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Issue Category: Issue 1, 2022

CGA’s 2021 Young Business Leader of the Year Nominees
The Canadian Gas Association has had a long-standing awards program to recognize its members’ leadership and commitment to safety and innovation. In 2022, CGA has enhanced this program to honour its members’ work in areas such as customer care, and environmental stewardship.

Another new award category is focused on young business leaders in the industry. In this issue of ENERGY Magazine, we interviewed the five candidates of this award to get their perspectives on working in the natural gas industry and what the future holds for the sector.

The nominees for CGA’s 2021 Young Business Leader are:
Alireza Kohandehghan, Pacific Norther Gas

Alireza Kohandehghan is an Asset Integrity Engineer at Pacific Northern Gas Ltd. (PNG). He has extensive experience in pipeline and facility integrity management processes, engineering assessments, risk assessments and probability of failure, remaining-life assessments, welding and metallurgical assessments, stress analysis, and simulation and modeling. He is an active member of several industry proceedings and working groups. Alireza always strives for knowledge-sharing across the industry, promotes a culture of excellence, and promotes strategic thinking. He has demonstrated initiative by tackling challenges, solving problems, developing systems, processes, and procedures, and brainstorming ideas to provoke critical thinking. Alireza’s addition to the PNG organization has significantly accelerated PNG’s overall understanding and management of pipeline system and facility integrity and has quickly positioned PNG to be a future leader in the integrity management sphere within the CGA member companies.

1. What motivated you to join the energy industry?

The constant changes and challenges in the energy industry present themselves as rewarding opportunities for leading-edge developments that have direct positive impacts on all our lives. These motivated me to be part of the solution to the growing demand for more environmentally-friendly and more sustainable energy and a more reliable supply of energy in the world.

2. What excites you most about the future of Canada’s natural gas industry?

What excites me the most about the future of the natural gas industry in Canada is one of the biggest emerging challenges the world, and Canada will face over the next few decades. This includes ensuring a sustainable and reliable energy supply for a growing population, managing the reliable energy supply through aging infrastructure, and developing and utilizing new and efficient carbon-reduction strategies. This energy will be in the form of Liquified Natural Gas (LNG) and varying blends of natural gas and hydrogen.

3. In your opinion, how do you see the role of natural gas infrastructure changing in the next 30 years?

Based on completed energy supply modeling studies, natural gas is predicted to be the primary energy source in North America for the next 30 years. During this period and beyond, the natural gas replacement by zero-carbon gaseous fuels will still require infrastructure similar to the existing natural gas systems for efficient delivery to markets and end-users. The natural gas infrastructure will play an immense role in that energy transition. This underlines the importance of integrity and health management and maintaining the existing infrastructure to ensure affordable serving at the time of the energy transition.

4. What advice would you give to young professionals today who are interested in joining the energy industry?

According to the history of our industry, the challenges that the energy industry will face could be overpowering at times. My advice for young professionals would be to remain persistent and motivated. Regular participation and contribution to knowledge and lessons-learned-sharing working groups and sessions are one of the most effective ways to tackle the common challenges to allow the industry to brainstorm innovative solutions on more leading-edge opportunities.

Ana Villarreal Escudero, P. Eng., TC Energy

Ana Villarreal Escudero has been working in Canada’s energy industry for the last seven years, lending her expertise in mechanical design to champion sustainable low-emission facilities. Her career has spanned areas of facility integrity and reliability, commissioning and capital expansion in Canada, the United States and Mexico. Most recently, Ana has led the development of emissions reduction strategies in the Canada Gas business unit at TC Energy with a focus on methane reduction and management. Recognizing that young professionals have the drive and passion to catalyze positive change in the energy industry, Ana joined the Young Pipeliners Association of Canada (YPAC) where she served as co-chair for the Calgary Chapter. In this capacity, she has channeled her passion for connection and transformative change to create spaces where young professionals are empowered to think big and think bold. As part of the Avatar Program, Ana is bringing her tenacity and ambition to continue developing innovative solutions for the energy ecosystem.

