David Yager is a long-time oilpatch writer and executive. Yager’s copy is provided free of charge by the Canadian Energy Centre Ltd.
It seems like just the other day (actually it was 15 years ago) when Prime Minister Stephen Harper opined about Canada’s role in the world as an “emerging energy superpower.”
That was before fossil fuels were rebranded by too many Canadians as a national embarrassment and the great pretense began that we can or should do something else.
But according to the federal department of Natural Resources Canada (NRCan), in fact our country deserves the title. Whether or not the following chart snuck past Ottawa’s political correctness censors or federal government departments are still allowed to release fact-based information, here’s where our country sits globally. This is a page from NRCan’s 2020-2021 Energy Fact Book.
Source: Energy Fact Book
Canada punches well above its weight thanks to a vast treasure of natural resources and export markets. Sharing a border with the second largest energy consuming country in the world (China is now number one) has its advantages. Canada exports large quantities of all forms of primary energy, mostly to the US. Of the six countries above, only Russia and Saudi Arabia join Canada as net energy exporters.
Canada produces 4 per cent of the world’s energy needs, according to the federal government. Yet we only have 0.47 per cent of the world’s population. Energy resource exports are key to the economies of BC, Alberta, Saskatchewan, Manitoba, Quebec and Newfoundland & Labrador.
You’d never know that from today’s media.
It would sure be useful if our fellow Canadians appreciated the significance of energy production and energy exports to the Canadian economy and our important stature in the global community because of it.
Or at least inquired periodically.
Saskatchewan gets least credit
Speaking of significance – or the lack of it – within Canada the most important contributor to this enormous and important sector that gets the least credit is Saskatchewan.
When Canadians speak of energy, only two provinces are seen as significant. As climate change has become a subject of national discussion, the sparring between the two has provided lots of fodder for media headlines and pundit commentary. It has influenced the last three federal elections and multiple provincial elections.
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Alberta is a globally significant producer of fossil fuels – coal, oil and gas. It has become quite fashionable to trash them all of them in 21st century.
But with global shortages of any source of energy looming for the upcoming winter, mercifully the news media and the climate change alarmist industry have been either muted or have changed the channel.
The other is Quebec. Developer of massive quantities of hydroelectricity thanks to the James Bay hydro development megaprojects of the early 1970s, Quebec has become the country’s largest hydroelectricity developer and exporter. It has also become Canada’s epicenter of climate virtue signaling.
Forgetting all the forested land that was flooded behind the dams, hydro is seen as clean and green. This has allowed Quebec to subsidize energy costs for local consumers, block oil pipelines, obstruct LNG exports, and advise the rest of Canada (particularly Alberta) what it should and should not do on in terms of energy production.
Forgotten in this high profile and acrimonious public debate is Saskatchewan. But fortunately, the province has not been overlooked by the technical analysts at NRCan. Here’s the provincial breakdown from the Energy Fact Book.
Source: Energy Fact Book
NRCan looks at energy from all sources. This includes oil, natural gas, coal, natural gas liquids, uranium for nuclear power plants, hydroelectricity, and “other renewables” which would include wind and solar.
It is fascinating to see where Saskatchewan ranks. When including uranium, most of which is exported, Saskatchewan ranks number two. Remove uranium, and Saskatchewan still ranks number three.
Based on population and public recognition, Saskatchewan truly is an unacknowledged energy powerhouse.
Most importantly, the major source of advice about what the rest of the country should do with energy – Quebec – ranks fourth in both scenarios, behind the three western provinces of BC, Alberta and Saskatchewan.
It’s the economy, stupid
GDP is another important measure. NRCan estimates that in 2018, Canada’s primary energy production, processing and distribution industries generated a GDP contribution of $145 billion. By this metric Saskatchewan’s total was 9 per cent nationally despite having only 3 per cent of Canada’s population.
As the old saying goes from US President Bill Clinton’s election campaign many moons ago, “It’s the economy, stupid.”
Energy is big job creator. NRCan figures that in 2018 there were 832,500 direct and indirect jobs in the creation, processing and distribution of primary energy in Canada, 4.4 per cent of all the jobs in the country. Indirect employment in processing, distribution and transportation was double that of producing the stuff.
