Natural gas producers demand government action in open letter to Kenney

The letter warns that the viability of the natural gas sector is in jeopardy

The CEOs of nine Alberta natural gas producers have released an open letter to Premier Jason Kenney asking him to show “bold leadership” in supporting a plan to restrict production to boost low gas prices.

The letter warns that the viability of the natural gas sector is in jeopardy and the province faces a high likelihood of corporate failures, job losses and falling investment levels if the situation is allowed to continue.

The CEOs say their gas price problems have developed over many years but point specifically to what they call failed federal regulation of TC Energy Corp.’s Nova Gas Transmission Ltd. gas pipeline system in Western Canada.

The letter proposes a solution in which gas producers commit to manage their production on a voluntary basis when needed to balance supply with system capacity, resulting in no net loss to provincial royalty revenues while honouring existing sales commitments.

The letter is signed by CEOs of companies producing about two billion cubic feet per day of natural gas, including Jupiter Resources Ltd., Bellatrix Exploration Ltd., Peyto Exploration & Development Corp., Advantage Oil & Gas Ltd., Paramount Resources Ltd. and Bonavista Energy Corp.

The new United Conservative Party government created the position of associate minister of natural gas when elected and, in early July, announced a one-time tax relief program for shallow gas wells and pipelines that is expected to deliver about $23 million in support for producers.

“It is imperative that the government of Alberta intercedes as the viability of the Alberta natural gas sector is in jeopardy and, on our current trajectory, the consequences will be dire for the many Albertans that rely upon the natural gas sector directly and indirectly to support their communities,” the letter sent late Tuesday reads.

The Canadian Press

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