By George Eynon, PGeo*
The Canadian Society for Unconventional Resources (CSUR) hosted a team from the Saskatchewan government to meet industry oil and gas players at a one-day workshop session in Calgary in late 2016, making quite the impression
The Canadian Society for Unconventional Resources attracted producers, consultants and members of the service sector from more than 35 companies to its Saskatchewan Day event in Calgary in late 2016. Representatives from both the Government of Alberta and the British Consulate turned out to meet key decision makers from Saskatchewan’s government. Ed Dancsok, assistant deputy minister with the Ministry of the Economy, fronted the government contingent. His team covered the entire spectrum, with representatives from Petroleum and Natural Gas Development, Lands and Mineral Tenure, the Saskatchewan Geological Survey, the Petroleum Technology Research Centre, and the Saskatchewan Research Council.
The group had good-news stories to tell and did not want to leave out any aspect of the Saskatchewan advantage.
Saskatchewan an attractive place for investment capital
At the start, Dancsok hit the highlights, starting with the economic attractiveness of oil from the Viking and Shaunavon formations, as well as the Bakken shale trend. Quoting a Scotiabank analysis, he noted that finding and development (F&D) costs of those plays are extremely competitive with the prolific unconventional resource plays in west Texas. The total resources in these Saskatchewan trends are huge — 56 billion barrels — but they’ve recovered only 12 per cent of the oil in place to date.
As mentioned, the relatively light oil from the shallow and often tight (low porosity, hence needs fracture stimulation) Viking sand is one of the most economically attractive plays in the province. To highlight the province’s diversity, enhanced recovery of heavy oil in western Saskatchewan also demonstrated top-tier economics. In fact, there are numerous investment opportunities in the province where a $400 million capital expenditure would potentially yield a 10,000 barrels-per-day project with the potential for up to a 60 per cent resource recovery.
Dancsok also mentioned Premier Brad Wall’s comments on carbon dioxide (Wall previously called it “a resource, not a pollutant”) citing the province’s carbon dioxide capture at the Boundary Dam coal-fired power plant and its use for enhanced oil recovery at Weyburn. This project will recover an additional 250 million barrels or more of oil, and sequester 55 million tonnes of carbon dioxide in the subsurface at the same time — something CSUR believes is a huge win-win.
What is Saskatchewan doing right?
The government team attributed the province’s appeal to a combination of resource endowment, the land tenure system, its royalty structure, and the regulatory regime, while also acknowledging the latter needs strengthening.
Those representing the Lands and Mineral Tenure branch talked about how Saskatchewan administers over 400 million hectares (about 1.5 million sections) of various types of leases for minerals, oil sands, heavy oil, natural gas, shale oil, and now helium exploration. Eventually, the government’s integrated resource information system (IRIS) will handle everything electronically online with new website features to reduce approval turnaround time.
Dancsok described the royalty systems and how the government is now applying a more flexible approach — different methods in different areas for different purposes. He said judging by the number of companies involved in the province now and by the results they are getting, it’s working.
Not everything is completely rosy, however. There are several areas needing improvement on the regulatory side. Dancsok noted the problem of “inactive wells” — as many as 55,000 oil wells and 25,000 gas wells — that need to be properly abandoned and the land remediated and reclaimed. He also said there were several areas that could benefit from regulatory improvement, including tending to certain needs around pipelines, using directives, licensing of flow lines, improving regulatory compliance and addressing methane emissions. He said fugitive emissions are not part of the “flaring and venting” program database at the time.
Dancsok said that while Saskatchewan will continue to enhance its regulatory framework, the focus will be on accessibility and consultation — a service-based approach — with IRIS as a single-window.
Saskatchewan’s numerous research establishments are busy
The Petroleum Technology Research Council discussed how it has approved 43 new technologies for field testing as pilot projects, under the watch of the Saskatchewan Petroleum Research Incentives (SPRI) program. The Saskatchewan Geological Survey has a public outreach program underway, as well as an array of collaborative research into helium deposits, refracking, potash, brines, lithium, and 3D seismic modelling. The Saskatchewan Research Council is studying enhanced oil recovery in light tight oil trends and in tight sand reservoirs. It is also looking at ways to get better recovery volumes with cold heavy oil production, for example, in areas where steam injection is not required. A lot of impressive research and development was discussed that could move the province to the forefront of innovation.
Keynote panel’s “big guns” extol Saskatchewan’s advantages
Perhaps the highlight of Saskatchewan Day was a keynote session over lunch with Dustin Duncan, Saskatchewan’s minister of energy and resources, and Neil Roszell, president and CEO of Raging River Exploration. Both waxed lyrical about their respective jobs and their home province.
The minister, only weeks into his position, certainly knew his subject. Duncan spoke enthusiastically and eloquently about Saskatchewan’s advantages and of the energy activities in the southeast corner of the province, including a carbon dioxide-capturing coal-fired power plant and carbon dioxide-sequestering EOR project.
Roszell returned to his roots and focused on the adage “what’s old is new again,” applying it to help revolutionize and revitalize the oil industry in Saskatchewan. He spoke of the Raging River Exploration success with pride. His company is thoroughly embedded in the local community it works in — an all too rare occurrence in an industry often disconnected from local residents.
It was fascinating to hear two passionate people talk about what they have already done and want to do for the Saskatchewan economy and people. It proved to be one of the most uplifting sessions I had the pleasure of moderating.
Creating economic success: “it takes a village to raise a child”
Collaboration between government, industry and stakeholders appears to be a key to success. The final Saskatchewan Day session featured industry speakers who provided proof of the Saskatchewan advantage. Scotiabank highlighted the research behind its financial optimism for the oil and gas sector that other speakers referenced. Raging River attributed the company’s local community involvement as a critical element in its success. Even though the provincial government spearheaded Saskatchewan Day and showcased the province’s advantages, it was obvious to attendees that it cannot happen without willing participants.
The Saskatchewan government is making the most of its resources, even though they are not as large or as recognizable as those of its neighbours to the west. Saskatchewan has a fiscal and regulatory environment that is highly attractive to industry players, even in a low-product price environment. The government makes a concerted effort to constantly engage with the industry, creating effective two-way dialogue.
Overall, the event made for an encouraging day in what are still difficult times in western Canada’s oilpatch. ■
George Eynon is a professional geoscientist (PGeo) and the principal of geos • eynon & associates consulting Inc. He consults on regulatory issues, teaches at the Haskayne School of Business, and provides energy literacy education to industry, government, and public audiences. He is also an elected councillor with APEGA and its representative on the Board of Geoscientists Canada. In addition he is a member of the Board of Directors of CSUR. You can contact him at firstname.lastname@example.org or 1-587-899-4367.