North America’s largest gas storage Rockpoint raises $704 million in TSX debut

Toby McKenna, CEO of Rockpoint, joins BNN Bloomberg to discuss the company going public as well as assessing natural gas storage infrastructure.

Executives for Rockpoint Gas Storage Inc. have big plans for the company after it made quite an impression on the TSX with a mammoth sized initial public offering (IPO) this month.

Calgary-based Rockpoint raised $704 million during its IPO of $22 a share. It is the second company to debut on the TSX this year after GO Residential Real Estate Investment Trust in July.

“Natural gas storage is playing such an important role,” Toby McKenna, CEO of Rockpoint told BNN Bloomberg in a Monday interview. “The way that investors are receiving us has been extraordinary.”

Rockpoint, which is 40 per cent owned by investment giant Brookfield Asset Management, is the largest natural gas storage operator of its kind in North America.

The company is working on address bottlenecks in their six natural gas facilities across Alberta and California to increase efficiency. They also plan to upgrade existing storage facilities to be more responsive and flexible to the changing customer needs of natural gas storage amid swings in energy demand, extreme weather and the growth of liquified natural gas (LNG).

“We’re really focused on sort of the short-term debottlenecking of some of our processes,” said McKenna. “Today’s customers are really demanding of a different type of storage than in the old days. You can imagine, 10 years ago, people would want enough gas in the summer in order to protect against the winter, whereas today, with these customers changing so much, such as LNG, they’re looking for high rate and high demand services.”

Customers are looking put gas in or take it out quickly to power new data centres or use natural gas as backup renewable energy source when solar and wind are not available.

“There’s so much focus today on renewable growth that’s actually causing incremental intermittency to the electrical system, and that system needs natural gas to backstop it,” said McKenna. “We’re looking at a significant change in the way that consumers use natural gas storage.”

The company was 10 times oversubscribed when it hit the market. McKenna said he was a little surprised at their success, given initial market skepticism about gas storage.

“I’m told we’re one of the few energy IPOs,” said McKenna. “It was a bit surprising to hear how successful it went, given that folks were indicating to us about a year ago that the markets might not be ready around something on a concept like gas storage. But overall, as we got onto the road and the feedback that we got very early, it was very clear that investors really liked our story.”