Brian Zinchuk is editor and owner of Pipeline Online
Longhorn Oil and Gas president and CEO Gary Becker, on the edge of one one of his leases north of Kindersley. Photo by Brian Zinchuk
The following verbatim excerpt from the Saskatchewan Economic Impact Assessment Tribunal on the Clean Electricity Regulations, May 1, 2024, covers the tribunal’s comments on oil and gas. Pipeline Online will also publish entire submission letters from several oil and gas companies and entities in the coming days. Submissions were made by Cenovus Energy, Whitecap Resources, Longhorn Oil & Gas, and the Canadian Association of Petroleum Producers. In total, 29 entities, including SaskPower and SaskEnergy, made submissions to the tribunal, totalling roughly 200 pages.
Oil and Gas
- The oil and gas sector is very important to the Saskatchewan economy.
- Similar concerns were expressed by petroleum producers. The Canadian Association of Petroleum Producers (CAPP) stated that electricity costs represent approximately 1/5th of oil and natural gas producer operating expenses. Accordingly, CAPP says, electricity prices have a significant impact on competitiveness. Rising electricity costs and the expected increase in the volatility of electricity prices amplifies industry’s concerns.
- Electricity is required for the oil and gas sector to decarbonize, which in turn means that clean, grid-based electricity lines to oil and natural gas fields must be built. However, CAPP believes that the CER:
will make it even more difficult for utilities to justify building electrical generation and distribution infrastructure to enable access and supply for our industry, particularly given the remote locations of industry’s operations which are often far removed from populated areas in the province. Natural gas supports affordable and reliable electricity generation. Standards need to ensure natural gas can continue to be a key contributor to the electricity system – it is the only lower emission baseload source that can be built on the timeline of the CER.
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- If the oil and gas industry is at risk, then the concomitant reduction in revenue will have negative impacts on the economy, reducing the ability to fund public services, infrastructure projects, and social welfare programs. Unintended or indirect consequences could include the loss of: (i) surface lease payments to landowners, (ii) mineral lease payments, (iii) property taxes paid to rural municipalities, and (iv) income that would have been earned under servicing contracts for repairs and maintenance. That would, in turn, affect local businesses such as retail stores, restaurants, and service providers, thereby causing indirect job losses.
- In its submission Longhorn Oil & Gas Ltd. (Longhorn) expressed its concerns about the forecasted increase in utility rates. It observed that older oil fields are extremely sensitive to higher power prices: utility expenses presently account for 26.2 per cent of its total operational costs, which percentage may increase to 42.43.
- Longhorn noted that if it no longer operates, then payments to landowners, to rural municipalities on account of property taxes, to third parties for repairs, maintenance and well servicing, would not occur. Longhorn states:
Eliminating these expenses would cause indirect job losses, affecting local businesses such as retail stores, restaurants, and service providers, leading to further economic downturns within Longhorn’s surrounding communities.
- The consequences may be more far-reaching, in Longhorn’s view:
Companies facing financial strain due to increased costs will cut back on their community involvement and charitable contributions as they prioritize core business operations and financial health.
There will be a shift in focus strictly to survival and efficiency, moving resources away from charitable causes to core business operations. This can have a significant impact on the local community, especially for organizations that rely heavily on corporate sponsorship to operate such as local food banks, crisis centres, and youth programs. Drastically increased utility expenses would lead to a significant reduction in community involvement and support, affecting not just the immediate beneficiaries of such efforts but also the broader socio-economic fabric of the community.
- As in the mining sector, oil and gas companies may choose to shift operations to jurisdictions with relaxed regulatory regimes.
- 0084 EMP Metals Pipeline Online0084 EMP Metals Pipeline Online
- 0053 Kingston Midstream Westspur Alameda Click0053 Kingston Midstream Westspur Alameda Click
- 0082 CsHM 2024 Pipeline0082 CsHM 2024 Pipeline
- 0077 Caprice Resources Stand Up For Free Speech0077 Caprice Resources Stand Up For Free Speech
- 0076 Latus only0076 Latus only
- 0061 SIMSA 2024 For Sask Buy Sask0061 SIMSA 2024 For Sask Buy Sask
- 0055 Smart Power Be Smart with your Power office0055 Smart Power Be Smart with your Power office
- 0051 JML Hiring Pumpjack assembly0051 JML Hiring Pumpjack assembly
- 0049 Scotsburn Dental soft guitar0049 Scotsburn Dental soft guitar
- 0046 City of Estevan This is Estevan0046 City of Estevan This is Estevan
- 0041 DEEP Since 2018 now we are going to build0041 DEEP Since 2018 now we are going to build
- 0032 IWS Summer hiring rock trailer music
- 0022 Grimes winter hiring
- 0021 OSY Rentals S8 Promo
- 0018 IWS Hiring Royal Summer
- 0013 Panther Drilling PO ad 03 top drive rigs
- 0011
- 0006 JK Junior
- 0002 gilliss casing services0002 gilliss casing services
- 9002 Pipeline Online 30 sec EBEX9002 Pipeline Online 30 sec EBEX
- 9001