Oil Pipeline News, Plus Natural Gas with Enbridge’s Michele Harradence

This week, the podcast starts with news on the West Coast oil pipeline. On July 2, Prime Minister Mark Carney and Alberta Premier Danielle Smith announced that a pipeline project exceeding 1 MMB/d was ready to be submitted to the Major Projects Office. Earlier that same day, PM Carney and B.C. Premier David Eby announced a Canada–B.C. Cooperative Prosperity Agreement, and, as part of the broader economic agreement, B.C. would not oppose a southern marine terminal for the oil pipeline.

On July 6, there was more pipeline news, with Ontario Premier Doug Ford and Premier Smith announcing an early-stage feasibility study for a pipeline connecting Alberta to Ontario’s refining region in Sarnia.

Peter and Jackie then welcomed Michele Harradence, Enbridge’s Executive Vice President and President, Gas Distribution and Storage, and the new Chair of the Board of the Canadian Gas Association (CGA), to the podcast.

Peter and Jackie asked Michele about municipal bans on natural gas, the role of natural gas in cold-climate reliability, and natural gas’s GHG emissions. They also discussed the outlook for North American natural gas demand growth, including demand from AI data centres, and whether supply can keep pace. Finally, they compared the regulatory process for major projects in Canada with that in the United States.

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Episode 333 transcript

Disclosure:

The information and opinions presented in this ARC Energy Ideas podcast are provided for informational purposes only and are subject to the disclaimer link in the show notes.

Announcer:

This is the ARC Energy Ideas podcast, with Peter Tertzakian and Jackie Forrest, exploring trends that influence the energy business.

Jackie Forrest:

Welcome to the ARC Energy Ideas Podcast. I’m Jackie Forrest.

Peter Tertzakian:

And I’m Peter Tertzakian and welcome back. Happy Stampede. I think, Jackie, now I’m five days into this and I’m frankly exhausted, but it’s such a wonderful vibe. The proverbial vibe check is very positive.

And I just want to take a moment and thank all the people that come up to us and speak positively about our podcast and give us encouragement because it’s you, the listeners, that keep us going. I also want to acknowledge all the people that invite us to these Stampede parties and so on. It’s just such a wonderful place and event to meet old acquaintances, people you work with, and friends. It’s such a positive thing.

Jackie Forrest:

It is. And this year is especially exciting because there has just been so much news to talk about with all those old and new friends that you get to see so efficiently at all these Stampede events.

Peter Tertzakian:

That’s right. Well, amidst it all we’ve had last week … I don’t know. As I said, time flies when you’re having fun, real fun at the Stampede. But we had the prime minister in town with Danielle Smith, our premier of Alberta, talking about the pipeline announcement as a follow-on to the memorandum of understanding a few months ago.

Jackie Forrest:

So July 2nd, this pipeline announcement, this document to be put forward into the Major Projects Office with the idea by October it could be fast-tracked as a project of national interest. Great news, the prime minister and the premier of Alberta talked about being $200 billion of direct investment when you consider the pipeline and all the upstream investment that can come with it.

It’s going to have this southern route. This is good because it is going to potentially come online a couple of years sooner than if you chose a northern route. And also, we learned earlier in that day that there’s going to be no removal of that tanker ban. So the north route really isn’t an option if there’s a ban on tankers in the north.

Peter Tertzakian:

That 200 billion, it should be pointed out, I mean, it’s not upfront. I mean, it’s over the course of 10, 12 years. It’s several pipelines, including some of the existing pipeline expansions, including the Trans Mountain pipeline expansion going west. But it also includes the capital expenditures needed to fill the pipelines, which is far in excess of what it costs to build a pipeline. So I mean, these are not $200 billion of just a pipeline. This is $200 billion of overall economic investment.

And I think that’s the way we have to view it, because there’s a lot of negativity about, oh my God, it’s going to be subsidized and this sort of thing. But we need to view these sort of infrastructural builds as investments for the next generation of Canadians and beyond, whether it’s ports, railroads, pipelines, transmission lines, and so on. These are investments in the future of this country at a time when the geopolitics of the world is such that we have to make these investments to break away from our North American paradigm.

Jackie Forrest:

200 billion I would say is even probably more than a decade, right? Because this pipeline’s going to operate for a long time. So the upstream investments can extend 20, 30 years.

Peter Tertzakian:

The original Enbridge mainline, and hold that note because Enbridge, we’re going to be talking about Enbridge here shortly, spoiler alert. But the original Enbridge mainline was built in 1952, ’53, I think. It’s still operational, still delivering oil to the United States in great quantity, and still generating volumes of royalties and taxes to the Canadian people. And this is really important because you cannot evaluate these things on near-term financial metrics. Is it economic? Well, how are you measuring that? The standard financial metrics are not really relevant when you think about the long-term prosperity of the country.

Jackie Forrest:

Well, and another thing that we learned is that it is going to be a private/public partnership for now. So Pembina is going to be part of it, but also the Trans Mountain. So people that already built a pipeline, actually the company that’s built most recently a pipeline in Canada across the same route. So I think that’s great to have that.

Peter Tertzakian:

It’s also great that our prime minister in his speech on Thursday Night, along with the premier of Alberta, has mentioned repeatedly of the indigenous participation, which is so important in getting these sorts of infrastructural projects built.

