Jim Warren thinks Saskatchewan should look again at a sovereign wealth fund, which can make investments in our capital-short oil and gas industry. This is Sun Country Well Servicing working with Innovative Artificial Lift Solutions, installing a new pump near Macoun. Photo by Brian Zinchuk

Here’s a topic and blue sky proposal inspired by the Moe government’s ‘Drawing the Line White Paper‘ and the intensifying federal assault on the west’s resource industries.

Apparently there has been a serious dearth of new investment in Canada’s energy sector in recent years. This is not surprising. Who would want to spend time and money on a pipeline project designed to reach tidewater, cross into Quebec or the US under Joe Biden’s watch? No less discouraging are the environmental policy changes being announced by the Canadian and European governments that threaten to sanction many economic activities that employ fossil fuel products and banks which finance those activities.

Investors’ reticence extends to the development of new oil sands projects, new refining capacity and seems to be affecting exploration and development of new conventional oil and gas wells across the Prairies. Not only has the lack of capital caused the disappearance of jobs and workers from the energy sector, it threatens to leave our oil and gas reserves stranded.

While the world could clearly use more oil and gas today, and will continue to need more of it for decades to come, there may indeed come a point when fossil fuels are, to a great extent, displaced by other forms of energy. The big question is knowing with certainty if and when that day will arrive.

Many Saskatchewan people are hoping that small modular nuclear reactors (SMRs) utilizing Saskatchewan-mined uranium will be a part of the new energy mix. The development of SMR power plants would of course generate employment in Saskatchewan and help reduce greenhouse gas emissions. Unfortunately, while we might be reluctant to throw a wet blanket on what clearly appears to be a good idea, the expansion of nuclear energy as a viable source of electricity isn’t entirely a sure thing.

The nuclear energy sector has been derailed in the past for reasons that defy reason. An essentially averted accident at Three Mile Island, the more problematic Chernobyl meltdown and the flooding of the Fukushima plant each played a role in derailing planned nuclear power projects for decades. The industry stalls following each media-hyped incident. It seems the fact that nuclear power generation has killed less than a couple of hundred people since the first reactors went online fails to register in the public mind. As is the case in Germany, environmentalists would rather stick with coal which indirectly kills thousands of people each year than rely on nuclear power.

What are the chances that there will be another well publicized incident that will derail the nuclear industry for another few decades? The dangerous situation at Ukraine’s largest nuclear facility isn’t likely to help.

Uncertainty about the uptake of alternative sources of energy such as wind, solar and nuclear underlines the importance of maintaining a thriving fossil fuel sector in Canada.

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That takes us back to the problem our fossil fuel industries are having when it comes to raising capital. Here’s a thought: what are the chances of us generating that capital ourselves – here on the Prairies?

We are currently looking forward to a $500 good-times resource dividend. This suggests our provincial government is capable of generating a significant pool of money that could be invested in fossil fuel development and potentially make us even more money. There is nothing new about the idea. The heritage fund schemes developed in the 1970s were intended to support economic development and diversification initiatives as well as serve as rainy day funds.

We might imagine a Saskatchewan sovereign wealth fund dedicated to developing our energy industries that could direct investment toward developments that conventional investors are afraid to make, despite the likelihood they would be profitable. For instance, if we know there is readily exploitable oil and gas that is sitting in the ground due only to a lack of conventional capital, why not make it available to people who are looking for the work?

If a lack of pipeline capacity makes increasing inventories a problem, maybe the next investment could be the manufacturing of railway tanker cars.

If the federal government chooses to frustrate the effort, we’ll see them in court or at the table negotiating overdue constitutional changes.

 

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