1. What motivated you to join the energy industry?

Working in the energy industry, there is a strong sense of social responsibility because the work that you do plays an important role in the way energy is delivered and used in society. I was attracted to the energy industry because of this sense of responsibility and the wide variety of opportunities and diversity of experiences one can have in this sector. Working in this industry, you can have a real impact in how energy develops and that is what motivates me to continue to be a part of it.

2. What excites you most about the future of Canada’s natural gas industry?

Canada is a leader when it comes to the responsible and sustainable operation of natural gas systems. I am excited by how this sector will continue to evolve and improve its practices to ensure that the gas is produced, transported, and delivered in the most sustainable and low-carbon way possible.

3. In your opinion, how do you see the role of natural gas infrastructure changing in the next 30 years?

There is no question that the existing natural gas infrastructure in Canada is a huge asset and I think these assets need to evolve to help achieve our country’s net-zero goals. What I think will be interesting is seeing how this infrastructure will adapt to transport products other than natural gas, like hydrogen, hydrogen blends or carbon. Changes like these would leverage the existing infrastructure and processes to build a strong foundation for new types of fuels and energy needs.

4. What advice would you give to young professionals today who are interested in joining the energy industry?

My advice would be to bring your passion, bring your ideas, bring your drive and commitment. The energy industry needs young professionals who are driven and ready to tackle challenging, multi-disciplinary problems that will contribute to a net-zero future. There is such a wide range of opportunities that will touch everything from the application of new technologies to policy development to meaningful partnerships with communities to achieve a common goal. There has never been a more consequential time to be part of the energy industry.

John Salazar, TC Energy

John was born in the Philippines and immigrated to Calgary in 2001. He spent his career in various facets of the Energy Industry, from research and development, facility and pipeline design, project management and operation. He is a registered Professional Engineer (APEGA) and Project Management Professional (PMI). Today, John serves as a Board Director for both Progressive Assistance Canada Charity and SOLAR Hope, leads a team of skilled trades men and women to deliver large volumes of energy to homes and businesses safely and reliably, and passionately participates in conversations about building high performance teams and the future of Energy.

1. What motivated you to join the energy industry?

My grandfather was an engineer and he led a team that built and operated the water sanitation and delivery infrastructure in the Philippines. My father is an engineer who led the team who designed, built, and maintained all the mechanical systems necessary for the delivery of electrical energy throughout the Philippines. I was inspired by and driven to continue our multigeneration lineage of builders and leave a legacy of building the infrastructure necessary to fuel our daily lives, connect our communities, and explore our future — Energy is at the root of all of that.

2. What excites you most about the future of Canada’s natural gas industry?

The global commitment to a more sustainable future has incubated a future of energy that inspires current and future Energy professionals to challenge the norm, therefore, accelerating the pace of transformation. What were mere ideas only a decade ago has become our reality today, and it’s inspiring to know that we are part of the community that will build a future that is still waiting to be imagined and discovered.

3. In your opinion, how do you see the role of natural gas infrastructure changing in the next 30 years?

Billions of people still have no access to clean, sustainable, and affordable sources of energy today. As we continue to advance our knowledge and technology, the composition of the natural gas in our system may change, but the role of the Canadian natural gas infrastructure will continue to grow in ensuring energy access equity around the world, while leading the advancement of technologies towards a net zero future.

4. What advice would you give to young professionals today who are interested in joining the energy industry?

The energy industry is one of the most dynamic industries out there. You will collaborate with some of the most passionate and creative individuals, learn about unique cultures and its people, and be part of an industry that is necessary to fuel our daily lives. We are in an unprecedented time of significant transformation and joining the industry today means you get to meaningfully participate in one of the most important conversations of our generation, today, for our tomorrow.

Lindsay Drozdiak, P.Eng., TC Energy

Lindsay started her career in the natural gas industry in Grande Prairie, Alberta, where she relocated after graduating from Mechanical Engineering at Queen’s University. Lindsay experienced firsthand the challenges associated with keeping our natural gas infrastructure running through the hot Alberta summer days and cold winter nights. She has since moved back to her hometown of Calgary to join TC Energy, where she has held various technical and project management roles within their Canada Gas Business Unit. Lindsay works to shape the future of the industry through her volunteer work with the Young Pipelines Association of Canada (YPAC).