Jackie Forrest:

And coming across the same route where you have indigenous communities that have already been familiar with pipeline projects and benefit agreements is important. Of course, the Alberta government is part of it too. We don’t have time to get into everything, but my beef about the announcement or the reaction was that, oh, well, Pembina’s only 10% and it’s non-binding.

And I’m like, this is a, by the way, we learned about it, potentially a $35 billion project, maybe more than that. I think that having government involvement is critical because of the risks still for the project. Of course, Premier Eby accepting that he won’t fight the pipeline gets rid of a big risk, but there’s still a lot of risks. And until we get rid of those risks, I think it’s very difficult for public companies to support a project. And then just the magnitude of this project. Very few public companies in Canada can support building a $35 billion project.

Peter Tertzakian:

No, it’s a big needle mover, as they say. And risk is all relative and relative to where we were say 18 months ago. We’re a lot further along and I think it’s barrel half full, if you will, in terms of trying to be optimistic, because there’s really no dividend to be paid for being negative.

Now listen, I’m going to timestamp the podcast here, as I usually like to do. It’s 8:30 AM on Monday morning, July the 6th. And I do that because the understanding is that Premier Ford of Ontario is in town to make an announcement with Premier Smith of Alberta. And so we shall await that as we record through the podcast and maybe at the end make mention of exactly what was said as we check our phones to see the announcement.

Jackie Forrest:

Yeah, apparently it’s at the breakfast, but it’s an update on economic growth, but we understand maybe there’ll be some pipeline news there too.

A couple other little points before we get going is I wanted to do a shout-out for Mark Carney’s video that was released just before Canada Day. I think people should look at that video. Interestingly, he talked about the fact that the previous liberal policy around climate is no longer working for the country and that in this world of geopolitical instability, we need something different. We cannot restrain our oil and gas production for short-term emission goals. Our allies need the energy. It’s way too expensive for Canadians. And he also talked about the fact it’s tearing the country apart with these separation references.

Peter Tertzakian:

We’ll post that video. We’ll post the video.

Jackie Forrest:

We’ll post the video. And then one more acknowledgement. Last week we talked about that green light data center power plant project.

Peter Tertzakian:

Again, from Pembina. Again, from Pembina.

Jackie Forrest:

Yeah, Pembina’s involved in that too, as well as some others. We said it was going to be difficult to FID because they didn’t have their client and then the uncertainty around natural gas power and that Clean Electricity Reg. Oh, I guess we were wrong on some things, Peter. They actually FID’d it July 2nd. So we will talk about that more in the future.

Peter Tertzakian:

Okay, listen, we are going to switch to natural gas because although the last several days have been oil, oil, oil, we want to flip over to natural gas. And we’re delighted to have with us Michele Harradence from Enbridge. As I said, that was a spoiler alert, from Enbridge. She is an executive vice president at Enbridge. And she’s also the president of the gas distribution and storage business within Enbridge. So straight from Toronto and sometimes from Houston, welcome to the studio, Michele Harradence.

Michele Harradence:

Well, thanks Peter, Jackie. It’s great to be here. It’s exciting times. It’s been a busy weekend, and you’re exactly right. It was over 75 years ago that Enbridge started with its mainline, all about taking Canadian energy to international markets. So it’s pretty exciting times here to see how the Canadians and the government are getting aligned on just how important that is.

Jackie Forrest:

Yeah, big change in the last few years. Well, I think most of our listeners know Enbridge as the big oil pipeline that moves 70% of the oil out of this region, a lot of it to the US, but some of it comes back into Canada through the Enbridge system in eastern Canada. But tell us a bit about the natural gas business that you run, because I don’t think that’s as well appreciated in terms of the size of it.

Michele Harradence:

Sure. Well, exactly. I mean, our crude oil business is the largest in North America. It moves about 30% of the crude oil that moves around North America. And actually we have the largest export terminal in North America. But the other thing that we’re the largest at is our natural gas utility business.

So we’re North America’s largest natural gas utility. We serve seven different provinces and states with 7.1 million customers. On a peak day, our gas utilities can deliver over nine billion cubic feet of gas into homes, schools, hospitals, and businesses. In fact, Enbridge Gas started in 1848 with 12 gas street lamps in Toronto.

Peter Tertzakian:

Oh, wow.

Michele Harradence:

So that’s still where we … Yeah, and you can still find some of those outside the St. Lawrence market if you go down there.

Jackie Forrest:

Now Peter’s going to have to change his summer travel plans.

Peter Tertzakian:

Yeah, exactly. Those old coal gas, they used to heat up the coal to make the coal gas.

Michele Harradence:

To make the coal gas, that’s exactly right. It started with manufactured gas back in 1848. So we’re pretty excited to … Now we’ve grown that we serve one in 12 natural gas customers in North America. We actually have 300,000 kilometers of pipeline, whether that’s gas transmission pipe, distribution mains, or service lines. That’s enough to go around the earth eight times. It is also why I don’t always sleep very well at night, making sure it stays very safe. So yeah, it’s an exciting place to be for sure.

