Investing in the Future – Saskatchewan government helps build oil industry

7 - AUS_2271DropBox5-fa 2“Build it and they will come” seems to be a motto that the Saskatchewan government is taking to heart, especially as it relates to the oil and gas producing industry. The province is the number two oil producer and number three gas producer in the country – which is impressive no matter which way you look at it. In 2014, Saskatchewan produced an average of 515,300 barrels of oil per day and 566 million cubic feet of gas per day. The combined value of its oil and gas production in 2014 was a record $15.9 billion.

“The oil and gas producing industry continues to be the largest contributor among primary industries to the provincial GDP,” states Ed Dancsok, assistant deputy minister, Petroleum and Natural Gas, Ministry of the Economy, who adds it accounts for 15.1 per cent of the province’s total GDP. “For 2014, industry investment in new exploration and development is estimated at approximately $6 billion, and the upstream oil and gas industry accounted for an estimated 38,000 direct and indirect person years of employment.”

With these numbers, it’s easy to understand why investment in infrastructure for this all-important sector is a critical component of the province’s current and future economic strategy.

A vision for the future

In its Saskatchewan Plan for Growth: Vision 2020 and Beyond, the Saskatchewan government identifies the need for “Building the Infrastructure for Growth” as one of its top priorities.

“We’ve invested $1.8 billion in transportation infrastructure since 2011, which puts us ahead of pace to meet our commitment to invest $2.2 billion over four years,” states Joel Cherry, communications consultant, Ministry of Highways and Infrastructure. “In total, we’ve invested $4.3 billion since 2008. These investments are a key part of Saskatchewan’s ‘Plan for Growth’, the goal of which is to accommodate the province’s current economic growth and facilitate future growth. These investments will benefit all sectors of Saskatchewan’s economy, including the oil and gas industry.”

Improvements have been made to close to 7,500 kilometres of provincial highways since 2007 alone.

The Ministry of Highways and Infrastructure also provides funding for municipal roads through the Municipal Roads for the Economy Program (MREP), which also benefits the oil industry. According to Cherry, the 2014-2015 MREP included $25.5 million in funding for 80 road, bridge, and culvert projects in 64 rural municipalities.

Additionally, the province has increased its primary weight system highways by nearly 60 per cent since 2008. In 2015, it also undertook a pilot project to convert low-quality, thin-membrane surface roads to super grids, which are wider grid roads built on an engineered base that can handle primary weight. The two super grid projects include 31 kilometres of Highway 361 from the junction of Highway 9 east to Alida and five kilometres of Highway 47, 20 kilometres north of Stoughton.

“The Shortline Railway Sustainability Program is another example of investment in infrastructure,” says Cherry. “It’s a 50/50 cost-shared investment in shortline rail, which is being used to move an increasing number of oil cars in the province. Since 2008, the government has invested $4.7 million in the program.”

Beyond highways and byways

The government of Saskatchewan’s investment in those infrastructure projects that benefit its growing oil and gas industry isn’t restricted to transportation improvements alone.

“One of the best and most comprehensive examples of the government’s investment in infrastructure for the oil and gas industry is our Process Renewal and Infrastructure Management Enhancement (PRIME) – a multi-year, multi-project program to renew and modernize the Ministry of Economy’s oil and gas business processes and computer systems,” states Dancsok, who adds that the cost of PRIME is estimated to be $70 million. “This long-term project is replacing systems and processes that are 30 years old. Through its 17 independent but interconnected projects, PRIME is building the Integrated Resource Information System (IRIS), which will support the ministry’s oil and gas business processes and facilitate industry online self service.”

PRIME is currently in its seventh year and is scheduled for final release in November 2015.

“PRIME’s fundamental goal is to improve how the ministry conducts business with the oil industry,” says Dancsok. “The project is building IT infrastructure and modernizing business processes for the administration of oil and gas regulatory administration.”

7 - AHP6428-EditMore to come

According to Dancsok, the Ministry of Economy’s 2014-2015 Mid-Year Report estimated that the province’s oil and gas revenue would reach $1.7 billion.

It’s a good thing, then, that more infrastructure investment is in the works, as can be seen by the following projects currently underway.

“The Ministry of Highways and Infrastructure is currently conducting the pre-construction work for the future twinning of Highways 6 & 39 between Regina and Estevan,” states Cherry, who adds that the ministry is currently doing a general location study. “The construction of passing lanes between Delisle and Rosetown is nearing completion. And we have also begun pre-construction for the twinning of Highway 7 between Saskatoon and Delisle.”

A new Estevan Truck Route is also in the works. It will improve traffic flow, enhance safety and generate potential development opportunities in the Estevan area. The selected route runs north of the city from the intersection of Highway 39 and Shand Road to Highway 39 west of the city. The 12-kilometre route will initially be constructed as a two-lane road. The plan for the truck route was developed to allow for twinning and interchanges at the west and east ends, and at the junction of Highway 47 as future traffic volumes require. A functional planning study is now underway to determine the locations of those future interchanges.

Although Cherry admits that pre-construction work for projects of this magnitude can take two to three years to finish, he states that the aforementioned projects will provide a direct benefit to the oil industry.

“These projects will be a benefit to shippers in southeast and west-central Saskatchewan, which are experiencing increasingly heavy truck traffic related to oilfield activity,” he states.

Nurturing future growth

The oil and gas industry has proven to be a significant part of the province’s growing economy. And the government of Saskatchewan has recognized this salient fact by committing to infrastructure investment and future infrastructure investment in order to continue to build the sector. This investment includes the highways and byways that crisscross the province – not to mention the railways – and it also includes innovative technology designed to ease the administrative side of the very industry itself.

By establishing such a strong foundation, the government of Saskatchewan is putting in place the necessary prerequisites for the continued growth and prosperity of its all-important oil and gas sector.

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