1. What motivated you to join the energy industry?

I joined the industry because of the vast opportunities and advancing career path I saw for myself. I was drawn in by the new graduate programs that many energy companies provide, allowing for rotational opportunities for young professionals that would increase my exposure to different roles within the industry.

The many development opportunities I have been provided have given me the tools and confidence to speak up and challenge the status quo. I feel that I have a voice in this industry, and that my voice is being heard.

2. What excites you most about the future of Canada’s natural gas industry?

I am excited by the number of opportunities that our industry has, due to the high level of expertise we hold. The industry is at a pivotal point where we have abundant young energy entering the industry, as well as significant senior expertise that is eager to share their knowledge. We must ensure that we are facilitating knowledge transfer down to the young professionals who can channel their energy into building upon the great foundation that exists and creating the innovative solutions that we all want to see in the years to come.

3. In your opinion, how do you see the role of natural gas infrastructure changing in the next 30 years?

We will always depend on the safe and reliable energy infrastructure that we have today. As it is becoming increasingly difficult to build new energy infrastructure, our existing infrastructure becomes immensely more valuable and will be depended upon by a growing population. In response, the ways in which we operate and maintain our infrastructure will have to evolve. We must continue to challenge our ways of thinking and increase our efficiency in order to solidify natural gas as a preferable energy form in the future energy mix.

4. What advice would you give to young professionals today who are interested in joining the energy industry?

Always continue learning. Strive to understand the basics; this will give you the foundation you need to be able to innovate and continue advancing the industry.

Get involved! There are so many great young professional associations and online webinars you can participate in to expand your knowledge and network.

Don’t forget about how the industry got to where it was. Although there are a lot of new and exciting areas to get involved in, it is critical that the industry pass down the generations of knowledge and skills they have developed.

Ryan Organ, Enbridge Gas Inc.

Ryan Organ was born and raised in Halifax, Nova Scotia and graduated from Saint Mary’s University with a Bachelor of Commerce, majoring in Finance. In 2007, Ryan moved to his wife’s hometown of Chatham, Ontario and began his career at Enbridge Gas Inc.

Ryan is on the Board of Directors of the Chatham-Kent Chamber of Commerce, recently joining their executive as Chair-elect. Ryan also supports various charity events, most recently joining the planning committee for a charity pickleball tournament.

Ryan has three young daughters with his wife, Justine, and enjoys spending time with friends and family, skiing, golfing, boating, and getting outdoors.

1. What motivated you to join the energy industry?

I was very fortunate to land a job at a bank after university. It was a great start, and a path that I thought I would continue in most of my career.

Then something unexpected happened: I discovered an opportunity in the energy industry that allowed me to grow personally, develop professionally, and contribute to the quality of life and the economic prosperity of our customers, our province, and our country. I would be learning from some of the brightest minds and strongest leaders in the industry.

It wasn’t a hard sell, and it was the best decision I could have made.

2. What excites you most about the future of Canada’s natural gas industry?

There is a lot to be excited about!

We are in a unique position to not only support our customers through the energy transition, but to help shape what it looks like. Our industry meets the needs of our customers who rely on natural gas to fuel their quality of life while also finding innovative solutions that meet the needs of tomorrow.

I am extremely proud to be a part of the natural gas industry and I’m excited about all the opportunities on the horizon.

3. In your opinion, how do you see the role of natural gas infrastructure changing in the next 30 years?

2052 isn’t that far away in the grand scheme of things.

I think the role of natural gas infrastructure will always be to meet the needs of our customers, but how we use those assets, the makeup of the energy they deliver, and the level of interconnection with other energy infrastructure will evolve.

I see changes in our supply mix, relying increasingly on renewable natural gas and hydrogen. I see carbon capture, utilization and sequestration playing an important role. By 2052, many of the initiatives that we consider leading or bleeding edge today will be part of a well-established, highly integrated and automated energy system.

4. What advice would you give to young professionals today who are interested in joining the energy industry?

First: energy transition will bring significant change and opportunity.

It will provide young professionals the opportunity to flex their creativity, the opportunity to dive into new and exiting initiatives, and the opportunity to help shape the energy industry for the coming decades.

Second: where you go in this industry might surprise you.