Peter Tertzakian:

Wow. And as if you didn’t have enough to do, congratulations on your new role as the chair of the Canadian Gas Association. Tell us a little bit about that association.

Michele Harradence:

Thanks. Yeah. So recently made chair of the Canadian Gas Association. It’s exciting, and it’s an exciting time to be focused on energy, as we were just talking about here. So the focus of the CGA is to build understanding of natural gas’s role in Canada’s domestic economy and how it impacts our quality of life, and to advocate for very clear policy alignment across energy infrastructure, and investment.

We all know that Canada has an extraordinary natural gas base. I mean, we have, what is it at current production levels, 200 years of supply I think it is. I spent part of my career with Enbridge working in our western Canadian assets and I always talk about the Horn and Liard River Basin that we’re not even really doing much with yet. And there’s probably 150 years up there.

But we have actually more than $90 billion of natural gas infrastructure that’s already in the ground invested in in Canada, and it’s something that we really need to appreciate we have. And I think the natural gas business has quietly done its thing for a long period of time, but we want to make sure that there’s a clear alignment on policy when it comes to what is its role domestically here in Canada. I mean, two thirds of Canadians use it to heat their homes. It’s about 40% of our national energy demand, and about 50% of manufacturing gets its energy and uses natural gas, whether that’s greenhouses, agriculture, manufacturing, critical minerals. I mean, mining uses it all the time. I’m sure we’re going to talk about data centers today, but it’s a big thing there too.

But right now there’s a real barrier and it’s around uncertainty about our energy policy when it comes to using it domestically, whether that’s building codes, permitting. Really the policy signals have been confusing because I’ll give you an example. The federal government recently enacted the National Model Building Code. So for 2025, I think they put it in place in November of last year. And while we’re hearing nonstop from businesses and customers about how important natural gas is, certainly from an affordability and a reliability perspective, that model building code would preclude in a lot of cases the use of gaseous energy for homes. So it’s taking away that choice. It’s making a decision around, when we think of that stool around affordability, reliability, and sustainability, it’s picking a leg of the stool.

And our position is we need transparency to understand how all of that interacts together. And sadly, there’s no silver bullet that’s perfect, but understanding those sorts of things. And even on the affordability side, the National Home Builders Association has estimated that the new model building code, if fully implemented, would cost another $100,000 to build a home.

Peter Tertzakian:

Per home?

Michele Harradence:

Per home. Per home.

Jackie Forrest:

Forget about the operating cost.

Michele Harradence:

Forget about the operating cost.

Jackie Forrest:

Just the capital.

Michele Harradence:

Exactly. Per home. So we really think there’s an opportunity for better coordination to align affordability, reliability, and emissions reduction, so we’re not solving one problem and creating another at the same time.

Peter Tertzakian:

Right.

Jackie Forrest:

Okay. Well, let’s go ahead and talk about those municipalities were banning natural gas. Now you’re telling me the building code is sort of doing it for them, but I feel like you used to hear about these all the time within US and even in some places in Canada, like Vancouver I know at one time wanted to do that. Are you finding that that’s not happening as much? Because I just don’t see those headlines. Is that still an issue?

Michele Harradence:

I think in some places it is, but overall the trend is definitely shifting. I mean, jurisdictions that restricted natural gas are really reassessing it as affordability, reliability, and the housing impacts become clearer. In 2024 and again in 2025 in Vancouver, they voted to pursue restoring natural gas in new homes. And it was cost that they cited. It was housing timelines, and it was consumer flexibility.

In fact, one of the things that was kind of fun, one of the strongest advocacy groups was around Asian and Southeast Asian cooking and the high flame, the heat that they needed to be able to do their cooking. They pushed back on a ban against natural gas. And certainly in Ontario, they’ve protected natural gas choice through legislation and through policy and planning direction.

In 2024, they restored a 40 year amortization period for new residential gas connections. And the reason that’s important is it allows us as a utility to amortize those costs over 40 years. And where things had been going, we would’ve had to charge our customers instead, about four or $5,000 for each connection. Now we’re able to amortize that.

Jackie Forrest:

Oh, so it had a short life.

Michele Harradence:

It had a zero life, in fact, is what the Ontario Energy Board had decided. And they’ve done other things, like they’ve limited municipal authority to impose fuel switching rules beyond what’s in the Ontario Building Code. And it is important to note when we talk about the National Model Building Code, that still gets implemented. It’s the provinces that decide.

So Ontario, for example, has said we’re not implementing those aspects of the code that are going to drive significant costs up or limit choice when it comes to your energy. I mean, this isn’t just a Canadian thing. We’re seeing it across the US as well. I mean, even the US Northeast recently, the governor of Massachusetts wrote a letter urging generators to look at Enbridge’s Project Beacon Pipeline Extension and sign up for firm capacity, and that’s to address those cold snap affordability concerns.

Peter Tertzakian:

Yeah, the pipeline constraints in the Northeast, and it’s been several decades that they’ve had these sort of constraints. And every time it gets really cold, the price of gas and electricity and everything really just shoots through the roof.

Michele Harradence:

It’s amazing. And I mean, my concern, we of course serve the US Northeast and the distribution utilities to our gas transmission business. And then we have Enbridge Gas in North Carolina as well. And the concern is affordability is one thing. It’s reliability and security of that energy. Are you actually even going to get what you need?

