Saskatchewan and Alberta both plan to increase oil production in collaboration with industry.
That was the message from Saskatchewan Premier Scott Moe and Alberta Premier Danielle Smith during a lunch forum and media scrum at the Lloydminster Heavy Oil Show on Sept. 11.
In Saskatchewan, a new multi-lateral drilling incentive is encouraging more oil drilling in the province.
“That’s the goal of this government. We most certainly think we should be producing more of it and making it available to more people,” said Moe.
The incentive applies to eligible multi-lateral horizontal oil wells drilled on or after April 1, 2024, and on or before March 31, 2028.
Moe called it a royalty incentive and an example of the relationship between government and industry.
Saskatchewan’s Energy and Resources Ministry, Jim Reiter says it’s a program that came from industry, noting drillers are happy with it.
“We think that’s going to help us get our barrels per day up. I’m looking forward to seeing how that plays out,” said Reiter.
Industry insider Brian Zinchuk from Pipeline Online counted five rigs working within 8 kilometres of the Lloydminster Upgrader last week. The most he’s seen in 10 years thanks to the incentive.
“I talked with a driller in southeast Saskatchewan; almost all the wells are drilling multi lateral wells now,” he said.
The new generation of multi-lateral wells can be drilled in multiple configurations to better access more of the oil reservoir. This increases the well’s recovery factor, reduces drilling costs and improves reservoir management.
Oil regulations
Premier Smith touched on the possibility of reviving the Keystone XL and Northern Gateway pipelines as production rises. However, made it clear the federal regulatory process needs to change first.
“We need to give confidence to industry that when they commence a project, there is some reasonable time when they can expect it’s going to be completed,” said Smith.
She hopes they could create an environment where government doesn’t have to step in with taxpayers’ dollars to de-risk such projects.
Former Alberta Premier Jason Kenney spent $1.5 billion of taxpayer’s money on Keystone before U.S. President Joe Biden cancelled the permits.
“If we have the same kind of environment we have today, it’s a moot point because I don’t think there’s any private company in the current environment that would be willing to take the risk on putting it forward,” said Smith.
She says her government is working with pipeline companies to maximize the shipping capacity on their existing pipes.
“Can you do loops, can you do compression, can you expand in other ways your existing capacity?” asked Smith.
She thinks there a potential to increase oil egress to markets from the 4 million barrels of oil today to 6 million bbls/d with innovative approaches by industry.
“So I think we have the ability to expand without having to have the conversation immediately about pipelines. But we need to fix the regulatory environment,” said Smith.
Oil and the feds
Both her and Moe shared a wish for change in Ottawa, best expressed by Moe at the lunch forum.
“I’m looking for one thing and I’ve tried disparately to work with current administration and I’m looking for a change in administration—that’s it,” he said.
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