This industry has a rich diversity of roles that can lead to a very exciting career mosaic. I’m fortunate to have worked in forecasting, regulatory, gas supply, sales, business development, and policy and sales support. It’s a rewarding career; I’ve learned a lot from the incredibly talented team at Enbridge and I’ve only scratched the surface.
April 27, 2022
Natural Resources Minister Jonathan Wilkinson on How Canada Can Support Energy Security

Hon. Jonathan Wilkinson, Canada’s Minister of Natural Resources

We are delighted to include below an op-ed from Minister of Natural Resources Jonathan Wilkinson. His schedule didn’t permit a face-to-face interview as we have done with his predecessors, but the Minister touched on a number of key issues that we wanted to explore in an interview, particularly the growing public concern of energy affordability, and the desire of Canadians to help Europe with energy security. Natural gas is key to addressing both public issues: Canada’s gas sector is uniquely qualified to keep energy affordable and help our allies — a win for all, and key to our economic well-being and global security. We look forward to working with the Minister and his colleagues on both of these.

Putin’s invasion of Ukraine represents a violation of international law, an unprovoked attack against a peaceful people, and an assault on the international, rules-based order.

Canada stands in steadfast support of the Ukrainian people and our European friends and allies.

Several weeks ago, our government moved to ban imports of Russian oil, gas, and petroleum products. The US and the UK have since taken similar steps.

Putin’s invasion has driven up gas prices around the world, and these events have raised serious questions about energy security in Europe.

“Canada stands in steadfast support of the Ukrainian people and our European friends and allies.”

Here at home, our government is engaging the Competition Bureau to prevent price gouging. And the issue of affordability remains a central concern for the federal government. We will continue to work to make life more affordable — as we have over the last few years through programs like the Canada Child Benefit, low-cost childcare, and the Climate Action Incentive that puts more money back in people’s pockets.

And on the world stage, we’ll keep doing our part too.

Europe’s short-term focus is on eliminating their reliance on Russian gas through LNG imports that will displace Russian oil and gas, while its medium-term focus is on shifting as rapidly as possible to renewables and hydrogen.

European leaders have asked us to explore how Canada can help with both, and Canadians want to ensure we are doing what we can to assist Ukraine and Europe. So how can Canada help?

Canada is uniquely positioned to contribute to building a clean energy economy in the long term. We are already leaders in non-emitting technologies, and we have the raw resources required to build them.

Clean hydrogen is a fuel that Europe is particularly interested in. Canada is one of the top hydrogen producers in the world, and we are building on our existing strengths, with multiple billion-dollar hydrogen projects already underway across the country.

Just last week I attended a meeting with my counterparts at the International Energy Agency (IEA) to discuss how we could work together to ensure availability of critical minerals required for the energy transition.

The EU is Canada’s second largest export market for clean technologies. There are significant opportunities to build on this and create sustainable jobs in Canada in the process.

But we’re also looking at what we can do to assist our European friends in the short term.

There is currently much discussion around LNG — not just as a transitional fuel for the ongoing energy transition, but as a direct replacement for Russian gas in the immediate-term.

In order for such Canadian LNG exports to make sense in that context, we would need to demonstrate an ability to satisfy Europe’s short-term requirements. That is, we would need to get LNG to Europe while Europe still wants it, and we would need to do so in the context of delivering on Canada’s climate commitments.

Canada presently has no large-scale LNG facilities on our east coast. New infrastructure would therefore be required — and it would need to fit into European timelines for transitioning from LNG to non-polluting hydrogen.

Moreover, any such exports from Canada would need to demonstrate compatibility with critical climate objectives.

“There is currently much discussion around LNG — not just as a transitional fuel for the ongoing energy transition, but as a direct replacement for Russian gas in the immediate-term.”

In general, if LNG is to help enable the energy transition, its use must be directly tied to the displacement of higher-emitting fuels like coal or existing natural gas usage. We cannot say we are building an LNG facility and simply assume that it will displace hydrocarbon fuels.

As noted, the emissions associated with such exports would also need to fit within Canada’s emissions reduction targets, meaning emissions associated with a production facility would need to be very low. To avoid the risk of such facilities becoming stranded assets, such facilities would ideally be able to convert to the production of ultra-low-carbon hydrogen in the long term.

