Reaching for a Million, Part 1: If Saskatchewan wants to pay for doctors and teachers, we need to drill, baby, drill

 

There was a clear message in the October Saskatchewan general election – more money is needed for health care and education. But what was hardly discussed during the election was how to pay for it.

In his acceptance speech on election night, Premier Scott Moe said, “We’ve heard on the doorsteps and in our communities that your expectations of a government is of a government that will do better when it comes to accessing health care services. Your expectations is to have a government that will do better in supporting our children in their in their education, a government that will do better in representing you.”

And then he said, “We are going to ensure that the people in Saskatchewan will be able to find a family doctor.”

All of these promises are going to require dollars, a lot of them.

When it comes to where the big dollars come from, Saskatchewan’s big three contributors to its gross domestic product (GDP) are oil, agriculture, and potash, in that order. Yes, oil exceeds both agriculture and potash.

But one can’t easily double canola production, if ever. And adding the largest potash mine in the world, BHP’s Jensen, is taking decades from the concept to full production – and that’s just one mine. But there is something we can do – increase oil production, dramatically.

 

After all, North Dakota did it. And Alberta plans to.

Alberta Premier Danielle Smith has been talking about doubling that province’s already mammoth oil production of 4.3 million barrels per day (bpd). And on Jan. 6, she announced her province was working with Enbridge to start to develop pipeline capacity before production capacity ramps up. In other words, Alberta’s moving past talk, to action.

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Could Saskatchewan’s oil production eventually hit a million barrels per day, more than double the current 449,000 barrels per day? Moe seems to think so.

That rather astounding number came up in an interview Pipeline Online did with Moe on Oct. 11 regarding the Saskatchewan Party’s energy platform for the Oct. 28 election. Since 2019, the Saskatchewan Party has set a goal of obtaining 600,000 barrels per day production by 2030. But Moe is aiming higher than that.

Here’s an excerpt from that interview:

 

600,000 bpd “is modest”

As for the growth plan, Moe said he thinks the that the 600,000 barrels per day of oil production target “is modest.”

He said, “With a little bit of certainty provided at the federal level, I think we’ll be able to not only achieve that, but go beyond and you don’t have to go far away to the south to see states that have been able to achieve that. We would like (to be part of) the million barrel club at some point in the future.”

That’s a clear reference to North Dakota, which saw its oil production shoot up from around 122,000 barrels per day to in excess of a million barrels per day in just five years during its Bakken boom.

The Moe government has been talking about this 600,000 barrel per day goal since at least 2019, but production has remained relatively flat. The intervening years, of course, were dominated by the COVID-19 pandemic followed by the Ukraine war, both dramatically impacting the industry.

Moe said of the pandemic, “Sure, the pandemic was a challenge for all industries, including the energy industry, both on the on the demand side and the production side. But without a doubt, the lack of certainty that we have in Canada in this industry is the largest challenge, when it comes to companies having to see an investment of millions of dollars through for seven or 10 years to realize the capital return on their investment.

“And so it won’t take a lot, but a little bit of certainty coming from the federal government, I think, will have a significant impact on the capital investment people that are going to work in this industry, and this is one industry, and the one cylinder, if you will, in Saskatchewan, economic engine that I think has a great opportunity to expand. This needs a little bit of certainty from the federal government, removal of a few regulations and the incentive to, like we are, always looking at in this province.”

That discussion was picked up in Pipeline Online’s year-end interview with Moe on Dec. 11. Here is that portion of the interview:

 

 

Here’s an interesting thing about that growth plan for 2030, published in 2019. Many looked at it and thought it would never happen. But we’re well on the way for population and canola processing. My mom is the closest neighbour to two canola crush plants at Yorkton. One has doubled in capacity, and the other is in the process of doing so, while adding a pea processing facility, to boot. Potash ales are already in the range of what was hoped for 2030.

Sometimes if you set a goal, you actually reach it.

