Introduction
The energy landscape in Alberta and Saskatchewan is undergoing a significant transformation. Traditionally, these provinces have been the backbone of Canada’s oil and gas industry, boasting decades of expertise and extensive infrastructure built to support hydrocarbon production. Today, however, a compelling opportunity is emerging: repurposing existing power generation assets to meet the burgeoning needs of the data centre market. Driven by rapid digitalization, growing data consumption, and the critical requirement for reliable power, data centres represent an attractive new revenue stream.
This report examines the potential for oil and gas companies in Alberta and Saskatchewan to enter the data centre power generation market. It reviews regional energy infrastructure, analyzes the rising demand for data centre power, details recent corporate and governmental announcements, and outlines the strategic opportunities and challenges facing these companies. By exploring this convergence of traditional energy production and digital infrastructure, the report aims to provide stakeholders with a comprehensive roadmap for capitalizing on this transformative trend.
Regional Energy Infrastructure & Its Adaptability
Alberta and Saskatchewan are home to a mature oil and gas industry with an extensive network of power generation facilities, transmission lines, and backup systems that have been optimized over decades. These assets were originally designed to meet the high power demands of drilling, extraction, and refining operations. However, in periods of lower hydrocarbon demand or during routine maintenance cycles, many of these facilities operate below full capacity.
This underutilization presents a significant opportunity. With relatively low incremental costs, oil and gas companies can repurpose their excess capacity for alternative applications. Data centres, which require an uninterrupted and high-quality power supply, can benefit from these reliable, established energy systems. Moreover, the technical expertise honed in the oil and gas sector—such as remote monitoring, predictive maintenance, and grid management—translates well to the needs of modern data centres. The challenge lies in adapting existing infrastructure to meet the stricter standards and redundancies required by digital operations, but with current advances in smart grid and digital monitoring technologies, these modifications are increasingly feasible.
In addition, Alberta and Saskatchewan enjoy competitive energy prices compared to other regions. This cost advantage, combined with the reliability of existing infrastructure, makes these provinces attractive for data centre developers who are under constant pressure to optimize operating costs while ensuring uninterrupted service. As energy demand continues to grow alongside data consumption, oil and gas companies can leverage their power generation assets to capture a share of this expanding market.
The Growing Demand For Data Centre Power Generation
Data centres have become the backbone of the modern digital economy, supporting cloud computing, streaming services, artificial intelligence, and other data-intensive applications. The rapid pace of digital transformation has led to an exponential increase in data storage and processing requirements. As a result, the demand for data centre capacity—and the power required to support them—has reached unprecedented levels.
In Alberta and Saskatchewan, several factors contribute to making the region ideal for data centre power generation:
- Abundant and Low-Cost Energy: The established oil and gas infrastructure provides a steady supply of power at competitive prices.
- Reliable Infrastructure: Proven systems for power generation, distribution, and backup ensure that data centres can operate without interruption.
- Climate Advantages: Cooler regional temperatures help reduce cooling costs—a significant component of data centre operating expenses.
- Government Support: Both provincial governments have expressed strong interest in diversifying their economies. Recent policies encourage the adaptation of industrial assets for new uses, including technology and data infrastructure.
Data centre operators are increasingly seeking long-term power purchase agreements (“PPA”s) to secure stable, predictable power supplies. The ability of oil and gas companies to offer such arrangements, drawing on their existing capabilities, could prove highly attractive to data centre investors. Furthermore, the steady growth in data consumption forecasts a sustained demand for reliable, scalable power solutions that can support digital infrastructure over the long term.
Recent Announcements & Industry Developments
Recent developments underscore the momentum behind integrating oil and gas power assets into the data centre landscape:
- Corporate Initiatives:
- EnCana Corporation recently announced its intention to explore alternative applications for surplus power generation capacity. The company is in the early stages of discussions with data centre operators to assess the feasibility of retrofitting facilities to meet modern uptime and efficiency standards.
- Pembina Pipeline Corporation has also signaled its interest in diversifying revenue streams by leveraging its power generation infrastructure. Pembina is actively engaged in preliminary talks with potential data centre partners to secure long-term PPAs.
- Data Centre Projects:
- DataHub Calgary has emerged as a major project in Alberta, with local authorities endorsing the plan as a key component of the region’s digital economy strategy. DataHub Calgary is in advanced discussions with several local energy providers, aiming to secure dedicated power arrangements that leverage existing oil and gas assets.
- In Saskatchewan, PrairieTech Data Solutions has announced plans to develop a state-of-the-art data centre facility in Saskatoon. The project is notable for its proposed use of repurposed industrial power assets, and it has already garnered support from both the provincial government and regional utility companies.