European leaders have been clear. They don’t just want to reduce their reliance on Russian oil and gas — they want to reduce reliance on oil and gas altogether.

As the President of the European Commission, Ursula von der Leyen, stated earlier this month, “it is our switch to renewables and hydrogen that will make us truly independent. We have to accelerate the green transition.”

Europe is doubling down on energy independence from Russia and on accelerating the transition to a low-carbon future. Canada is here to do anything it reasonably can to help.

April 27, 2022
Views from our Political Commentators: Conservative, Liberal and NDP

How Can Policy Leaders Support Affordable Energy to Reduce the Impacts of Energy Poverty in Canada?

The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of the Canadian Gas Association.

By Tim Powers

If you have bought anything lately you know that inflation is real. If like many Canadians you aren’t driving an electric vehicle you will know when you have been to the pump that the price of gas has risen dramatically. And for people who don’t have public transit or walking options, the cost of getting to work or the kids to hockey is making life less affordable.

Now with war waging in Ukraine, Russia’s central role in energy provision to parts of Europe, Asia and elsewhere is properly getting more scrutiny. Geopolitical dynamics have always influenced discussions on energy policy in Canada. Already three Canadian provinces Alberta, Newfoundland and Labrador and Saskatchewan have said Canada should use the crisis in Ukraine to advance the energy options those jurisdictions have to the world. Simultaneously, high-profile federal Conservative politicians Pierre Poilievre and Michael Chong have argued Canada must also move to accelerate the development of LNG projects, particularly those on the East Coast, so that Europe has new stable supply options.

“If like many Canadians you aren’t driving an electric vehicle you will know when you have been to the pump that the price of gas has risen dramatically.”

As the domestic Canadian political system turns to budget season, expect inflation and global instability to dominate those political documents. From St. John’s to Victoria, citizens are screaming for some temporary relief from inflationary pain particularly when it comes to the price of gas. In Ottawa, they are hearing those same cries while being encouraged to be more aggressive on opening Canada’s energy warehouse to the world. With the Conservative Party in yet another leadership race expect more debate on how Canada needs to do more geopolitically to displace other nations not just on greenhouse gas reductions, but as an energy provider.

So, what to expect on the policy front? It is possible governments may look at temporary gas tax collection relief in the places where they have such mechanisms. Some have called for broader sales tax waiving or reductions — it is not outside the realm of possibility — but that might be seen as risky, given the perceived precedent it could set. Others could increase subsidies for swifter transition to non-renewable energy options if the argument can be made it provides legitimate relief from ongoing personal affordability challenges. Also, I wouldn’t rule out some governments creating special one-time relief payments for citizens. Bribery with our own money has worked before.

Medium to longer term policy debates, beyond the budgets, will return to the Canadian energy regulatory environment and pace of energy transition. For example, in the current Conservative Party of Canada leadership race the pace and place of transition has been centre stage. Most of all the candidates have acknowledged that geo-political uncertainty in Europe creates a significant opening for Canadian oil and gas. One candidate has gone as far to argue that uncertainty should be impetus to expand our domestic production. This on top of the government’s own recent recognition that our energy production in Canada will be increasing creates a set of many interesting circumstances.

Maybe for the first time in years there is real disruption happening around what the shape of Canada’s energy policy is about to be over the next two decades. Watching it play out will be fascinating as the threat of climate change is not going away, and neither is instability in Europe.

“Maybe for the first time in years there is real disruption happening around what the shape of Canada’s energy policy is about to be over the next two decades.”

Tim Powers, is the Chair of Summa Strategies Canada and the managing director of Abacus Data, both headquarters are in Ottawa. Mr. Powers appears regularly on CBC’s Power and Politics program as well as on VOCM in his home province of Newfoundland and Labrador.

By Scott Reid

The drive to net zero will remake Canada’s economy over the coming couple of generations. At stake is our ability to preserve our standing as a major energy-producing nation, albeit in a sustainable fashion. Even more fundamentally, this effort will determine our ability to preserve our standard of living and quality of life. If there’s any word that’s been overused in recent times, it is transition. But managing this energy transition will be the most critical public policy challenge Canada faces in the next half-century.

