Alberta Weighs Crown Corps to Secure Gas for AI Data Centres

The Alberta government is considering the establishment of two Crown corporations to address structural bottlenecks in its natural gas transmission network. This move aims to secure reliable fuel supplies for power-intensive data centres, a sector Premier Danielle Smith has identified as a primary economic driver. The initiative addresses concerns that current infrastructure limitations could divert investment to other jurisdictions.

A cabinet briefing document from the Energy and Minerals ministry outlines the rationale for this intervention. It cites a lack of competition and insufficient transportation capacity as critical barriers. The document warns that without timely access to reliable natural gas, the province risks losing high-value industrial investments. The proposed entities would handle system-wide planning and construct or backstop infrastructure where incumbent utilities decline to invest.

TC Energy capacity limits constrain growth

The core of the concern involves NOVA Gas Transmission Ltd. (NGTL), which is owned and operated by Calgary-based TC Energy. As the province’s largest gas transportation system, NGTL is projected to operate at or near full capacity through 2029. The document notes that TC Energy has limited plans for new capital investment in Canada past 2030. This reticence stems from lower return on equity in Canada compared to its U.S. operations.

TC Energy’s returns on its U.S. investments average approximately 14 percent, whereas returns on the NGTL line are closer to 10 percent. CEO François Poirier has indicated a preference for lower-risk expansions in the United States. The Alberta government argues that this divergence in corporate strategy creates a market failure, leaving key growth regions without adequate gas access and hindering the expansion of the data centre sector.

Crown corporation roles and costs

The proposed framework involves two distinct state entities. The first would conduct system-wide planning for gas infrastructure to address demand across the province. The second would be responsible for constructing, owning, or backstopping gas infrastructure. This entity would step in to ensure identified infrastructure needs are met specifically where incumbent utilities, such as TC Energy, decline to invest due to lower expected returns.

Full implementation of these Crown corporations is estimated to cost between $53.9 million and $162.6 million. The document suggests that these entities would boost competition by introducing new market players and providing the province with greater regulatory autonomy over infrastructure development. While acknowledging that building infrastructure ahead of projected demand increases financial risks, the government views this as necessary to prevent the loss of data centre investments.

Government stance on market failure

The office of Energy Minister Brian Jean stated that internal materials do not represent final government decisions. However, the ministry acknowledged that an increasing number of project proponents across various industries have raised concerns about accessing industrial quantities of natural gas. The government is currently identifying practical solutions to support future growth and investment, citing a need for viable alternatives to the dominant NGTL system.