Alberta is so determined to usher in a wave of AI data centres and increase oil and gas production that it is considering rewriting legislation and creating government-owned corporations that would force private companies to invest in natural gas pipeline expansions — or allow the government to build and operate those pipelines itself — according to a document leaked to The Narwhal. It’s also willing to pay for any legal challenges that follow. 

The document — labelled a “cabinet report” and bearing the Alberta government logo — contains a broad swath of recommendations it indicates were prepared for the Energy and Minerals Ministry led by Minister Brian Jean, and says it was scheduled to be presented to a high-level cabinet policy committee on Sept. 10.

The document says private ownership of natural gas transmission pipelines is throttling growth and that “escalatory and direct measures are now required,” especially as “the Government of Alberta is actively courting hyper-scale data centre capital and other investors.”

The document notes Alberta risks losing investment from AI data centre companies if it can’t come up with “speed-to-market” solutions.

According to the document, the government has been in talks with TC Energy, which owns and operates Alberta’s main natural gas pipeline system, since 2024 in an attempt to force the company to invest in new pipeline capacity, but the company refuses to build based on “speculative demand.” TC Energy did not respond to detailed questions.

Talks with the company stalled, according to the document, after the company pitched a plan that would involve the province assuming more financial liability for the pipeline system and forcing higher rates on those who use it. 

“Discussions continued until 2026 and escalated with the premier’s involvement,” reads the document. “Extensive discussions with TC Energy [have] produced no viable solutions to date.”

The document is critical of TC Energy’s track record, saying the company’s “underinvestment in [natural gas] pipeline capacity has caused a market failure in the natural gas sector leaving key growth regions unable to access gas,” calling the result a “dysfunctional natural gas pipeline network.”

The document was leaked to The Narwhal by a government official whose identity is being kept confidential. The Narwhal has verified they are in a position that would likely have access to such a document. The Narwhal has not been able to independently verify the authenticity of the document, but Alberta’s lobbyist registry confirms TC Energy has been in talks with government officials regarding “increased support for gas market access,” as well as discussions on “strategic natural gas initiatives.”

A note on trust, integrity and unnamed sources+

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Detailed questions sent to the premier’s office, including for confirmation of details in the document, were sent to the press secretaries for the premier and the ministers of affordability and utilities, energy and minerals, jobs, economy, trade and immigration, and treasury board and finance. There was no response by publication time. 

There was also no response to an email and phone call to Vitor Marciano, the chief of staff to the energy minister.

According to the document, the full slate of proposals for cabinet consideration include taking regulatory control for the pipeline transmission network operated by TC Energy away from the federal Canada Energy Regulator, creating a Crown corporation that would guide pipeline construction based on government forecasting, and another Crown corporation that would oversee, or build and operate, its own pipelines. 

That would give the government the power to control some private investment decisions, including directing companies to build pipelines, and it could also make the government a direct competitor of companies such as TC Energy. 

The document argues the moves are necessary to rapidly build natural gas pipeline capacity to help increase oil and gas production and spur data centre growth. The government’s data centre strategy explicitly encourages the use of natural gas for power generation. 

Since the release of that strategy, the government has restricted AI data centre access to the provincial grid until 2028 because there is not enough power to fuel demand and keep the lights on. Developers are required to build their own power supply, which is currently restricted to natural gas power plants.

Albertans could be on the hook for hundreds of millions — or billions — to help support power for AI data centres: document

The moves could cost Albertans. 

The document is clear one of the main drivers of the plan, in addition to increasing the province’s oil and gas production, is attracting AI data centres to the province. “Alberta’s ability to attract and retain data centre investment depends on reliable access to natural gas service,” the document says. 

The recommended changes would result in “significant legal and cost impacts for the Government of Alberta,” according to the document, as well as likely result in “increases for utility ratepayers.”

The document notes Albertans may be “sensitive” to what it calls “any change in perceived affordability.”

The preliminary estimated cost of the proposed changes, including the planning and creation of Crown corporations and potential ensuing legal battles, could exceed $162 million, according to estimates in the document, but that does not include possible infrastructure costs.

The document estimates building a pipeline to meet government expectations could cost as much as $6 billion. The capacity from that new pipeline could provide enough gas for six gigawatts of power generation for data centres, according to the document. A recently rejected AI data centre near Olds, Alta., would have required a 1.4-gigawatt power plant and used as much power each day as the City of Edmonton.

The total cost includes anticipated litigation from TC Energy and other companies, including concerns over “significant claims for compensation” for “alleged expropriation of valuable contractual rights.” 

The document warns First Nations could also initiate lawsuits. 

The moves could also make things more expensive for residents and businesses by driving up the price of natural gas, according to the document.

“While low prices benefit customers (Albertans and industrial users), they limit provincial royalty revenues and can discourage natural gas investment by reducing producer revenues,” the document reads. 

“Increased natural gas demand could contribute to higher costs for households, businesses and gas-intensive industries, which could deflect stakeholder support.”

The document also notes “potential disproportionate impacts on seniors and rural residents can be mitigated by monitoring affordability and exploring mitigation measures specific to households and small businesses.”

The government’s aim is to almost double natural gas prices to support and expand production, which would increase the cost of electricity generation by up to 25 per cent, based on calculations in the document. 

It’s unclear exactly what that could mean for Albertans’ power bills, but those costs could be passed down to Albertans, who the document warns could be upset about government spending and increased costs. 

A recent analysis from the Pembina Institute, estimates the recently announced Meta data center near Edmonton could add $270 to $460 to electricity bills each year.

The document suggests government messaging could sell the plan to Albertans to “help strengthen social licence.”

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