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Leadership Canada's LNG marathon man: pioneering the dream from coast to coast

Alfred Sorensen

rachel idzerda The Globe and Mail

Alfred Sorensen had his "aha moment" in 2007 when he had a chance encounter with Randy Eresman, then chief executive officer of Encana Corp., at an investors symposium in London.

During a break, Mr. Eresman asked his fellow Calgarian what business he was in. Mr. Sorensen told him that he was leading a project to bring liquefied natural gas into British Columbia at Kitimat.

The blunt reply from a man who was then heading one of Canada's largest oil and gas producers: "That's the stupidest idea I ever heard of."

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Mr. Sorensen might have responded with defiance to Mr. Eresman's impolite assessment. After all, some of the world's biggest energy companies were still planning to build LNG import terminals throughout North America.

Instead, he listened and reacted. He went back to Calgary and told his partners they had a problem, that the nascent shale gas business throughout the U.S. and Canada was likely to flood the North American market. In a desperate effort to save their investment, they reversed course. Kitimat LNG became the first of what is now nearly 20 West Coast projects proposing to liquefy Canadian natural gas and export it to Asia.

In 2010, with the project desperate for cash, Mr. Sorensen was forced to sell control of Kitimat LNG in a $300-million deal with Apache Corp. and EOG Resources. His personal take: $30-million.

Now, the man who pioneered the LNG dream in B.C. is leading a new venture, Pieridae Energy Ltd., which proposes to build an $8.5-billion LNG export facility on another Canadian coast, in Goldboro, N.S.

Skeptics question whether either LNG project will be built, given the huge capital requirements and competitive markets, as countries such as the United States and Australia race to cash in.

Still, Mr. Sorensen exudes confidence, even as he acknowledges the challenges of the global LNG business. Owlish and deliberate behind his thick glasses, he totes up the pluses of an East Coast LNG plant, then addresses the key risk: the lack of a nearby gas supply.

"The absolute surplus of gas in North America is so large that we have to find ways to get it off the continent," the chartered accountant says over a late breakfast at Wilfrid's restaurant in Ottawa's Château Laurier Hotel, a block from Parliament Hill.

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"But the math is very challenging. You need incentives other than economics."

Mr. Sorensen was visiting Ottawa earlier this month as part of a broader effort to win support for the LNG business. Shortly afterward, the federal government announced a key tax break, allowing project proponents to write off capital costs at an accelerated pace.

The key for any successful LNG project, Mr. Sorensen insists, is to line up customers who are also partners and who are eager to ensure the diversity of their own energy supply mix.

Early in its planning, Pieridae reached a deal with giant German utility E.ON AG that will see the company take half of the proposed 10 million tonnes of liquefied gas the Goldboro plant would produce. With E.ON's backing, Mr. Sorensen then secured a promise of loan guarantees from the German government, which is eager to reduce its dependence on Russia for natural gas. He expects to announce another major European customer soon.

In the absence of an assured gas supply from Canada, he is negotiating with a major producer in the massive Marcellus field centred in Pennsylvania, and has an application slowly working its way through the U.S. Federal Energy Regulatory Commission to export the American gas through Canada.

Mr. Sorensen is a serial entrepreneur who is clearly passionate about human endeavour that rises above the ordinary or mundane. Whether chasing an improbable business deal, appreciating the exquisite physicality of ballet, or listening to lectures from researchers at the University of Alberta, where he has status as a major donor, he revels in activities that push back boundaries.

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Since breaking into the business as a trader with Direct Energy in the late eighties, Mr. Sorensen has started three energy companies and is a major shareholder and former chief executive officer of a fourth – a small gas producer, Canadian Spirit Resources Ltd.

"That trading mentality is what guides my decision making today: How do you take a situation and turn it into a monetizable event?" he says over a breakfast of eggs Benedict and tea. "We're experts at turning gas into cash. That's what we think about all the time – how to accomplish it."

Mr. Sorensen attributes his tolerance for risk to his immigrant parents. His carpenter father, Carl, came to Edmonton from Denmark a few years after the Second World War. To escape the prairie winter, Carl drove with a friend to Acapulco – famous then for attracting movie stars and the jet set – and met his Mexican bride-to-be, Dolores, on a beach. She was from a well-to-do family but moved north to rear four children – Alfred is second oldest with three sisters – in middle-class Edmonton.

"I think their experience taught me to be independent," Mr. Sorensen says. "And to be a little skeptical at times as well – that what everybody is doing right now isn't necessarily the right thing."

