An Interview with Greg Ebel, Chief Executive Officer of Spectra Energy – Bringing Perspective on Ontario’s Energy Industry

Greg Ebel, Chief Executive Officer of Spectra Energy

Greg Ebel, Chief Executive Officer of Spectra Energy

The day Kathleen Wynne was sworn in as premier of Ontario last June, Greg Ebel, the Ottawa-born Chief Executive Officer of Houston-based Spectra Energy, returned to his home province with a stern warning for the new government at Queen’s Park: Ontario will bleed thousands more manufacturing jobs if it doesn’t get a handle on high electricity rates.

There’s a cheap energy alternative right next door in the northeastern United States, Ebel argued, where large deposits of shale natural gas in Ohio, New York and Pennsylvania have transformed the economies of those states by generating cheaper electricity and reigniting the manufacturing sector.

The rebound in the northeastern U.S. has been dramatic. Energy intensive manufacturers, lured by reduced energy costs, have returned to Michigan, Ohio, Pennsylvania and New York, all of which have posted record job gains in the past five years.

Many of those U.S. gains came at the expense of Ontario jobs said Ebel, who rhymed off a list of companies that have closed Ontario operations in recent years including Caterpillar, Unilever, Heinz and U.S. Steel. All told, about 300,000 manufacturing jobs have vanished from the province since 2002.

“I am a native son of Ontario,” he said. “I was born here, grew up here, studied at York University.”

Ontario’s industry and manufacturing sector hasn’t rebounded the way Ebel had hoped and he thinks bold steps need to be taken for the province to stay competitive.

Ontario’s industry and manufacturing sector hasn’t rebounded the way Ebel had hoped and he thinks bold steps need to be taken for the province to stay competitive.

“I have family . . . parents, siblings, aunts, uncles, nieces, nephews and friends in the province. So, like you, I want what’s best for Ontario. And like you I am troubled by the widening competitiveness gap we’ve experienced of late.”

Ebel made the remarks in a speech to The Economic Club of Canada at a downtown Toronto hotel, a few blocks from the Ontario legislature, where Wynne was being sworn in.

In an interview after the speech, Ebel expressed dismay that Ontario hasn’t rebounded from the recession the way he hoped.

At times, he appeared exasperated that Ontario leaders haven’t taken bolder steps to stay competitive.

“If you don’t keep up with the competition, your success is going to be greatly put at risk.”

“If you don’t keep up with the competition, your success is going to be greatly put at risk and that’s what we’re seeing in Ontario,” he said.

Ebel believes affordable natural gas can help restore jobs and fuel growth.

Ebel believes affordable natural gas can help restore jobs and fuel growth.

“In the past, Ontarions would have looked down their nose at Pennsylvania, Ohio and Michigan, saying it’s a rust belt.

“But reality jumps up and bites you,” he added.

High electricity rates sap competitiveness

Ebel blamed high electricity rates for widening the competitiveness gap between Ontario and the northeastern United States. In some regions, electricity costs are 60 per cent lower than in Ontario.

“The disparity puts us at a disadvantage relative to our competitors who are aggressively leveraging affordable natural gas to restore manufacturing jobs and fuel growth,’’ Ebel said.

“Thirty to 60 per cent higher prices absolutely break deals for businesses where 10, five or even two per cent makes a monumental difference,” he added.

One solution, Ebel said, lies in tapping natural gas in the Utica and Marcellus basins in Ohio, New York and Pennsylvania. Spectra Energy, along with partner Detroit-based DTE Energy, has proposed a $1.5 billion pipeline to ferry U.S. natural gas from eastern Ohio to southern Ontario. He urged the new Ontario government to fast track the plan.

“There is a 100-year supply of natural gas just 200 kilometres to the south,” Ebel said.  “How could you not use it?”

The proposed 400-kilometre link, known as the NEXUS Gas Transmission, would transport gas to southwestern Ontario storage hubs operated by Union Gas in Sarnia and Enbridge in Tecumseh. An already existing pipeline, the Vector line, which is connected to the Sarnia hub, would transport the gas to markets in Ontario and Quebec.

Spectra Energy is the parent company of Chatham, Ontario-based Union Gas, which Ebel ran from 2005-2007.

Ontario recovery fragile 

Ebel said Ontario’s economic recovery hangs in the balance.

“This is the number one issue,” he added. “If you can’t compete against the Great Lake states, then someone will just have to turn out the lights when the last manufacturing jobs leave the province.”

The proposed pipeline to Ontario needs speedy approval because the U.S. shale gas can be exported elsewhere.

Ebel argues a proposed pipeline to Ontario needs approval because U.S. affordable natural gas can be exported elsewhere.

Ebel argues a proposed pipeline to Ontario needs approval because U.S. affordable natural gas can be exported elsewhere.

“If the decision is made not to bring it to Ontario in the next 18-24 months, I think you’re in trouble for at least another half decade and maybe that’s too late to catch up,” Ebel said.

“As soon as people say ‘Go’ on a project, it’s then three to maybe four years before that project can get built,” Ebel said.

Ebel argues that steady, secure supply of natural gas could jumpstart development of the Ring of Fire in northern Ontario.

Ebel argues that steady, secure supply of natural gas could jumpstart development of the Ring of Fire in northern Ontario.

The development of vast natural gas deposits at the Marcellus and Utica basins in New York, Pennsylvania and Ohio launched a shale revolution in the northeastern United States. Previously, that natural gas was inaccessible, but innovative drilling technology has unlocked those reserves.

The cheaper gas was used to generate lower-cost electricity across the northeastern U.S., sparking a renaissance in manufacturing activity.

Ontario, Ebel said, missed out on the manufacturing rebirth, in part, by placing too much emphasis on renewable energy plans, which he said proved costly.

“I am not at all opposed to renewable energy, but the amount and pace by which it is added to the supply mix has to be carefully balanced with the impact to rates and the economy,” he said.

Finally, Ebel said a steady, secure supply of natural gas could jumpstart development of the Ring of Fire region in northern Ontario, which has stalled due to high infrastructure costs. The remote region contains large deposits of chromite, nickel and gold.

He described the region as one of the “most significant mineral regions” in the province and North America.

“Affordable, flexible and efficient energy is crucial to unlocking opportunities – and it provides a major catalyst for large-scale economic transformation. Natural gas can play a significant role in driving these opportunities.”