POLITICS

Alberta looking at ways to expand natural gas use, including in vehicles

06/19/2012 12:57 EDT | Updated 08/19/2012 05:12 EDT
CALGARY - Alberta's premier says the province is looking at ways to boost the use of natural gas, including using it as a transportation fuel, at a time when dismal prices have been pinching producers as well as government coffers.

"This is part of the direction we need to go in, because the circumstances have changed to the point where these decisions, that can be made on behalf of government, start to make economic sense — for us and for industry," Alison Redford told a conference on unconventional natural gas Tuesday.

Redford concedes there are barriers to the idea, including the great expense of building refuelling infrastructure and the high purchase price of vehicles that can run on natural gas.

But she said "it's time for us to have these conversations."

"It will make a difference to the way that we live. It's something that people in our society are talking about. And it needs to be part of what we do in the future."

Redford made her remarks at a time when spot natural gas prices in Alberta are trading at around $2 per 1,000 cubic feet, a level that makes it tough for energy companies to eke out a profit.

In the past, the price has risen and fallen in cycles, she said. But ever-growing supplies from shale gas formations throughout North America has prolonged this slump.

"The most recent drop in prices, however, has persisted to the point where we have to consider this, from our perspective, to be the new normal and our natural gas sector is experiencing challenging times," Redford said.

She says natural gas made up about 60 per cent of all provincial resource revenues in 2005, a figure that has since declined to only 10 per cent.

Redford said it's not all bad news, citing initiatives to export natural gas to Asia via Canada's West Coast and a plant Talisman Energy Inc. (TSX:TLM) and a South African partner might build to convert natural gas into liquid fuels.

She also pointed to expanded use of natural gas amongst power producers, petrochemical makers and oilsands operators.