(Photo by Bill Allen)
As the province continues with its Re-Open Saskatchewan Plan and attempting to move past the COVID-19 pandemic, Energy and Resources Minister Bronwyn Eyre has called on the federal government for further, substantial help for Saskatchewan’s oil and gas sector.
“It is unprecedented and a terrible, terrible challenge for the sector that has faced so many challenges over the last year,” said Eyre in a phone interview.
“I have dealt with and addressed quite a few challenges, but this was one that we didn’t see coming,” she added.
Eyre sent a letter to the federal government’s Minister of Natural Resources, Seamus O’Regan on May 4, outlining the unique challenges the province is currently facing. The letter noted the oil price war, negative pricing and the COVID-19 pandemic.
Eyre’s call to the federal government included further help for a sector that is “top-in-class when it comes to innovation, has provided millions in funding for community organizations and infrastructure across our province.”
On April 17, the federal government announced $675 million in repayable loan funding for greenhouse gas emission reductions with a focus on methane for Alberta, B.C. and Saskatchewan. Also announced was a $400 million pledge for the clean-up of inactive orphan wells.
Eyre said those efforts will create crucial work for the sector, but added Saskatchewan companies are desperately trying to retain existing production for wells.
“Certainly, that will help our service sector, it is welcome,” said Eyre.
“Abandonment is just one part of the life of a well. If you focus on just abandonment you are focusing on end of life,” she added. “You are not focusing on a well in life, on current existing production. It’s current production that produces royalties for the province.”
Eyre said the royalties from production brings in $600 million in taxes for the province. She added it is that cash flow that is desperately needed for operators in current production.
“I found it unfortunate that the Prime Minister seemed to imply during his announcement three weeks ago that leaking wells are dotting the landscape,” said Eyre.
“That isn’t the case in Saskatchewan. We have a strong record of cleaning up wells going into this crisis, and I think it’s important that Saskatchewan people understand and know that,” she added.
Eyre’s letter also said the province of Saskatchewan only has one large, vertically integrated producer, which is Husky. Additionally, the province has 10-15 “midcap” producers and around 160 small producers. She said only a handful of producers in the province will qualify for the recent federal loan program also which requires companies to produce 5,000 to 100,000 barrels per day.
“We continue to look at other support and relief options for the sector while we wait for what we understand could be more help from the federal government,” said Eyre.