Experts say that Saskatchewan still shows as a favourable market for the oil industry despite companies sharpening their pencil on finances.
Premier Scott Moe made comments following Alberta’s announcement of the oil production curtailment starting January 1, 2019, stating that although the province supports Alberta’s decisions, Saskatchewan’s market is not necessarily comparable because of the different oil between the two provinces.
Ben Brunnen, vice president of oil sands operations and fiscal policy for the Canadian Association of Petroleum Producers (CAPP), said that in regards to the curtailment, companies that have an invested interest in both Alberta and Saskatchewan will likely start to look at Sask. for projects as there was no curtailment implemented here. As others have also stated, Brunnen reiterated that the curtailment does signify a crisis within the oil industry that obviously will raise concerns for investors and companies within the oil sector and may have them re-evaluating future decisions.
Brunnen however, touched on the complexities of the current oil market and that the curtailment is only one leg of the stool. At this point, the Alberta government is working to bring the inventory numbers down, in which it is likely the curtailment will be lifted. Although this would allow companies to resume operations, there are still two major factors, the Trans Mountain Pipeline and Bill C-69, that pack more of a blow to the oil sector.
“If we see Bill C-69 pass as is, we fully expect not to see any reasonable substantive incremental investments into pipes in the Canadian economy for the foreseeable future and that’s a problem for our long term prosperity,” said Brunnen
He explained that when investors originally put money into Canadian oil, there were indications of growth and forward movement which would bode well for their dollars. Given the unfavourable changes in recent past, it is no surprise, investors very well may be taking their money elsewhere, which would further cripple the industry.
During the interview, Brunnen said companies may not necessarily be treading water and waiting to see what happens, however with contracts back up for bid and lack of action in the area, it is apparent that 2019 is not off to a booming start. There are still many decisions to be made that will all play a part when predicting the future prosperity of oil within Western Canada, Brennen shared that CAPP has drafted a revision on Bill C-69 in an effort to relay to the federal government the dire results that could ensue if the Bill is put through as is.