Varcoe: ATCO boss on hydrogen’s future, Bill C-69 and own missteps


During the meeting, ATCO’s chair and CEO applauded the province’s ‘great win’ this week over Bill C-69

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ATCO Ltd. chief executive Nancy Southern heralded the province’s legal victory over Bill C-69 this week and lamented the stunted state of Canada’s LNG development. She looked ahead to the future of hydrogen projects in Alberta and apologized for past conduct at ATCO Electric.

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It was an event-filled annual meeting Wednesday for ATCO Ltd., arriving during a period of rapid change for the province’s energy sector and the Calgary-based utility, structures, logistics and energy holding company.

During the meeting, ATCO’s chair and CEO applauded the province’s “great win” this week over Bill C-69, the federal government’s Impact Assessment Act, which overhauled how major energy infrastructure projects are evaluated in Canada.

The provincial government opposes the legislation, contending it infringes upon Alberta’s jurisdiction over the development and management of natural resources. On Tuesday, the Alberta Court of Appeal said the act was unconstitutional.

Ottawa has pledged to appeal the matter to the Supreme Court of Canada.

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“I feel that C-69 is so far-reaching that it’s created so much uncertainty for industry to invest. We don’t know whether a hydrogen project falls under C-69″ and requires federal review, Southern said in an interview after the meeting.

“We don’t understand the total implications of what C-69 says. Now, the Alberta court ruling at least sets the stage for the Supreme Court to bring greater clarity, so that industry has a path forward for investment.”

The Alberta government and energy industry have contended Bill C-69 would extinguish the prospect of major new oil pipelines being proposed to export additional crude out of the province, although market forces — and additional capacity coming from the Trans Mountain expansion — may make that irrelevant.

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However, the industry has high hopes for building other energy infrastructure, including hydrogen production facilities and new LNG export terminals off Canada’s east and west coasts.

ATCO, founded 75 years ago, has a footprint in these emerging areas. Last year, it completed work on a 4,500-person workforce housing complex at the LNG Canada natural gas liquefaction and export facility in Kitimat, B.C.

It’s also working on providing accommodations for 2,500 workers at an LNG expansion project in Western Australia.

“We talk a lot about energy transition here in Canada and we talk about energy security, more so now in North America as a result of the Russian invasion (of Ukraine),” Southern told the meeting.

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“And who’s doing a lot about it, when one LNG terminal (is) in Canada? One LNG terminal in Canada. Australia has 10.”

The development is part of the Coastal GasLink pipeline route to a liquefied natural gas project in Kitimat, B.C.
The development is part of the Coastal GasLink pipeline route to a liquefied natural gas project in Kitimat, B.C. Photo by DISTRICT OF KITIMAT

The mammoth LNG Canada development, led by Shell, is the only such facility under construction in the country, despite 18 separate projects being proposed for the Pacific coast over the course of the past decade.

The smaller Woodfibre LNG facility near Squamish, B.C., has been moving closer to getting a green light for full construction.

“Why don’t we have more? Why can’t we be the exporter of choice? And why can’t we create the value-add in Canada?” Southern said. “How come we forgot that we are a trading nation like Australia?”

Canadian natural gas producers are anxious to see more LNG facilities constructed to export their energy beyond the United States. Prices and demand have soared for LNG in Europe and Asia over the past six months.

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As European countries try to shift off Russian natural gas following its invasion of Ukraine, Ottawa has been in talks recently about two potential LNG projects off the Atlantic coast and how the government could expedite such developments, Natural Resources Minister Jonathan Wilkinson told Reuters last week.

As the focus on the energy transition gains momentum, ATCO is also active on the hydrogen front. The company is proceeding with a project to blend up to five per cent hydrogen into the natural gas distribution system for 2,000 homes in Fort Saskatchewan later this year to reduce emissions.

It’s also examining plans for a large development with Suncor Energy to produce more than 300,000 tonnes of clean hydrogen annually in the province by 2028; much of the output would be used at Suncor’s refinery near Fort Saskatchewan.

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“The deeper we get into it, the more we realize how strategically advantaged we are in being able to underpin and use two-thirds of this hydrogen within our own refinery to help decarbonize it,” Suncor CEO Mark Little said in an interview this week.

“We’re on track to sanction that in 2024.”

Southern is also optimistic, but said she is hoping for clarity on whether the project falls under the federal Impact Assessment Act, noting: “That for me is really the major impediment. That’s the only thing.”

At the meeting, Southern also commented on ATCO Electric recently reaching a joint settlement agreement with the enforcement staff at the Alberta Utilities Commission (AUC) to pay a $31-million administrative penalty. (ATCO Electric is a subsidiary of Canadian Utilities, which is majority-owned by ATCO.)

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ATCO Electric contravened sections of the Electric Utilities Act and independent system operator (ISO) rules related to a sole-source contract awarded in 2018 to a firm co-owned by a B.C. First Nation — tied to a new transmission line and substation project in the Jasper area, according to AUC filings.

ATCO Electric paid an estimated 30 per cent over market value for the work and then applied to be reimbursed for it by ratepayers. Southern said these costs did not go into customer rates.

“I want to apologize to all of you for the disbelief and disappointment that you must have felt upon hearing this news,” she told shareholders. “Our investigation did indeed find that proper procedures were not followed . . . and those people are no longer with the company.”

A decision by the AUC on the settlement agreement is expected soon, Southern added.

Chris Varcoe is a Calgary Herald columnist.

[email protected]

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