Peter Tertzakian:

Can you talk about that notion in Canada? Because to me, as I look at places like Massachusetts in the northeastern United States, that’s an example of what can happen and should be avoided.

So here, we have certainly in the West abundance of natural gas. The price is very cheap. But all of a sudden we have a potential for a major pull from data centers, which we’ll talk about. We have a pull for more LNG exports, significantly more LNG exports. We have a pull from increasing industrial activity and just overall economic growth. So do you see constraints in natural gas potentially in western Canada as well or Canada as a whole?

Michele Harradence:

Well, I think it’s something we need to look at. I mean, certainly the mainline, and if you look at the history actually of natural gas in Canada, it really pivoted. So the Canadian Gas Association was founded in 1907, focused on manufactured gas, as you referred to earlier. And then in the 50s, TC Energy built their mainline to eastern Canada. And that was just a massive game changer, bringing that natural gas from West to East and really created the modern Canadian natural gas market and powered the economy really from West to East.

It’s full now. And I mean, a decade or more ago it wasn’t, but it’s full now. In fact, if you look at Ontario, we have four million customers in Ontario. It’s where a lot of the natural gas is used. And we have something called the Dawn Hub and it’s in southwestern Ontario near the Chatham/Sarnia area. We have almost 300 billion cubic feet of natural gas in storage down there. It’s kind of boring to look at because it’s all farmers’ field. It’s all underground storage that’s there. But these days, it’s filled about two thirds with gas that comes north from the US and about one third with Canadian gas.

Peter Tertzakian:

With Canadian. I mean, there was a time when the TC, at that time, the Trans Canada mainline, which by the way was actually six pipelines, not just the one. There’s six beside each other. It was like half empty.

Michele Harradence:

That’s right. Well, they were talking about doing energies-

Peter Tertzakian:

And they were talking about converting half of them or something like that into oil pipe because half of it was empty. But now you’re saying it’s all full.

Michele Harradence:

That’s my understanding. I mean, I do think they may have one idle line, but it’s significant demand.

Peter Tertzakian:

Yeah. But this is sort of an indication of what’s happened is that the economy grows and there’s the pulls for natural gas for all sorts of industrial activities, heating homes and beyond. And all of a sudden the tensions are starting to emerge on all of our energy systems, including electrical power, which is a separate podcast, right?

Michele Harradence:

That’s 100% right. It’s that access to that reliable, secure energy. I mean, we’re quite fortunate in Canada, I’d say, between the fact that the natural gas is here in the West and we can bring it to markets. But there’s lots of investment that’s done by the gas utilities across the country to ensure that there’s storage and capacity in place.

I know you’ve had Roger Dall’Antonia on the podcast before. They’re doing lots of work in FortisBC, for example, with their Tilbury LNG terminal. And that’s all about making sure it’s there on that peak day, that coldest, coldest day that you need the energy for.

Peter Tertzakian:

Yeah. And it’s so important because the physics of heating, let’s just take heating homes, is such that we want a 20 degree Celsius to be comfortable inside. And the difference, if you’re -20, that’s a 40 degree difference. But if you go to -30, it’s a 50 degree difference. The thermal power needed to heat your home actually increases exponentially. And so the pull on cold, dark days for energy is actually amplified-

Michele Harradence:

It’s massive.

Peter Tertzakian:

… on these super cold days. And natural gas with its thermal power deliverability is the fuel of choice in those instances.

Michele Harradence:

It has to be. I mean, we don’t have at this stage, and we’re not even close to having another choice. And it’s a great example that you just described. We’re overall in Canada generally on electricity a summer peaking system for electricity, although increasingly we’re seeing the use of gas for that more and more and then gas peaking in the winter. And what that really means, and the way I think about it is exactly like you do, is let’s just call it -20. That’s not unheard of anywhere in Canada in the winter. And you’re taking your home from -20 Celsius to +20 Celsius on that coldest day. That’s 40 degrees.

Most parts of Canada on that hottest day when you need that electricity load for energy, you’re not taking your home from much more than 30, 35 degrees outside. I mean, it was hitting 38 in Mississauga when I was leaving to come out here for Stampede last Thursday, down to 20. It’s an 18 degree difference versus a 40 or 50 degree difference. So the amount of energy required to do that is completely different.

And a great example would be on January 23rd, I think it was pretty warm out here in January in the West, but it was extremely cold and it was a sustained cold in the East, in the US and in Ontario. On January 23rd, we were delivering natural gas to generate electricity to the tune of the equivalent of about 9,000 megawatts. It was about the same as the nuclear fleet was generating. This is in Ontario. But going directly into people’s homes was another six and a half or seven times that amount of energy. I mean, it was something like 74,000 megawatts when you look at the … It was actually eight times, but we said it was six times the capacity of the nuclear fleet. It was amazing.

That’s there. That’s existing infrastructure. So when you hear of folks who say we’re not going to need natural gas in the future, there is nothing that’s comparable that has the resilience, that has the rateability, that you can just turn on and it can meet that demand, by any stretch of the imagination right now.

Jackie Forrest:

Yeah. And we actually had a podcast on heat pumps, which I will put a link to in the show notes. Because this is the other thing that’s interesting, when electricity is very efficient at certain temperature ranges. But when we get into that very cold period, those heat pumps are very inefficient.