Affordability will be vital to the entire exercise. If we rush head-long into a brand of change that radically increases the prices that families pay to meet their energy needs, there will be recoil and resistance. Progress will be undermined and setback. Consequently, identifying affordable energy sources — and using public policy tools to support their development is key. Natural gas sits high on this list. Abundant in supply and with high demand around the world, it represents an enormous transition opportunity. Not only will it help us move toward net zero, it will provide more affordable options at home as well as GDP-boosting potential for export. Of course, the challenge is getting such product to market which requires the engaged support of a prudent public policy approach — in particular, for the sustainable, socially-accepted construction of pipelines.

“Consequently, identifying affordable energy sources — and using public policy tools to support their development is key. Natural gas sits high on this list. Abundant in supply and with high demand around the world, it represents an enormous transition opportunity.”

Other technologies offer similar hopes for an affordable transition such as the development of SMRs — or small modular reactors. Canada could easily, with the concerted support of governments and public policy leaders, become a champion in this new era of nuclear power. But the technology will not produce itself. Public dollars and policy support are needed to create momentum, prompt breakthroughs and facilitate scale.

Finally, Canada will need to also invest in the support of our energy producers and workers across the country. Those in energy-generating regions like Alberta, Saskatchewan, BC and elsewhere will need help to shift their focus to other options whether that be renewables, natural gas, nuclear or other. The talents of these workers need to be nurtured. Their skills need to be supported. And their ability to earn a living wage must be respected. At previous points in our history, dedicated transition programs have been put in place to help hasten change and support those most acutely affected. Our public policy tools must be similarly employed today in order to demonstrate to our energy sector workers that all Canadians recognize the challenge is not theirs alone. Nor is it simply sectoral or geographic. It must be regarded as a truly national priority.

In pursuing all these courses, and possibly others, we would be wise to keep affordability as a top-of-mind imperative. Public policies must be shaped with full consideration of practical consequences. If the price of energy transition is too costly for people to pay, the entire project will be harmed. Affordability is therefore a disciplining tool. It helps us pick the public policy priorities that will not only see us succeed but that will enable us to create and cultivate public support.

Scott Reid was director of communications to former prime minister Paul Martin, and is the co-founder of Feschuk.Reid.

By Kathleen Monk

Families are struggling. Inflation has hit a 30-year high while wages continue to lag, especially for workers on the lower end of the pay scale.

The cost-of-living crisis will continue to be a top political issue. As politicians focus on Canadians struggling to pay rising bills, rising energy costs will play a central role.

For months, energy costs have been a top driver of inflation and now, as costs rise to transport or manufacture goods, this is having a run-on effect making everything families need even more expensive. With interest rates poised to rise in coming months, and Canadian households holding $2.5 trillion in debt, the fiscal squeeze families face is only going to get worse.

Experts generally measure energy poverty by the percentage of household income families spend on energy, but this doesn’t even consider the impact of sky-high gas prices, which particularly affect low-wage earners in communities without easy access to public transit.

Energy poverty is only going to grow. This means more Canadians sacrificing one essential to pay for another, a greater number of families living in discomfort, higher incidences of respiratory illnesses, and poorer mental health outcomes. This is the bleak context facing policy makers as they look towards new measures to tackle energy poverty in this country.

Canadian Urban Sustainability Practitioners (CUSP) provides a tool to show what energy poverty looks like across Canada. According to CUSP, the number of households that spend more than double the nation-wide average on their monthly energy bills — which is the definition for energy poverty — stands at over 2.8 million families across Canada. In Atlantic Canada, over a third of households are now experiencing energy poverty. In some parts of Northern Ontario, it’s over 50 per cent of families.

This isn’t just about families struggling to afford high energy costs. Some communities face a lack of dependable access to energy at all, including a sizable number of Indigenous communities.

Solutions will have to work in the different realities facing a myriad of communities across the country.

Governments can start by helping families improve household energy efficiency through measures like energy retrofit programs, in particular, initiatives aimed directly at helping low-income families living in inefficient homes. Efficiency Canada, an organization pushing for a more energy efficient economy, has proposed new legislation with firm energy poverty reduction targets as well as new funding in the upcoming federal budget that could be used to leverage greater commitments from the provinces around reducing energy poverty.

