EnCana said Monday it is in talks with the federal government about a plan to encourage gasoline and diesel retailers to add natural gas fuelling stations along Highway 401, Canada's busiest roadway.

The Calgary-based company, one of North America's largest producers of natural gas, has asked Ottawa to contribute $1 billion to the project along the highway, which runs from Windsor, Ont., to the Ontario-Quebec boundary and connects onward to Montreal and Quebec City.

Natural gas would produce one-third less greenhouse gas than diesel. (CBC)

Burning natural gas in cars and trucks would create a third less greenhouse gas than using gasoline or diesel but no system of fuelling stations exists and it would be expensive to set one up. Drivers would be reluctant to invest in switching their engines over until there's a widespread network of stations they can use.

Canada's natural gas industry has been hit by low prices during a glut caused in part by a drop in demand during the recession.

As well, new technology to create and prop open fissures has opened up previously inaccessible underground formations and created an oversupply from previously inaccessible shale gas formations in North America.

"What we've seen is fundamentally a material change in the volume of natural gas that's available for use in society," EnCana spokesman Alan Boras told CBC News. "With the breakthrough in technologies, we see enormous new supplies coming on stream. And you can see that in the price.

'There can be great new opportunities for natural gas to expand its role in the economy.'—Alan Boras, EnCana spokesman

"We've got storage that's full now in the winter and we have relatively soft prices. And what that is an indication of is we have plentiful, affordable supplies of natural gas and we've seen there can be great new opportunities for natural gas to expand its role in the economy," Boras said.

EnCana also wants incentives in the federal budget next spring for trucking companies to convert their rigs from diesel to natural gas. The United States already has incentives of up to $32,000 US for truckers to switch from diesel.

Edmonton-Vancouver route envisioned

The company has also been negotiating with the B.C. and Alberta governments about building filling stations between Edmonton and Vancouver.

Analyst Bill Gwozd of the Ziff Energy Group in Calgary said the proposal would benefit the industry by increasing demand, and would help Canadians by reducing greenhouse gas emissions.

"And it probably would be a win for the government of Canada," he said. "This is one new mechanism [of meeting emissions targets]."

Pembina Institute executive director Marlo Raynolds says Ottawa shouldn’t try to pick winners when it comes to technologies to reduce carbon emissions. (CBC)

Marlo Raynolds, executive director of the Pembina Institute, said natural gas can play an important role but the environmental organization opposes the idea of governments picking favourites among many promising technologies and approaches to reducing emissions.

"I think the big question is how to spend public money and whether a subsidy for a specific technology is the best approach," he said. Raynolds said a better option is to impose a price on carbon dioxide emissions.

"We need to put a price on pollution and let the market solve this," he said.

Calgary trucker Mohammed Kammouni said he would consider conversion. Moving away from diesel to quieter natural gas engines would be good for the people who live along heavily frequented roads, he said.

"Natural gas would be a lot cheaper for us, so that would help us, too," Kammouni added.