Michele Harradence:

That’s right.

Jackie Forrest:

And so it’s kind of a double whammy. Like you say, you get the need for more energy because of the huge temperature change between the outside and the inside of the home. But then those heat pumps get less efficient as we get colder and colder.

Michele Harradence:

That’s exactly right.

Jackie Forrest:

And so the actual amount of electricity, it’s not a linear relationship in terms of how the need for electricity goes up as we get into those colder areas. So it is really hard to see how a cold climate like Canada could make it without some natural gas when you really look at the numbers.

Michele Harradence:

That’s exactly right. And I mean, it doesn’t mean… I think one of the challenges is everybody wants to make things either a very binary choice or find a silver bullet that doesn’t quite frankly exist at this point in time. But it’s about balancing that affordability, efficiency, and the sustainability of things. So one of the things, certainly at Enbridge Gas we’re big proponents of, but I would say most of the members of the Canadian Gas Association are proponents of, are hybrid systems.

So if you really want to focus on your carbon footprint and you want that heat pump, say you’re in a place where the electricity is generated by nuclear or hydro or something like that, that’s great. Get your heat pump. But remember, we live in Canada and it can go to -40. So back it up with that natural gas furnace. I mean, fundamentally what we do, our fundamental purpose as gas utilities is to keep people safe and warm in their homes. Days like January 23rd are the days we live for, and we did that successfully everywhere it was cold. But that’s the key things.

Peter Tertzakian:

Okay. So we’ve talked a lot about the benefits of natural gas. I think we would be remiss if we did not address the carbon emissions issues. So taking us back, first of all, to the 1850s, it was town gas and manufactured gas.

Michele Harradence:

Coal gas.

Peter Tertzakian:

It was manufactured or coal gas, because as I said, coal was heated and the gases that came off the coal were refined into methane and the methane was then put into the town lamps. Natural gas was labeled natural gas because when we started drilling for gas, it was nature’s gas. That’s what they called it. As first as it was called nature’s gas. And then it became natural gas. And more recently it’s been labeled as fossil fuel, although I still like to use natural gas. So tell us about the greenhouse gas emissions and the fossil fuel lobby, paradigm, whatever you want to call it, and how you respond to people who talk about natural gas as still a major emitter of emissions.

Michele Harradence:

Yeah. I think it’s somewhat what we just discussed about that need for balance and not being a binary choice. The reality is you’re balancing that resilience or reliability, you’re balancing affordability, and you’re balancing those emissions. But what I would also say is this is an industry that started, and it’s over 175 years ago for Enbridge Gas, as an example. And it’s evolved. And there was not necessarily a recognition in the past of the impact of methane on climate change and things like that.

So as that’s become much more obvious to the industry, we’ve made great strides and continue to make strides in fundamentally changing how we operate and fundamentally changing how we design our equipment. An example I would give you is when we used to inspect or do work on pipelines, we would do what we called a blow down and you’d just open up the valves and you’d release the gas to atmosphere. That’s how it was designed to be done. And now what we do is we actually pump that gas back into the pipeline. It takes longer, but that’s fine. We push it back into the pipeline. We try not to release the gas.

Or these original systems, a lot of the things folks raised about natural gas distribution systems is that the leaks that are in the system and older systems have cast iron pipe in them. In fact, one of our utilities, Ohio, still has a fair bit of cast iron pipe. And we’re spending over $250 million a year just to replace that pipe, to upgrade it, so we have things that are less leak prone and things that-

Peter Tertzakian:

So these are called also fugitive emissions because they leak from the pipes that have been put into place, like some even a hundred years ago.

Michele Harradence:

Well, and some of it wasn’t leaked. Some of it was designed to release that way. It was meant as a safety release, a safety valve to not over-pressure the system, but without the recognition that we actually don’t want that.

Peter Tertzakian:

So the leaking methane, as we’ve discussed in the podcast before, is a very intense and potent greenhouse gas.

Michele Harradence:

Exactly.

Peter Tertzakian:

And then there’s the combustion side.

Michele Harradence:

That’s right.

Peter Tertzakian:

So you’re working hard, like all the other natural gas providers, to minimize and capture the fugitive emissions, but then there’s the combustion side.

Michele Harradence:

That’s right. So as we’re moving the natural gas through the system, we’ll use compressors that combust, that turns into CO2-

Peter Tertzakian:

Right.

Michele Harradence:

… is exactly right. So similarly, in some cases we’re able to use electric driven compressors. Traditionally, they’ve been natural gas compressors. Again, to use an example of the design changes in the past, we design compressors if they were shutting down in order to not over pressure, to vent the extra gas that comes into the system when it’s being shut down. Now we try and capture that gas and pump it back in, as an example.

Efficiency is a huge thing. So there’s the combustion from furnaces as well. That’s a big part of what we talk about in the distribution system. So we’ve been very focused on efficiency and reducing the emissions from distribution systems. In fact, since 2000, I think it is, Canadian Gas Association members, the emissions while we’ve grown the system, the emissions are down about 24%.

