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Message from the Premier of Saskatchewan, Scott Moe
On behalf of the Government of Saskatchewan, it is my pleasure to welcome readers to the 2020 edition of the Saskatchewan Oil Report.
The past few months have been challenging for everyone as we work together to contain the COVID-19 pandemic. The virus has caused a health-care emergency and affected the livelihoods of thousands of Saskatchewan citizens. Nowhere is the economic uncertainty felt more profoundly than in the oil and gas sector, which is dealing with a steep drop in demand arising from the pandemic and fallout from the price war between Russia and Saudi Arabia.
Our government is fully committed to ensuring the province’s energy sector can weather the storm and emerge even stronger in the months to come. Part of our support comes through advocacy. For years, we have advocated for an expansion of Canada’s pipeline capacity that would enable the industry to get world prices for the oil it produces. We have also called for the federal government to assist the energy sector by supporting the cleanup of inactive oil and gas wells in Saskatchewan. We were pleased Ottawa recently came forward with a well cleanup program, but more must done at the federal level to address liquidity challenges in the industry.
Saskatchewan has responded directly to the current situation with measures intended to assist companies with cash flow and reduce the administrative burden on the industry. As we move forward, our government will maintain a stable royalty structure in the province, supported by clear, responsible policies and regulations. Industry incentives, such as the Oil and Gas Processing Investment Incentive, will remain in place. Last year, Gibson Energy in Moose Jaw was the first company in the province to take advantage of this incentive. The company was able to boost production without increasing emissions, an example of the sustainable production Saskatchewan can take pride in.
Today, energy companies face an unprecedented challenge. But the underlying fundamentals of the industry remain strong. Saskatchewan is the second largest oilproducing province in the country and the sixth-largest onshore oil producer in North America. Oil and gas is our biggest economic engine. Last year, production alone was responsible for an estimated 15 per cent of our provincial GDP, supporting almost 33,000 direct and indirect jobs. In 2019, we produced 489,000 barrels of oil a day. Over the last decade, the energy sector has generated $4-6 billion in annual investment in Saskatchewan. This year, production, capital investment and employment will most certainly drop. But, our oil and gas sector is resilient and innovative and will be positioned to succeed when the recovery comes.
Our government believes energy will drive growth in the province for decades to come. Last November, we released a new Saskatchewan Growth Plan (https://www.saskatchewan.ca/government/budget-planning-and-reporting/ plan-for-growth). One of the most ambitious targets in the new plan is our commitment to increase oil production to 600,000 barrels per day by 2030. Substantial growth in our oil sector is not only possible but also necessary. Prior to the current difficulties, global demand for oil was widely forecast to grow annually through 2040. While there is much uncertainty today, we know that the world will require a vast amount of oil to power economic growth. Saskatchewan companies deliver some of the most sustainably produced oil in the world. In the years ahead, we will play an important role in meeting world demand.
Saskatchewan is tough, resilient and innovative. We pull together in times of trouble. We are hopeful and optimistic by nature. These are the essential traits of our province, embodied by those who work in our oil and gas industry. I’m confident our energy sector will drive the economic recovery to come. Better days are ahead for Saskatchewan.
Scott Moe Premier
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