Brian Zinchuk is editor and owner of Pipeline Online
Main gang (welding) on the Enbridge Line 3 Replacement near Vibank, Saskatchewan. Photo by Brian Zinchuk
REGINA – The Alberta government is getting serious about doubling its oil production, with Premier Danielle Smith and Enbridge announcing on Jan. 6 plans to expand export pipeline capacity to enable production growth.
Saskatchewan Premier Scott Moe, too, has mused about doubling this province’s production capacity, from the 449,772 barrels per day (bpd) in October, 2024, to eventually one million barrels per day.
Historically, Saskatchewan’s oil production peaked in December, 2014, just as the Bakken boom was ending and the seven-year oil downturn was taking hold. That month Saskatchewan produced 2,644,785 cubic metres of oil, or 536,619 barrels per day. And at the time, crude-by-rail was still very much a thing, providing additional capacity.
The key thing, however, is if pipeline companies like Enbridge start planning for expanded Alberta production, and Saskatchewan is not involved, we could miss the bus and find there may not be room for our incremental barrels if and when they eventually materialize. So what is Saskatchewan going to do?
Pipeline Online spoke to Saskatchewan Energy and Resources Minister Colleen Young by phone on Jan. 8 about just that.
Colleen Young, MLA for Lloydminster, is the new Minister of Energy and Resources. Here she was speaking at the Lloydminster Heavy Oil Show in September, a few months before her appointment to the ministry. Photo by Brian Zinchuk
Young said, “The Government of Saskatchewan is in regular discussions with Enbridge. As a matter of fact, I have a meeting booked in about a week and a half here with them, as well as other industry partners about pipeline capacity and expansion through several working groups that we have ongoing.
“So, we are supportive of any new pipeline capacity, as you would understand, that improves market access for oil and gas produced here, in Western Canada.”
In the 2024 provincial budget, the largest change in Saskatchewan’s oil royalty regime in decades was made. The Multi-Lateral Well Program provided incentives for drilling wells with numerous legs, not just one or two, but several more. Depending on the design, the incentive maxes out at a minimum of five legs (pitchfork design) or 10 legs (fishbone design). Doing so would result in a reduction of royalties payable on the first 16,000 cubic metres (~100,000 barrels) of about $1.5 million per well.
Some wells in Saskatchewan have already been drilled with 39 legs by the time the announcement was made. The program was intended to raise production by approximately 50,000 barrels per day, and since it was announced, there’s been substantial adoption in multiple areas of the province. But that still leaves another 500,000 bpd day to go in that million barrel goal.
Are there any plans for the upcoming budget to expand oil production? Young said, “Not for oil production, in particular. Last year we put through a few new incentives that have added the critical minerals into the batch as well, because there’s lots of work going on in our north with investment and companies coming in there. So we’ve added that into our incentive plans as well.”
Young noted that there are only two access points to the Enbridge mainline within Saskatchewan – at Kerrobert and Regina.
Click to see Enbridge’s interactive map
“So whether that means Enbridge is looking to add additional capacity within that Mainline coming through, that would be great. I mean, we would be looking to work with our industry partners to see what we can do to ramp up production,” she said.
A third access point technically is not within Saskatchewan, but for all intents and purposes could be considered as such. That’s the Enbridge Mainline terminal just across the border at Cromer, Manitoba. It is the delivery point for the Kingston Midstream Westspur system, which takes delivery of all oil produced in southeast Saskatchewan. (Nothing is being shipped by rail these days.) The Westspur system used to be part of Enbridge, as Enbridge Pipelines (Saskatchewan) Inc., or EPSI, until it was sold to the Richardson family, which initially operated the system under the name Tundra Energy Marketing Limited (TEML).
Asked if there has been any discussion of crude-by-rail, given that Saskatchewan has several dormant crude-by-rail facilities, Young said, “No, we have not talked about crude-by-rail at this point in time.”
Keystone?
Bow Island has been spun off from TC Energy and operates the Keystone Pipeline, which runs across Saskatchewan. Young said the government has not yet put them on the agenda at this point in time. “But once we’ve had a discussion with Enbridge, we might be looking at what other additional capacity there might be,” Young said.
Prime Minister Justin Trudeau announces his resignation as Liberal leader and prime minister outside Rideau Cottage in Ottawa on Monday, Jan.6, 2025. THE CANADIAN PRESS/Sean Kilpatrick
Trudeau factor
The Saskatchewan government has long expressed the view that the Trudeau government has been the largest impediment to growth in our oil sector. As Prime Minister Justin Trudeau on Jan. 6 announced his impending resignation, so Saskatchewan expect a boom in production, marginal increases, or flat production?
Young replied, “Well, we’re hoping to increase production. As you said, the premier has pushed for a million barrels by 2030. I mean, we’re at 459,000 right now, barrels per day. But I mean, if we can get to that 600,000 that would be great. And you know, we have a lot of good industry partners that we’ve been working with, and supporting them and helping them through incentives in order to get production up in this province, and I think that’s where we look to rely on the work that they’re doing.
“As far as the federal government goes, I don’t think there’ll be any immediate changes, even with a new leader coming in, on their end, until we have a full election in swing.”
(Editor’s note: yes, there is a discrepancy between the oil production number reported on the Saskatchewan economic dashboard website (https://dashboard.saskatchewan.ca/business-economy/business-industry-trade/oil-production) , which reflects October numbers, and what the minister said. The website says 2,216,752.6 cubic metres of oil produced in October, 2024 (equal to 449,772 barrels per day). Minister Young quoted 459,000 barrels per day. And as minister, she likely has updated numbers that have not yet been published.)
Watch out for the upcoming Pipeline Online Grimes Sales & Service podcast, with the first episode schedule for 1 p.m. on Monday, Jan. 20.