In fact, we’ve invested over $2 billion in efficiency, and that includes upgrading windows, upgrading your insulation, things like that, so you don’t have the leaks of heat, so you don’t have to fire your gas furnace as much. Things like renewable natural gas. Enbridge Gas was the first in North America to blend hydrogen into its gas system, all proving out that those things do work and are options for us. Again, as we try and balance affordability, reliability, and sustainability. I think in the US, the gas distribution utilities are down something like 90% since 1990 in terms of their emissions.

Jackie Forrest:

So you’ve painted a picture where things are changing. There’s more openness for municipalities and different groups to use natural gas. And Peter talked about the LNG exports and the AI data centers, which we’ll get into. But in general, what’s your view of the growth of natural gas demand in North America? And is Canada the same or is there a difference between your view in US and Canada in terms of demand growth?

Michele Harradence:

Yeah. Well, I mean, as Enbridge, we see natural gas demand in North America increasing by about 28 BCF a day by 2030. I mean, it’s significant, the growth we’re seeing. Just the gas utilities alone, I think I mentioned my peak day is about nine billion cubic feet. If I did every data center that’s currently in the queue and asking for gas from us between now and 2030, I would add another five billion cubic feet. So more than 50% increase in the next three years.

Jackie Forrest:

And that’s just within your areas.

Michele Harradence:

Yes. Let alone our gas transmission business. Now, the single biggest piece is LNG and of course the US Gulf Coast. I mean, we’re looking at on a North American basis it’s about 30 BCF a day by 2030, which would mean basically doubling today’s levels. A lot of that is on the US Gulf Coast. We have some of it in British Columbia of course, as well, that we all know. And it’s shifted a lot because that’s become a real energy security story as well.

Peter Tertzakian:

Put this number in perspective, seven BCF per day per year to 2030, because there’s four years to 2030. So it’s 28 BCF per day. What is it, US supply is about 120 and we’re about 20, so that’s a 140. So seven on 140 is about five percent.

Michele Harradence:

Yeah.

Peter Tertzakian:

Five percent per year. I mean, that’s pretty dramatic growth.

Michele Harradence:

Well, I mean, I would tell you in my natural gas utilities in the US that I’m seeing anywhere from five to eight percent rate, what we call rate-based growth. So us investing in the infrastructure to move more gas. I mean, in some places in North Carolina, it’s in the teens. There’s so much demand. So whether it’s LNG in North Carolina, a lot of what we’re seeing is for power generation. They’re moving from coal to gas.

In a lot of cases, there’s a lot of industrial reshoring that’s happening, whether it’s for defense, critical minerals is a big thing. So although a lot of the story has been about data centers, it’s actually driven by a number of things that are driving that electrification piece. And then of course there’s just local gas utility growth that you see as well. So it’s amazing.

Jackie Forrest:

Okay. Well, I asked about Canada because here in Canada we have this policy, the Clean Electricity Reg. We just love to eat that up as much as we can, but it would mean that we probably have less less natural gas growth for electricity than what you’re seeing in the US. Is that something you’re seeing? Do you have less outlook for gas growth here in Canada because of policies like that?

Michele Harradence:

I call it more uncertain outlook for gas in Canada than in the US. The US is very clear. The states are very clear around what they need for energy and for electrification, quite frankly. I think in the past, the gas industry talked about electrification as a headwind, but it’s really much more of a tailwind.

It’s less clear in Canada. I mean, the Clean Electricity Regulations are a great example. Right now, we’ve become an importer of electricity, but the fact is we’re importing that electricity from the US, so we’re sending our gas south and then we’re importing the electricity that they’re generating north. At the end of the day, I think there’s an increasing recognition that you need natural gas for that rateable, dispatchable energy. It’s there, it’s available. It’s all part of the mix, though.

So we’re in Ontario, where there’s a good, strong nuclear fleet and a lot of investment in nuclear, which is great. I mean, it provides great base load power. We recently had a procurement that was published I think about two weeks ago. All of it is around battery storage, and there the independent electricity system operator was looking for about eight hours worth of reliability.

If you talk to the operators at the IESO, they’ll tell you, though, that it’s not really that first or second day that they worry about, it’s the third day. And the Ontario IESO, for example, has been very clear that gas fired generation needs to be part of the mix to serve that. It’s an amazing shift in four years. I started this role just over four years ago, moved back to Ontario, where I had grown up, from Houston. And the energy minister at that time was asking the IESO to see if we could completely go off natural gas by 2030. Now, they do their job just like we do ours, which is keeping people safe and warm in their homes, and they came back and said, “Not without brownouts or things like that.” And that’s before we started talking about data centers.

Peter Tertzakian:

Yeah. We’ll talk about data centers and now you’re talking about that tremendous pull for natural gas from all sorts of different sources, whether it’s LNG exports, AI data centers, economic growth, and so on. And we learned last week when we had Mike Law on the podcast that we’re now net electricity importers.

And as if all this wasn’t enough, that we hear about hydroelectric dams and potentially lower water flows. So as you travel in your role across North America, but let’s stick to Canada, what are the provinces and the utilities, power generators, and others saying about the use of natural gas versus nuclear versus hydro as the base load for electricity?