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Saskatchewan’s share was 17,705 jobs, mostly in production. This was more than half of Quebec’s 30,3014 energy jobs with only 14 per cent of that province’s population.
In terms of clean energy (defined as not emitting carbon), Saskatchewan’s contribution in terms of uranium production is rarely mentioned. While there is lots of talk about Small Modular Reactors (SMRs) being a workable solution for 24/7/365 baseload electricity, where it comes from remains unknown and unacknowledged.
Like too many things in today’s energy world, it is just there.
Until it isn’t.
For oil production, Saskatchewan was late to the party compared to Alberta. But like the old fable about the tortoise and the hare, the following data shows how Saskatchewan’s slow and steady growth approach to conventional crude production has, after 70 years, finally put that province ahead of it neighbor to the west.
Source: CAPP Statistical Source: Handbook, left axis thousands of barrels per day
Oil was discovered in Alberta centuries before Saskatchewan, when early explorers found it oozing from the banks of the Athabasca River near what is now Fort McMurray. Early drilling found oil in places like Turner Valley and Wainwright. But it was the Leduc discovery in 1947 that put the province on the map as a major producer.
Saskatchewan’s first oil discovery well was drilled in 1943 near Lloydminster. Turns out the oil-bearing reservoir for these enormous deposits of heavy crude in that region had no idea where surveyors had placed the Alberta/Saskatchewan border.
But the province really entered the business in the 1950s when significant discoveries were made in the southeat corner. One of favorite my reference books is titled Dusters and Gushers – The Canadian Oil and Gas Industry published in 1968. It lists Canada’s most important oil discoveries to that time with estimated recoverable reserves.
In Saskatchewan in lists Midale in 1953 (106 million barrels), Steelman in 1954 (229 million barrels) and Weyburn in 1955 (336 million barrels). They are all still producing today thank to horizontal drilling and enhanced oil recovery.
Political influence
What the chart above shows is the influence of geology and politics on oil development.
Alberta was blessed with a much larger portion of the Western Canadian Sedimentary Basin than Saskatchewan and was, until 2015, governed by political parties that created a favorable fiscal regime for continued resource development. Alberta’s conventional oil production growth curve tracks geological opportunity and steady growth until it peaked in the mid-1970s. Conventional oil production has been in more or less continuous decline as the industry focused its attention on the materially larger resource in the oil sands.
Saskatchewan elected an NDP government in 1971. When OPEC forced global oil prices up in 1973, Saskatchewan’s government chose to jack up production royalties significantly. Capital and equipment fled the province leading to a production decline for most of that decade.
But the only thing that had fled Saskatchewan was the commercial incentive to develop it, not the oil. The election of a Progressive Conservative government in 1982 attracted capital back to the province.
For the past 40 years Saskatchewan has continued to grow its oil production. By 2020 that province passed Alberta in terms of light crude oil production for the first time in history.
They key to continued growth has been innovation. Saskatchewan was an early adopter of horizontal drilling in the 1980s, followed by multi-stage horizontal hydraulic fracturing when that technology was perfected in this century.
Drilling activity crashed in 2020 as was the case in the rest of the world. But with oil prices up, it will resume.
Perhaps there’s a certain political genius in Saskatchewan flying below the radar in terms of its key role in Canadian energy. The anti-fossil fuel movement tends to only pick on one big target at a time. The focus on oil sands and attempts to build new pipelines has put most of the attention on Alberta, a province NDP Premier Rachel Notley once referred to as, “the embarrassing cousin no one wants to talk about” of Confederation.
Nice.
But here’s the data. Make up your own mind. In my view, Saskatchewan is the unrecognized jewel of Canadian energy. I leave it up to the reader to decide if that’s good or bad.
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NOTE: This is my first column for PipelineOnline.ca. I’ll be back. Hats off to Brian Zinchuk, who has worked tirelessly for many years to help keep Saskatchewan’s oil and gas and resource industries informed, relevant and important. Wishing you the best success Brian with the new platform. Your province and energy industries deserve the focus and attention.
David Yager is an oil service executive, oil writer and energy policy commentator and analyst. He is currently President and CEO of Winterhawk Casing Expansion Services which is commercializing a new method of mitigating methane emissions from wellbore surface casing vent flows. He is author of From Miracle to Menace – Alberta, A Carbon Story. More at www.miracletomenace.ca.