Mr. Sorensen does not fit any stereotype of a Western oil executive. A bachelor at 53, he says he inherited his passion for ballet from his mother, who helped to start the Alberta Ballet Company. He likes to cook and garden, though he admits that he's not highly skilled at either.

He is also a distance runner and has completed three marathons and 10 half marathons. His last full one, three years ago, was through the wineries of the Médoc region of France, with the second half of the race interrupted by tastings. Last summer, he participated in his first "Spartan Race," as one of a handful of fiftysomethings. It was only a five-kilometre course but with 16 obstacles; it was "way harder than a marathon ever was," he says.

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He likens the mental toughness needed to complete a 42-kilometre run to the attitude required to see an LNG project through to completion.

"Mentally, it's the same game," he says. "Anyone can run a marathon – it depends on how much mental strength you have. … They're very similar in that you can take the bigger race and break it into smaller pieces and get to the next piece and then work on the next one and the next one."

Mr. Sorensen started his career on a conventional path. He graduated with a commerce degree from the University of Alberta, and went to work for one of the big accounting firms while he earned his chartered accountant status.

He joined Direct Energy as an accountant but quickly moved over to the trading floor at a time when natural gas markets were newly deregulated. Within two years, he and a colleague left Direct Energy to start a firm they called Continental Energy Marketing Ltd.

Continental became one of the premier companies trading natural gas futures, and was acquired by a predecessor of U.S. energy giant Duke Energy Co. After the acquisition, Mr. Sorensen stayed on to lead the firm's effort to establish a European beachhead. And it was during that London stint that he was introduced to the LNG business.

He got a call from a trader who had a tanker full of liquefied natural gas waiting outside the Belgian port of Zeebrugge, who wanted to know whether Duke would buy it. "I had no idea what he was talking about," he recalls.

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But he did the research and left Duke in 2002 with the conviction that LNG was going to be the next big thing in natural gas commodity trading. He never did do the trading but instead was approached about putting together a project to import LNG, and co-founded Galveston LNG Inc., which started the Kitimat LNG project now headed by Chevron Corp.

After essentially getting forced out of Kitimat by Apache, Mr. Sorensen took a break to enjoy his new fortune but found himself feeling empty and bored. His bottom came in 2011, when his tailor told him that he had the leisurely lifestyle of a "trophy wife."

"It was very depressing, soul sapping," he says. "I need to build and continue to learn and experience new things. It was not about the money – that was just a pile of cash that meant nothing to me. I liked the idea of the chase."

He joined Canadian Spirit Resources Inc. as CEO, but it was a rocky road. The small exploration and production company has some natural gas properties in the Montney region of northeastern B.C. Its biggest selling point is easy access to pipelines that will feed West Coast LNG projects, but development on the coast has moved far more slowly than anticipated.

For all the skepticism around Pieridae and the insufficient local gas supply to feed the liquefaction plant, Mr. Sorensen remains upbeat.

Pipeline companies are looking for approval to build capacity into New England, which would connect with a reversible Maritime line that ends at Goldboro, where Nova Scotia's rapidly declining offshore production comes ashore. Marcellus producers have vast quantities of natural gas and are desperate for new markets. And European customers are equally desperate for North American supply.

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There are still plenty of obstacles to overcome as Mr. Sorensen checks off some short-term goals in pursuit of his long-term target. Having left the B.C. project before the end of the race, he is determined to see the finish line with Pieridae, rather than hand it over to foreign interests.

"We need national champions in this country," he says.

"I'm fiercely Canadian. We live in a very wonderful country that allows people who don't have much to build something very quickly."

The pursuits of Alfred Sorensen

Ballet

He chairs the Alberta Ballet Foundation, which funds new works. He developed his appreciation for the art of dance as a teenager, when he was dragged to the ballet by his mother and three sisters. His favourites are Serenade and Jewels, two masterpieces by famed choreographer George Balanchine. "In both cases, an incredible amount of physical movement occurs in a short amount of time," he says. "To me, that is what is most amazing, how all those bodies can be co-ordinated and move at the same speed in absolute beauty."

Fitness

Though he admits to having "slacked off " at 53, Mr. Sorensen still sees a personal trainer four times a week and is considering a friend's request to run the New York marathon this year. He has run three marathons and 10 half marathons.

Education

After making a $5-million gift to his alma mater, the University of Alberta in Edmonton, Mr. Sorensen gained entry into a "new world of the university." He served on the search committee for the new president and is a member of the business advisory committee. He also attends the president's dinner, where leading researchers tell their stories. His favourite was the team working on artificial intelligence, which had taught a computer to play poker with an ability to respond to the other players.

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