MONTREAL – Quebec is pushing further with a plan to power its remote north with natural gas in a bid to stoke investment, joining a growing shift toward the fuel source in many parts of the world.
The province confirmed Tuesday it will take a $50-million stake in a new subsidiary of Quebec natural gas distributor Gaz Métro that markets liquefied natural gas. The company plans to triple output capacity at its plant in eastern Montreal with the goal of supplying customers by the summer of 2016.
Total project cost is estimated at $118-million.
Quebec’s investment underlines the conviction with which the Liberal government of Premier Philippe Couillard has restarted the Plan Nord, a multi-billion dollar economic development strategy pinned on natural resource extraction north of the 49th parallel.
Mr. Couillard is betting his government can woo investors by building out transportation and energy infrastructure in the territory, twice the size of France. And he’s shifting the government’s investment approach itself – from the automatic corporate subsidies of the past towards a more active focus on shareholder partnerships.
“This is a new relationship [with business], a much healthier relationship,” Mr. Couillard said Tuesday. “I think Quebecers had a bit of an impression that our natural resources were being exploited and that the benefits of that were being steered largely outside Quebec. With this new role of partner-shareholder instead of grant-giver, we’re ensuring that Quebecers participate in the success of those projects.”
The Gaz Métro project is only one of several planned equity investments the Liberal government will make. In its most recent budget it set aside $1-billion in a special fund for stakes in natural resource companies operating on its territory, taking a $2-million participation earlier this month in Arianne Phosphate Inc.’s financing for its Lac-à-Paul phosphate rock mine.
The government is also helping to finance roadwork, including an extension of highway 167 through the Otish mountains to Stornoway Diamond Corp.’s Renard diamond mine north of Chibougamau. It pledged to prepare a more comprehensive plan for infrastructure development in the weeks ahead.
Demand from trucking companies is driving the development of liquefied natural gas around the world, with ship and train transporters also testing the super-chilled fuel as an alternative to diesel. Use of LNG as a marine bunker fuel will be stoked by emissions regulations, the International Center for Natural Gas Information said in a Sept.28 report.
In Quebec, building hydro power lines out to remote areas like Stornoway’s Renard site is prohibitively expensive, Gaz Métro chief executive Sophie Brochu said in an interview. Preliminary plans to extend existing gas pipelines to the Côte Nord region have also been shelved because of weakness in global markets for iron ore and other commodities. Potential buyers could not commit to long-term contracts required to fund the estimated $1-billion cost of the extension.
“If there is a turnaround of the nature of the demand that can be developed on the north shore, for sure we’re going to be there with a gas line,” Ms. Brochu said. “But in the meantime, we can deliver smaller volumes for smaller needs and still have a major impact, both for them and for the environment.”
She described the disruptive potential of LNG as an energy source to the way mobile phones changed the telecom industry. “It’s very powerful.”
Among the companies using LNG from Gaz Métro are trucking company Transport Robert, which already has a fleet of vehicles running on the fuel. Purchase commitments have also been secured from Stornoway, marine shipper Groupe Desgagnés, and the Societé des traversiers du Québec.
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