The pipeline network created to foster natural gas development in Alberta by the province’s government has broken away from its parent to cater to new production in northern British Columbia (BC).

Nova Gas Transmission Ltd. (NGTL) and the Alberta Department of Energy (ADOE) parted ways as the National Energy Board (NEB) wrapped up hotly contested hearings on the North Montney Mainline proposed in BC for C$1.4 billion ($1.1 billion).

“Contrary to the ADOE’s arguments, NGTL is a federally regulated pipeline and cannot discriminate against producers in one province to protect producers in another,” said the project sponsor’s reply to its government opponent.

The statement rejected an Alberta case against granting new BC production from NGTL’s low-cost regime of “rolled-in” standardized postage tolls for Alberta gas, as opposed to separate “stand-alone” rates for increasingly expensive facilities additions.

Among industry veterans, the blunt statement by the Calgary-based pipeline grid stood out as confirmation that a long-standing union of provincial economic policy and private industry is unraveling.

The combination came together under its first name, Alberta Gas Trunk Line, at the dawn of the modern Canadian petroleum industry following the 1947 Leduc discovery near the Alberta capital in Edmonton. The pipeline network’s charter, enacted by the provincial legislature in 1954, created a mixed public-private enterprise with five ownership layers represented on the board of directors: personal investors, gas utilities, exporters, producers and processors, and two cabinet appointees.

Alberta residents, granted first rights to buy, snapped up shares for C$5.00 ($4.00) each. “The stock never looked back. It was up — $l0, $l5, and away it went like a rocket,” the provincial premier at the time, Ernest Manning, recalled in retirement. “A lot of people made a lot of money.”

The corporate mandate dedicated development of the pipeline network solely to Alberta. The structure enabled the Alberta government to hold exclusive jurisdiction over construction and tolls through provincial conservation and utilities boards.

The name change to Nova symbolized stellar growth. The public gas enterprise matured into an Alberta-wide collection grid capable of handling more than 15 Bcf/d with 24,500 kilometers (19,200 miles) of pipe, about 1,100 inlets and 300 outlets, plus major sidelines in gas-based petrochemicals and plastics, and sponsorship of the Foothills Pipe Lines export routes to the United States.

However, the Alberta-only role changed when TransCanada Corp. bought Nova for C$14 billion ($11.2 billion), at the time in 1998 the biggest deal in Canadian energy industry history.

After lengthy study and negotiation, Alberta ceded jurisdiction over NGTL to the NEB as of 2008. The switch recognized NGTL’s integration into TransCanada’s international network and enabled construction of supply collection extensions beyond Alberta’s borders.

The proposed North Montney Mainline, with initial capacity for 1.5 Bcf/d, would be NGTL’s biggest BC addition to date. Earlier extensions carry about 1 Bcf/d of new BC gas production. More BC additions are expected to figure in a C$2.4 billion ($1.9 billion) capital program in an advanced planning stage.

From the Alberta government’s viewpoint, NGTL expansion to cater to rival BC gas growth contributes to the worst provincial revenue loss since the onset of unconventional drilling, surpluses and reduced prices across North America.

Annual Alberta royalties from publicly owned or Crown gas resources, formerly the provincial treasury’s top earner, have shriveled by 94% from a 2005 pre-shale peak of C$8.4 billion ($6.7 billion) into a C$500 million ($400-million) range.

A reminder that Canadian gas production migration to BC is poised to continue surfaced as NEB’s hearings panel started to consider its verdict on the fight over building the North Montney Mainline on Alberta-style NGTL low-cost tolls.

The BC pipeline project’s chief shipper, the Calgary-based Progress Energy arm of Malaysia’s state-owned Petronas, disclosed selling all its oil and natural gas assets in Alberta’s northern Deep Basin region. Progress President Mark Fitzgerald said the sale “further supports our ability to consolidate our focus on the vast unconventional resource we have in the North Montney in northeast BC.”