- Government and Regulatory Announcements:
- The Alberta government has introduced initiatives aimed at economic diversification, offering financial incentives and streamlined regulatory pathways for companies willing to convert legacy industrial assets for digital infrastructure use.
- Saskatchewan’s economic development strategy also highlights the potential to modernize traditional energy systems to serve emerging industries, including data centres. Recent policy updates have provided clarity on permitting and environmental standards, further encouraging investment in this sector.
These announcements not only validate the potential for convergence between oil and gas and data centre power generation but also signal a proactive stance from both corporate and government stakeholders in driving this transition.
Opportunities For Oil & Gas Companies
Oil and gas companies in Alberta and Saskatchewan are uniquely positioned to seize this opportunity. By repurposing existing power generation assets, these companies can:
- Diversify Revenue Streams: Transitioning a portion of their operations toward data centre power generation offers a hedge against the volatility of the traditional oil and gas markets. Long-term PPAs with data centre operators provide steady cash flows, contributing to more stable earnings.
- Maximize Asset Utilization: Repurposing underutilized power generation capacity transforms idle or underperforming assets into valuable, revenue-generating investments. This improved asset utilization can extend the economic life of infrastructure and reduce overall operating costs.
- Secure Long-Term Contracts: Data centre operators typically favor multi-year agreements to ensure operational reliability. Such contracts not only guarantee a stable revenue stream but also provide a competitive edge in an industry characterized by high capital expenditure.
- Form Strategic Partnerships: Collaborations with data centre developers and technology firms can facilitate the necessary upgrades and retrofits to meet modern power quality standards. These partnerships enable oil and gas companies to tap into digital expertise while maintaining control over their energy assets.
- Enhance Market Leadership: Early adoption of data centre power generation can position traditional energy firms as innovators in the energy transition. This strategic pivot may attract new investment and improve market perception at a time when diversification is increasingly valued by investors.
For data centre operators, partnering with established oil and gas companies means accessing reliable power at competitive prices, while also benefitting from the operational expertise inherent in large-scale energy production.
Implications & Challenges
Despite the promising opportunities, several challenges must be addressed to fully realize the potential of this market:
- Infrastructure Conversion: Retrofitting existing power plants to meet the stringent standards of data centre operations will require significant capital investment. Upgrades may include improved cooling systems, enhanced power distribution controls, and integration of digital monitoring technologies.
- Regulatory and Permitting Issues: Navigating the regulatory landscape to repurpose industrial assets for data centre use is complex. Oil and gas companies must work closely with provincial authorities to secure the necessary permits and ensure compliance with updated environmental and safety standards.
- Competition with Renewables: Data centre operators are increasingly evaluating renewable energy options, such as solar and wind power. Oil and gas companies must ensure that their power offerings are not only cost-competitive but also meet the evolving sustainability criteria that many data centre clients require.
- Digital Integration: To effectively serve the data centre market, traditional energy companies may need to invest in advanced digital technologies and smart grid systems. The integration of these technologies is critical for managing energy loads, ensuring uptime, and providing real-time data analytics.
Conclusion
The potential for oil and gas companies in Alberta and Saskatchewan to participate in data centre power generation is a transformative opportunity. By leveraging mature energy infrastructure and repurposing underutilized assets, these companies can diversify their revenue streams and tap into the growing demand for reliable, cost-effective power among data centre operators. Recent corporate announcements and supportive government initiatives underscore the viability of this convergence, positioning the region as a future hub for digital infrastructure.
As digital demand continues to escalate, oil and gas companies that successfully transition into the data centre power market will not only secure new revenue streams but also play a pivotal role in Canada’s economic diversification. For stakeholders, the integration of traditional energy assets with modern data centre requirements represents a compelling investment opportunity that bridges the gap between legacy operations and the digital future.
About Moneta
Moneta is a boutique investment banking firm that specializes in advising growth stage companies through transformational changes including major transactions such as mergers and acquisitions, private placements, public offerings, obtaining debt, structure optimization, and other capital markets and divestiture / liquidity events. Additionally, and on a selective basis, we support pre-cash-flow companies to fulfill their project finance needs.
We are proud to be a female-founded and led Canadian firm. Our head office is located in Vancouver, and we have presence in Calgary, Edmonton, and Toronto, as well as representation in Europe and the Middle East. Our partners bring decades of experience across a wide variety of sectors which enables us to deliver exceptional results for our clients in realizing their capital markets and strategic goals. Our partners are supported by a team of some of Canada’s most qualified associates, analysts, and admin personnel.