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Reaching for a Million

Pipeline Online is going to publish an ongoing series of stories, like its Lithium in Saskatchewan series, called Reaching for a Million. Pipeline Online will be asking the smartest people in the industry, the ones who know Saskatchewan’s oil industry in particular, if we can reach a million barrels, and if so, how would they do it? Several interviews have already taken place, and many, many more will come. If you want to take part, let us know.

Such an enormous goal will not be attainable in one fell swoop, but by incremental actions here and there. Some will be by government, but the bulk of the action will need to be by the industry, itself.

For those who say it can’t be done, as noted above North Dakota went from 122,000 barrels per day of production to eventually 1.4 million. Now, that was admittedly with vastly superior geology and the unlocking of what was essentially a new, major field. And Saskatchewan’s “Bakken Boom” was a mere 70,000 barrels per day, not over a million.

 

But Saskatchewan has something North Dakota doesn’t – something to the tune of 30 billion, with a “B,” barrels of heavy oil in northwest Saskatchewan. The oilsands don’t end at the Alberta/Saskatchewan border. Oilsands Quest tried, and failed, to develop Saskatchewan’s oilsands. But maybe a serious second look needs to be taken at it. And a third. And a fourth.

One of the stories in this series will investigate AOSTRA, a game-changing Alberta government-financed research project in the 1980s that resulted in now commonplace Steam Assisted Gravity Drainage (SAGD). Now, over half of all Canadian oil production is a result of SAGD, and about a quarter to a third, give or take, of Saskatchewan production. If Alberta hadn’t made that bet then, Saskatchewan would be much, much poorer today.

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And those oilsands, for all intents and purposes, extend south to near North Battleford. They’re just deeper and less viscus. In northwest Saskatchewan, we call it heavy oil country instead of oilsands.

Husky went heavy into thermal, initially planning for 15 of their “Lloydminster Thermal” projects. Twelve of these 10,000 bpd SAGD projects were eventually completed around the time Cenovus wrapped up its acquisition of Husky.

 

But you know what? If you look on a map, and drive throughout the region, you realize something. The rough grid spacing of the projects leaves a lot of room in between them. Is it possible that another 15 cookie-cutter SAGD projects could be built in that area, in turn adding 150,000 bpd? That, alone would take Saskatchewan to the 600,000 bpd goal. What would it take to make that happen? Is it water permits, capital, change of government in Ottawa, all of the above?

Indeed, the timing might be perfect over the next four years to make major strides. If you listened to Moe and his MLAs, you’d think the largest impediment to Saskatchewan’s oil sector was Prime Minister Justin Trudeau. Well, Trudeau just announced he’s resigning, and Conservative Leader Pierre Poilievre will very likely form government in short order.

That means we could see an ideological and pro-energy alignment in Ottawa, Washington, Edmonton, Toronto and Regina. And it wouldn’t take much for the BC government to fall, either. This could be a once-in-a-lifetime chance to build pipelines and “drill, baby, drill.”

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There are other restraints as well this series will look into. Naysayers will say we could never find enough rigs, even though in 2013 we had three times as many rigs working in this province as we did today, and manned them all. And we were able to accomplish that with a Canadian population six million people fewer than we have today. Old rigs can be refurbished, and new ones built. Among the six million additional Canadians, surely we should be able to find a few thousand that can turn to the right?

 

Reaching a million barrels, in relatively short order, would be the largest oil boom this province has ever seen. It would mean communities like Estevan, Kindersley and Lloydminster would have to step up and meet the demands of growth. After a tough decade, hopefully most oil towns would welcome the change.

Pipelines would need to be built. Alberta’s already on that. Saskatchewan needs to be at the table, too. But we need to be there with an action plan to fill those pipelines with oil, not just platitudes.

There’s a motivation behind this series – to make this happen. By asking the smartest people in the room, then publishing their ideas, this will end up being a rough plan of what the province could do, if it’s serious. Basically, these stories are wrapping up an action plan in a bow and plopping it on the energy minister’s desk.

Here you go, have at ‘er.

And yes, the idea is to keep the pressure on. But as Moe said, “Keep the heat on us.”

It’s going to be an interesting ride, reaching for a million.

 

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