Brian Zinchuk is editor and owner of Pipeline Online
Re-elected Saskatchewan Premier Scott Moe speaks to media, following his party winning a majority government in the provincial election, in Shellbrook, Sask. on Tuesday, October 29, 2024. THE CANADIAN PRESS/Liam Richards
REGINA – The Saskatchewan Party landed a historic fifth consecutive majority government on Oct. 28, but were humbled by the loss of several seats, including several cabinet ministers in the big cities.
The TV coverage went late into the night before declaring a winner, despite numbers that settled out at 35-26 in favour of the Saskatchewan Party. While that number could change slightly, the majority is assured.
One thing was clear – the NDP couldn’t get elected in rural Saskatchewan except for the two northern ridings. And the Sask Party for the most part couldn’t get elected in the big cities.
All oil producing ridings went to the Saskatchewan Party. Energy Minister Jim Reiter was handily re-elected in Rosetown-Delisle, as was his legislative secretary Daryl Harrison in Cannington. But Reiter’s predecessor in the energy portfolio, Bronwyn Eyre, lost in Saskatoon Stonebridge. Eyre, in the position of Minister of Justice and Attorney General, had been leading the fight against Ottawa’s numerous climate change policies and their impacts on Saskatchewan’s economy. That included the Saskatchewan First Act, which begat Economic Impact Assessment Tribunals on power generation and an emissions cap on oil and gas. She was also in the lead on the fight against the federal carbon tax and Bill C-69, the Impact Assessment Act, also referred to as the “No More Pipelines Act.”
If late night unofficial results bear out, Premier-elect Scott Moe will have next to no one from the big cities he will be able to appoint to cabinet. As of 1 a.m., the only winning Sask Party candidates in the big cities were Ken Cheveldayoff and David Buckingham in Saskatoon. But Buckhingham’s winning margin was just 31 votes, with hundreds of mail-in ballots are yet to be counted. That could flip the seat, as mail-in ballots tend to overwhelmingly go NDP.
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What does this mean?
So what does all this mean on the energy front? A government focused on increased oil and critical minerals production, and continuing down the nuclear reactor development path.
In an in-depth interview with Pipeline Online on Oct. 11, Moe said he would not only like to grow Saskatchewan’s oil production by a third, from the current 454,000 barrels per day to 600,000 by 2030, but he’d like to go beyond that – by a wide margin.
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 90,000 barrels per day to in excess of a million barrels per day in just three 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.
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“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.”
The largest move to increase oil production came with the 2024 provincial budget, with introduced the Multi-Lateral Well Program. That program is already seeing widespread adoption and implementation. When maxed out for applicable wells, it results in a royalty reduced to just 2.5 per cent for the first 16,000 cubic metres (100,600 barrels) of production, a savings of roughly $1.5 million. In many cases, that will roughly cover, or exceed, the cost of drilling the well in the first place.
Nuclear path
In recent weeks, Moe lost a close ally in New Brunswick Premier Blaine Higgs, who lost his own general election last week. The NDP in British Columbia have finally solidified an election win, but just barely. And last year, Manitoba’s Conservative government fell to the NDP. So the number of right-wing allies on the interprovincial stage has diminished, but significantly, Ontario Conservative Premier Doug Ford remains in power.
And that’s significant for Moe’s next four years as Ontario is a crucial partner on the implementation of small modular reactors. Ontario Power Generation is currently building the first GE-Hitachi BWRX-300 reactor at Darlington, with three more to follow. This is the model SaskPower has chosen, and SaskPower intends on closely following OPG’s lead.
As SaskPower proceeds through the regulatory process to obtain federal licensure to build these same reactors near Estevan, the fifth term of the Saskatchewan Party in power will become increasingly dominated by the SMR file, and for good reason. If Saskatchewan does go ahead with nuclear, its first reactors are likely to become the most expensive capital expenditures in this province’s history. Current timelines place the final decision to go/no go in 2029, one year after the conclusion of this term. But it will take four years of grueling and expensive nuclear licensing to get there.
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That is, they will be the most expensive expenditure until Saskatchewan possibly proceeds with even larger, much more expensive reactors. In the summer of 2023, Moe started publicly musing about the possibility of building 1,000 megawatt reactors in the future. While that decision will almost certainly be well past the end of his term as premier, it is also clear from his statements since then that Moe would like to see Saskatchewan move down that path.
And his government has already thrown its support behind micro reactors in the 5 megawatt range.
Clean Electricity Regulations
One of the biggest ongoing fights with Ottawa will be the proposed Clean Electricity Regulations, whose final form will likely be released by the federal Liberal government within the next few months. Those regulations, as they currently stand, seek to all but eliminate coal and natural gas that does not have carbon capture implemented from the power grid by 2035. But on any given day, especially in the winter when wind power generation can fall to nothing, SaskPower relies on coal and natural gas to provide up to 88 per cent of SaskPower’s output.
Current federal legislation also prohibits the continued operation of conventional coal-fired power generation by 2030. As Saskatchewan moves towards nuclear, current timelines place the earliest SMR going into operation in 2034. And that’s on the assumption everything stays on schedule, which is a rare occurrence in nuclear construction.
On Oct. 27, according to SaskPower, despite wind power having a great day, averaging 66 per cent output or 409 megawatts, coal still was needed to produce 31 per cent of power or and average of 861 megawatts. And on cold days in the winter, it often runs up to 44 per cent of Saskatchewan power. While this next term will see the implementation of the 377 megawatt Great Plains Power station at Moose Jaw and construction of the similar 370 megawatt Aspen Power Station at Lanigan, they still won’t be enough to replace coal before 2030. (SaskPower is already talking about further natural gas power expansion to fill this gap.)
While speaking in Estevan on May 31, 2024, Moe said Saskatchewan would continue to burn coal until nuclear was ready.
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Critical minerals
In 2021, Saskatchewan implemented its Helium Action Plan. And in August of this year, lithium was rolled into Critical Minerals Incentives. Moe noted on Oct. 11 that Saskatchewan is sitting on one of the world’s largest helium reserves.
Under his administration, there have been eight helium processing facilities built by North American Helium, which is now pumping out about two per year. (A ninth, built several years earlier at Mankota by Weil Helium, is now owned and operated by NAH). Saskatchewan is rapidly closing in on the critical mass of helium production to support the next step in the value-added chain – a helium liquefaction plant in this province. And that was one of the goals cited in the Helium Action Plan.
Under Moe’s government, several lithium explorers have drilled over a dozen targeted lithium wells and tested several other wells. At least two companies are moving towards commercial lithium production, with leader Arizona Lithium seeking to go into small-scale commercial production in 2025. Moe sees an opportunity for Saskatchewan “to not only be a significant rare earth elements producer for batteries, but to be a processor in that space as well.”
As for potash, Moe promised a stable royalty structure. Growing Saskatchewan production of potash has long been a focus of his government.
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