Michele Harradence:

Well, I think in places like Ontario, like I mentioned earlier, they like nuclear for the base load. They see the benefit of the investment. But if you look at Quebec, for example, and that’s the problem, it’s with the most hydroelectric capacity in North America. They’ve now launched a regulatory process to add gas-fired generation. That’s at their Bécancour plant. And it’s really to manage those extreme demand days.

I think low water flows are a part of the story. I mean, Hydro Quebec has said that runoff levels since 2023 have really shifted them from being a net exporter to a net importer for the first time, I think it was last year. And it’s all interconnected, I think is the important thing to remember. So when I was talking about four years ago when I first came to Ontario, they said, “Well, that’s okay. If we need extra electricity, we’ll get it from Quebec.” Well, we can’t right now. They’re importing their electricity.

And again, I don’t think it’s gas versus nuclear. It’s about balancing all of those things, including renewables. They’re an important part of the mix, as well. But as you move your way west where they’ve traditionally relied more on coal, say in provinces like Alberta and Saskatchewan, they see the benefit of gas generation, but of course they’re also talking nuclear as well and some renewables are part of the mix. And then back to hydro again in BC, but even BC has recognized that that’s not what they can rely on exclusively or renewables. And just a few weeks ago, I went out to talk about prolonging the use of gas generation at a couple of their gas fired plants that they have there as well.

Jackie Forrest:

Right. So I actually talked about BC, but that’s news to me about Quebec. We haven’t talked about that on the podcast. So hopefully, I know they opened up that Clean Electricity Reg for some flexibility they talked about when they came out with the electricity strategy. So it’s good to hear that some of these other provinces will be advocating for more flexibility probably in that consultation as well.

Michele Harradence:

Well, it’s really about Canadians are demanding it. They’re recognizing affordability is a concern, reliability, security is a concern. And that’s really what we have to do at the end of the day, is meet that demand.

Peter Tertzakian:

Yeah. Speaking of demand, let’s switch to the AI and data centers. As we said on this podcast, data centers are gigantic heaters because they take electricity in and basically produce 100% heat and this abstract thing called AI. The pull on electricity is really quite phenomenal and growing. And therefore, if you go further upstream, it means more natural gas fired power generation or other types, be it renewables, nuclears, or what have you. What are you hearing in the meeting rooms that you go to, with say hyperscalers and others and the data center people in terms of what they’re looking for?

Michele Harradence:

It’s really become speed to power. I mean, how quickly can they get connected? How quickly can they get that generation? In an ideal world, I think they want to be able to take their electricity off the grid. They’re not looking to become power producers themselves, but they know they need that electricity. So they are looking at behind the meter generation is what we call it.

And it can vary from combined cycle to… There was one that I was visiting that was really quite fascinating. So it’s AI, it’s one of the hyperscalers. It’s actually a data center developer who’s been in data centers for about 15, 20 years. He was a very interesting person taking us around. It was all fully enclosed, a whole bunch of six, 7,000 horsepower reciprocating compressors, which for us is kind of old technology. I said, “Well, why would you do that versus having say a big 45,000 combined cycle turbine or something like that?” And he said, “Well, it’s because AI is very violent when it’s learning.” What does that mean? And he said, “Because it cycles up and down, they needed that flexibility.”

That particular area where this data center is is built into a new community south of Salt Lake City. And what we were able to do is build a larger pipe that was funded by the data center developer. And now the homes in that community haven’t had to spend as much to get their natural gas because it’s already the distribution main has been brought there and then we’re just doing extensions off of it. And in a lot of cases, that’s what’s happening. And I think there’s a misunderstanding about the cost that it drives because in the regulatory world, growth tends to fund growth. And that’s an important principle that the existing rate payers not be burdened with it. And for me, that one’s a great example of it.

But yeah, it’s speed to power. They want to get as close to where the gas is as possible. They are finding for the most part that the local gas utilities can connect them a bit faster than say an interstate or interprovincial pipeline that might need to go through a federal approval process. That’s why you’re seeing a lot of the demand at the utility side.

Jackie Forrest:

And that is a trend we’re actually seeing now, is there’s been a bit of opposition, maybe a bit is even an understatement here, to some of these data centers, is that they’re willing to pay for some of the infrastructure themselves, not have that go on the rate base and result in higher costs for people. So you’re seeing that kind of across the board.

But when you look at these projects, I mean, you talked about how many you have in your queue there. Some of them can’t be real, right? You hear it takes four years to get a natural gas turbine and there’s all these potential opposition. How do you run your business when you have all these requests, but you know not all of them are real?

Michele Harradence:

That’s a great question. I mean, I think I mentioned we have, there’s probably more than this, but maybe 45 that we’d say these are the most credible that we have that are coming through here. And it would be 5BCF, like I said earlier, that’s more than 50% of what I already deliver around North America. I don’t think it’s all happening.

I mean, I really don’t. But it is about seeing which are the most mature. I mean, our folks have gotten very good at separating the fly-by-night developers from the ones that are backed by the hyperscalers. And that’s really what’s emerging more and more, is working with the hyperscalers. And at Enbridge, we’re able to offer them a great suite of solutions too, because we’ll talk to them. I think we’ve had a few announcements with Meta, for example, about renewable power generation. The gas utility can connect them quite quickly. And we’ve got the gas transmission side as well.

