Sask. oil and gas producers eye federal aid package, but loans 'really not the solution,' says prof
Jennifer Quesnel | CBC News | Posted: December 20, 2018 12:00 PM | Last Updated: December 20, 2018
Analyst calls $1.6B package the 'equivalent of throwing somebody a lifeboat with a hole in it'
A federal aid package for energy producers has received a lukewarm welcome in Saskatchewan.
The bulk of the $1.6-billion package, announced Tuesday, consists of commercial loans for oil and gas producers who wish to expand, or who wish to buy new environmentally friendly technology.
Accumulating more debt has little appeal for a number of oilfield service companies and contractors in southeastern Saskatchewan.
"It's probably the equivalent of throwing somebody a lifeboat with a hole in it," said Brooke Dobni, a professor at the Edwards School of Business at the University of Saskatchewan.
"It's really not the solution."
Crescent Point Energy, Saskatchewan's biggest oil producer, said it's too soon to provide any comment on the $1.6 billion package.
After years spent drilling wells and buying a flurry of junior oil producers, the Calgary-based company is scaling back spending.
Officials at Husky Energy are also eyeing the federal loans.
"We appreciate that the [federal] government recognizes the challenges that the energy industry is facing," Mel Duvall, a spokesman for Husky Energy, wrote in an email.
"We will be reviewing the details of the program to see if there are aspects that could benefit Husky," he said.
Minister, Opposition agree pipelines needed
With pipelines at or near capacity, the cost of shipping Saskatchewan oil south of the border has risen considerably, analysts say.
"We really pay quite a discount to get our oil into the pipeline," said Dobni. "Something's gotta change."
Most oil from southeastern Saskatchewan currently travels by rail, or east and then across the U.S. border using the Keystone pipeline.
In a written statement, Saskatchewan Energy and Resources Minister Bronwyn Eyre said she hoped the money from Ottawa "will provide some relief for the oil and gas industry."
"In the days ahead, we will be evaluating how this announcement affects Saskatchewan-based energy companies," she said.
But, she said, it's no pipeline.
"Addressing the root cause of the current energy crisis won't happen until market access is enhanced and investor confidence is restored."
She said she'd rather see the federal government kill "harmful" federal legislation such as Bill C-69 — which would overhaul the environmental assessment process for major resource projects — and Bill C-48, which would ban all oil tanker traffic off the coast of northern B.C.
She'd also like to see the carbon tax scrapped, and an immediate commitment to building pipelines.
Trent Wotherspoon, the Opposition NDP critic for the economy and resources, agreed on the pipelines.
"Market access is critical and we need pipelines approved and built," said Wotherspoon.
"It's very important to our industry that we get access to tidewater," he said. "Certainly we also share the view that Bill C-69 is creating a lot of uncertainty in this industry."
Noting Saskatchewan currently produces about 12 per cent of Canadian oil, Wotherspoon also questioned why the province received no mention in Tuesday's federal announcement.
Eyre, he said, "doesn't seem to be engaged with this federal package and that she doesn't seem aware of how it connects with Saskatchewan's energy interests."
"What case was put forward by Saskatchewan on this front?"