Alberta's Associate Minister of Natural Gas and Morinville-St. Albert UCP MLA Dale Nally says natural gas has not been spared from the economic turmoil that has embroiled the province during the COVID-19 pandemic.
“Natural gas companies are suffering from some of the similar issues that other companies are, (which) is their loss of capitalization,” Nally said.
“Their evaluations have plummeted along with the rest of the energy industry, and that's impacting their ability to raise capital.”
Nally says changes he has made in his role as the province's first associate minister of natural gas have helped to insulate the industry from some of the negative impacts of COVID-19.
While the price of oil continues to dominate the news, most recently by dipping down below $0 per barrel, the natural gas sector saw prices fall below $0 months ago. In November, Nally told the Gazette his department had been working hard to stabilize the industry, which at one point saw the price of gas drop to -$0.10.
His ministry tackled an industry report on how to recover, including a key recommendation to allow natural gas producers to inject their product into storage while pipelines are under maintenance. Before that, they had to continue making their project, pushing gas prices down.
Thanks to the changes that have been made, the price of natural gas has not dipped into negative prices and Nally said natural gas has been holding steady at around $2. Canadian natural gas prices have remained similar to prices in the United States, which hasn't historically been the case.
“If we hadn’t done those measures that we did, there would have been a different situation right now. There would have been more bankruptcies and there would have been more layoffs.”
The associate minister said the industry still needs support from the federal government.
“There are systemic issues that we need to solve. Part of them are (the industry) is hampered by the federal government,” Nally said.
“There is an NGTL expansion that is supposed to be completed by April of 2021 and unfortunately, even though the Canadian Energy Regulator has recommended the approval of that expansion, the federal government is ... delaying making a decision in what is clearly a correct decision to make,” Nally said, referring to a natural gas gathering and transportation system that TC Energy hopes to bring online next year, pending regulatory approval.
The Canadian Energy Regulator issued a recommendation in February that the project be allowed to proceed.
Nally said the industry was already hampered before COVID-19.
“It's been tough but I’m confident that the natural gas producers have adjusted to producing in a low-cost environment and I am confident they will come out as a stronger industry on the whole because of it.”