And they are working with developers on the power side of it as well. I mean, obviously we’re a big buyer of gas turbines, probably the largest in North America, or have been at least for the last 20 or 30 years. So we work closely with them to see what we can help to deliver. It’s a tricky time because you want to make sure that first and foremost, you’re spending your capital on the infrastructure resilience to make sure that gas moves every day.

Jackie Forrest:

One question I did want to ask you before we end our time is since you’re active in the US, how it’s going in terms of fast tracking large energy projects there compared to Canada. For our audience, we have talked about the Americans have this National Energy Dominance Council, which to me appears to be like the American version of our Major Projects Office, where projects that are deemed to be very important are fast tracked. We learned at CERAWeek sometimes in months. What’s your experience? What’s the situation in Canada versus US now for a project that you want to get done?

Michele Harradence:

I would have to say, and it’s tough to say it as a Canadian, but I would have to say we do see the projects moving a lot faster in the US. I mean, ultimately it takes political will to build these big things, to build things that cross through jurisdictions. That’s the toughest thing, is whether you’re crossing state lines, provincial lines, or international lines. And both the Canadian and US governments are trying new approaches, whether it’s new to Projects Office, or as you said, the National Energy Dominance Council.

And it’s really about more predictability of timelines is what we’re seeing that’s coming through. It’s getting faster to a yes or no. At some points we don’t really … I mean, we care if the answer’s yes or no, but we just want to know what the answer is. We can’t have these projects that drag on for decades.

In Canada, I think since ’23, about 80% of all Impact Assessment Act processes have gone past the 180 days that are due for ministerial discretion to pause the clock and that sort of thing. Now, I have to give the Canadian government credit, though, in our recent Sunrise Expansion Project in BC, they took their 60 days with cabinet to approve and they didn’t extend it and away we moved. So that was a relatively reasonable process. And at the CER, it was about 18 months. Now that’s an expansion in an existing area, which is always a little bit easier to do, but certainly the Canadian government’s consulting on regulatory reform and we hope to see things there.

I think one of the things we really want to focus on, too, is the competitiveness that we have in Canada. So I like to think of success as being defined by private sector capital investment in Canada’s energy industry. And that’s what we’re seeing in the US. It’s that private sector that’s investing in the energy industry and demanding to invest. Canadians shouldn’t have to rely on the government to be the lead proponent on major projects, but in the US they have permitting bills like the SPEED Act, things like that.

Both countries are converging on the same goal. I think they’re getting there, but actually it was in the World Economic Forum report, it said, “One of the priorities has to be to increase investability through stable, credible policy and regulation. Security shapes what gets built, delivery determines whether it works, and investibility decides where capital goes,” is what they said. And I thought that was a great quote.

And I think both countries are working on it. The US is maybe a little more ahead and even that much more aggressive about taking that capital that it wants to invest and turning it into projects. I think we have that capital that wants to invest in Canada. We’ve just got to make sure we have projects in front of them.

Jackie Forrest:

Okay. And I think a lot of our listeners maybe aren’t aware, but there is going to be some new legislation that is going to fast track all projects in Canada, not just those deemed to go to the Major Projects Office. We’re going to learn about that in the fall and we will be covering that in the show once we get more information on that because I think that’s very important.

Okay. Well, as we get to the end of the podcast, we talked about this news coming from the premier’s breakfast here with Doug Ford, and we do have the press release around that. So the idea is a study, a feasibility study on potentially a 3,300 kilometer pipeline between Hardisty to Sarnia called the Northern Shield. We’re going to learn more about it. There’s interest from Ontario, Saskatchewan, possibly even Manitoba, maybe even stopping by Churchill. I don’t know. But we’re getting pipelines in all directions.

Peter Tertzakian:

I know.

Jackie Forrest:

So we’ll be talking about pipelines a lot on the podcast.

Peter Tertzakian:

Seems like we’re going from an era of pipeline scarcity to pipeline abundance, and we will talk more about that on podcasts to come, I am sure.

But today we were talking about natural gas. We were delighted to have Michele Harradence, executive vice president of Enbridge, and also the president of gas distribution and storage across North America. Thank you very much for being with us, Michele.

We’ve talked about so many things. We started with coal gas, town gas, manufactured gas, nature’s gas, moving all the way to modern day natural gas, the demand for which is growing quite aggressively. And we’ve talked about price fluctuations, policy, AI, competition, all of the above and more of the above as we talk about different kinds of energy systems.

One of the things we didn’t talk about is that when people wake up in the mornings on cold, dark winter days, that behind the scenes, there are many companies, including Enbridge, that work diligently to bring us the energy that we need to live and to prosper. So thank you for that, and also thank you for being on our podcast.

Michele Harradence:

It was my pleasure. And yes, I’m glad I could represent the 13,000 utility workers who make sure that people have hot showers in the morning.

Peter Tertzakian:

Fantastic.

Jackie Forrest:

Thank you. And thanks to our listeners. If you enjoyed this podcast, please write us on the app that you listen to and tell someone else about us.

Announcer:

For more ideas and insights, visit arcenergyinstitute.com

Oil Pipeline News, Plus Natural Gas with Enbridge’s Michele Harradence

Episode 333 transcript

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