“Governments can start by helping families improve household energy efficiency through measures like energy retrofit programs…”

These would be good first steps but so much more needs to be done. The fact is, we need urgent measures to reduce energy costs, but also action on bringing down the high cost of housing, medicines, and groceries. If we fail to act, we risk millions of families being left behind.

Kathleen Monk is Principal Owner at Monk + Associates, an independent public affairs firm. She appears regularly on CBC News Network’s Power and Politics and sits on the board of CIVIX, a non-partisan charity dedicated to building engaged citizens.

April 27, 2022
U.S. Operators More Secure from Cyber Threats After Colonial? Perhaps.

In the year since Russian hackers forced the shutdown of a major liquid fuels pipeline, U.S. gas utilities and pipeline operators have become more focused on building defenses against cyber threats, but compliance with federal security mandates has proven a nettlesome distraction.

Weeks ahead of Russia’s invasion of Ukraine in February, cybersecurity expert Cisco Talos Intelligence Group already was warning of cyber operations by malicious actors in the U.S. and elsewhere aimed at eroding support for Ukraine. Attacks, Talos predicted, likely would target critical infrastructure with a goal of creating disruptions that were serious but relatively easy to recover from.

It sounded like déjà vu all over again. Russian hackers behind the Colonial Pipeline ransomware attack in May 2021 targeted the operator’s enterprise systems while leaving operational systems intact, yet forced Colonial to shut down a major network delivering gasoline, jet fuel and diesel to the East Coast and pay $4 million ransom in cryptocurrency.

Nearly a year later, are U.S. oil and natural gas operators better equipped to defend themselves against such attacks from a variety of state-sponsored and independent cyber criminals? Perhaps, though some industry advocates are concerned many operators have had to redirect their focus to meeting new federal security mandates rather than actually strengthening cyber defenses.

Colonial certainly got the attention of gas industry executives and helped to reprioritize cybersecurity for some. Soon after the May incident, the Transportation Security Administration (TSA) issued two security directives intended to fortify about 100 TSA-designated critical pipeline systems against ransomware, malware and other threats.

Both directives list several requirements. The first directive asked operators of these systems to designate a cybersecurity coordinator to serve as a point of contact for TSA and report cybersecurity incidents to the Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency. The second, more nettlesome directive requires operators to take specific mitigation measures to protect against cyber threats and develop and implement contingency and recovery plans.

“Have we become more secure? I’m not going to say we haven’t,” said Kimberly Denbow, Managing Director of Security and Operations for the American Gas Association (AGA), which represents more than 200 energy companies. “I’ll say yes, in a nutshell we’ve become more secure, but at the same time we’re distracted by compliance.”

On a recent call with TSA administrator David Pekoske, Denbow said, one natural gas CEO told the regulator how the mandates had forced his company to “add so much more cyber staff, not because they had a poor cyber program by any means, but so they could come into compliance by checking the boxes that need to be checked.”

Bolstering threat alert capabilities

For its part, the AGA has made strides in the past year in improving the Downstream Natural Gas Information Sharing and Analysis Center (DNG-ISAC), the industry’s premier alert system for both physical and cyber threats. The system serves members of the AGA, the Canadian Gas Association (CGA) and pipeline operators represented by the Interstate National Gas Association of America (INGAA).

The AGA enhanced the DNG-ISAC platform in 2021 to make it more secure and user-friendly, with a mobile app and better push notification capabilities for threats and information submission opportunities. The platform posted 1,200 alerts last year, including information on hundreds of cyber-related threats, potential vulnerabilities, and actual cyber intrusions of relevance to pipeline operators.

David McConkey, Director of Operations, Safety and Security for the Canadian Gas Association, said the DNG-ISAC is an important complement to the Blue Flame Program, a near real-time threat information and analysis sharing system established by CGA last year in partnership with the Canadian Centre for Cyber Security (Cyber Centre).

The CGA helped facilitate the close working relationship that now exists between the DNG-ISAC, the Cyber Centre and other organizations on the Canadian side, “so they have a really healthy and active flow of information there, which benefits our members because the information coming out of the DNG-ISAC has a Canadian flavour as well,” McConkey said.

