls by about 5 cents per gigajoule, while lowering Mainline tolls by about $1 – a shift that should, according to estimates brought before the NEB, raise gas prices between 17 and 40 cents a gigajoule.

"We genuinely believe that our proposal will be beneficial to the producing gas industry in the Western Canadian Sedimentary Basin," said Steve Pohlod, vice-president commercial east for TransCanada.

What's clear is that the debate over the tolls is a fractious one. On Monday, Barry Jardine, a manager with the Canadian Association of Petroleum Producers, called on TransCanada to make the Mainline more competitive without turning to the NEB, saying: "Let's be honest here. They're big boys. Stand up and take responsibility."

TransCanada has argued that it should not bear the full brunt of the bad times, since it runs a regulated pipeline that was never allowed to fully reap the rewards of the good times. Réal Cusson, senior vice-president of marketing at CNRL, shot back: "If you don't have any more shippers on your system, you will be the proud manager of an asset that has no customers." He also questioned the modelling that predicted a lift in Alberta gas prices: "It's the principle of garbage in, garbage out. You can plug in any number you want, any assumption you want, and get the answer you want," he said.

NEB chair Gaétan Caron then weighed in, with several references to "the ultimate risk" of TransCanada being forced into a writedown on the Mainline if it can't revive its fortunes. He cautioned that "nobody wants to dress for the funeral," before asking pointed questions about how the NEB can speed its review of tolls in a fast-changing market.

Story continues below advertisement

CAPP suggested creating and enforcing time lines as one possible solution.

Report an error Licensing Options
About the Author
Asia Bureau Chief

Nathan VanderKlippe is the Asia correspondent for The Globe and Mail. He was previously a print and television correspondent in Western Canada based in Calgary, Vancouver and Yellowknife, where he covered the energy industry, aboriginal issues and Canada’s north.He is the recipient of a National Magazine Award and a Best in Business award from the Society of American Business Editors and Writers. More


The Globe invites you to share your views. Please stay on topic and be respectful to everyone. For more information on our commenting policies and how our community-based moderation works, please read our Community Guidelines and our Terms and Conditions.

We’ve made some technical updates to our commenting software. If you are experiencing any issues posting comments, simply log out and log back in.

Discussion loading… ✨