ATCO chief executive officer Nancy Southern, at the company’s offices in Calgary, on Sept. 21, 2023.LEAH HENNEL/THE GLOBE AND MAIL
Calgary-based ATCO Ltd. ACO-X-T is betting big on the role natural gas will play in Canada’s energy future, with a new $2-billion pipeline-infrastructure project that chief executive Nancy Southern says will help grow demand for the fossil fuel in Alberta as the energy transition spurs hydrogen production.
The company is also looking at entering the nuclear space, which Ms. Southern firmly believes will play a role in Canada’s future energy mix.
“We want to be a part of all of those sources,” she told shareholders at the company’s annual meeting in Calgary on Wednesday.
ATCO’s massive new Yellowhead Mainline project will consist of approximately 200 kilometres of natural gas pipeline from Peers, Alta. – about 170 kilometres west of Edmonton – to Fort Saskatchewan, just northeast of the provincial capital. The pipeline is expected to have the capability to deliver up to one billion cubic feet a day of natural gas, reinforcing Alberta’s natural-gas network for its growing population and industries.
It’s the largest infrastructure project in ATCO’s history, and the company says it will create thousands of direct jobs during construction and more employment by its customers, including Dow Chemical for its Path2Zero project – the expansion and retrofit of an existing ethylene plant outside Edmonton with carbon-capture technology so it can triple production.
Ms. Southern said in an interview Wednesday that she hopes the project will also boost development in Alberta’s Industrial Heartland, a region in Fort Saskatchewan where more than 40 companies produce fuels, fertilizers, power and petrochemicals.
“What I’m really excited about is seeing the demand for natural gas really coming to fruition,” she said. “We’re going to need a lot of natural gas for hydrogen in the future, so we’re hoping that that pipe is going to be big enough.”
Hydrogen is light, storable and energy-dense. When burned, it produces no direct greenhouse gas emissions, making it an attractive form of decarbonization. One way to produce hydrogen is by using high-temperature steam to produce hydrogen from a methane source such as natural gas.
Canada’s federal government and various provinces – including Alberta – are pursuing hydrogen as a potential economic opportunity.
ATCO has several hydrogen projects around the world, including in Australia and Japan. These include production, blending and refuelling facilities. In October, 2022, it began delivering a blend of natural gas containing 5 per cent hydrogen into a subsection of the Fort Saskatchewan natural gas distribution system.
ATCO also has a sweeping portfolio of wind and solar assets, and Ms. Southern says Canada will need to take advantage of all of its energy options as it pursues its net-zero greenhouse gas emission goal.
“Unfortunately, we’re at the nascent part of the journey in the transition, but the longer you keep at it the better you are getting the cost down,” she said.
That’s where small modular nuclear reactors come in. Ms. Southern said she sees incredible opportunities in a Trans-Canada power grid backbone that the federal government has talked about – despite regular bickering between the provinces and Ottawa.
“I think the next decade will be pretty exciting to see some of these projects come about and actually deliver long-term, low-cost energy,” she said.
ATCO Ltd., is a sprawling, international operation with its hands in power generation, natural gas distribution and an array of camp services for remote and temporary work sites. That diversity is ATCO’s strength, Ms. Southern said. But she acknowledged it has hit the company’s share price this year, which has fallen more than 8 per cent to $40.64 since this time last year.
She attributes that to ATCO’s offerings being unpopular with analysts, who tend to prefer pure-play businesses. At the end of the day, the company has to do a better job of explaining why diversity is strength, Ms. Southern said.
“Obviously I believe in it, because I lead it, but I think the market has a hard time understanding it. So that’s on us,” she said.
“We’re a big company that nobody knows about.”