The threat alert system is just one area where cross-border collaboration is boosting cyber defenses. This fall, the AGA will pilot its first NGX event, a cybersecurity planning exercise that will include U.S. and Canadian participants from natural gas utilities, transmission pipelines and government. It will be a scaled-down version of GridEx, a planning exercise that originated in the electric industry but now includes gas operators. Denbow’s plan is to grow NGX over time.

“CGA’s Blue Flame Program adds operational capacity to reduce cyber risks for the gas industry.”

A new twist on cyber vulnerabilities?

Cybersecurity concerns tend to focus on the bag of tricks malicious foreign actors and domestic “hacktivists” can use to wreak havoc on critical infrastructure in pursuit of their agenda, but U.S. industry advocates say the potential impact of total electrification of the energy system on cybersecurity deserves more attention.

Going all-electric will not just make the overall energy system less resilient in terms of physical threats such as severe weather events or activist attacks but could also simplify the playbook for those planning cyber mayhem, they say.

The electric grid already is stressed: There were 182 major disruptions to the grid in 2020, compared to fewer than two dozen in 2000, according to a Wall Street Journal analysis published earlier this year. Culprits include the age of the U.S. transmission system, the inherent vulnerability of an aboveground transmission system, and the vagaries of wind and solar.

“Everything is tied to having electricity, and yet we’re not focusing on the reliability of the grid. That’s absurd and that’s frightening,” Curt Morgan, CEO of electric power wholesaler Vistra Corp. told The Wall Street Journal in February. “There’s such an emotional drive to get where we want to get on climate change, which I understand, but we can’t throw out the idea of having a reliable grid.”

AGA’s Denbow tied total electrification to increased cybersecurity risks at a recent meeting of the National Association of Regulatory Utility Commissioners (NARUC). Denbow cautioned against pursuing policies that reduce resilience by “putting all of our energy eggs in one basket” and at the same time ignore the impact on the cybersecurity landscape.

“Energy policy continues to be made in siloes,” Denbow said. “Cyber becomes an afterthought: Operators are asked ‘What about the cyber?’ I reply, ‘Well, what about the energy policy that increased our cyber vulnerability?”

Like so many other aspects of the total electrification debate — like its impact on climate change, resilience, and affordability — it comes down to what is lost by not including natural gas as part of the solution.

“I think the message there is the natural gas sector is doing a lot, we’re on top of things, we’re a great asset from a physical and cybersecurity standpoint and we’re leading in many respects,” the CGA’s McConkey said. “You throw our industry out and you’re losing an asset from many, many perspectives.”

“Like so many other aspects of the total electrification debate — like its impact on climate change, resilience, and affordability — it comes down to what is lost by not including natural gas as part of the solution.”

Still working the kinks out

The AGA and its member companies have been working with TSA since July to address aspects of the “one-size-fits-all” security directives that have created problems for operators — for example, multifactor authentication requirements that aren’t compatible with control systems and various components now in use.

Issues persist and new vulnerabilities are being created in the process. TSA in February requested that the designated pipeline operators submit their cybersecurity incident response plans to the agency electronically — a request that was greeted by operators with grave concern.

“TSA has collected all of these sensitive plans in a single database,” Denbow said. “In a threat environment when we’re worried about nation states compromising our networks, storing all these playbooks in one location does not give operators a warm-fuzzy feeling, regardless of security assurances provided by the government.”

Around the time the second TSA directive was issued last July, federal officials simultaneously released previously classified documents revealing that 13 of 23 U.S. natural gas pipeline operators were successfully compromised by a Chinese “spear-phishing” campaign from 2010–2013 that could have allowed hackers to gain control pipeline operations.

In combination with the Colonial incident and the TSA directives that followed, those disclosures no doubt had a salutary influence on oil and gas operators that lagged on their cybersecurity efforts, but those likely were already in the minority.

“For the majority of the companies subject to the security directives, cybersecurity has been a priority for a long time,” Denbow said. “For those that may not have been giving cybersecurity the level of attention needed, the attention is certainly there now.”

David Coburn is a strategic thinker, writer, media relations expert and communications consultant leveraging 30-plus years of print journalism and agency public relations experience.

April 27, 2022