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Energy Minister Eyre worries about too swift a green transition

Saskatchewan Minister of Energy and Resources believes that the energy sector is a lot stronger than it was a year ago.
wind turbines field
These are sectors that are proud sectors and are incredibly important sectors for Saskatchewan
MOOSOMIN - The World-Spectator spoke with Saskatchewan Minister of Energy and Resources Bronwyn Eyre about the future of the energy industry in Saskatchewan. The full interview follows:

We’ve seen an increase in oilfield activity in our area as prices have recovered.
How do you see the oil and gas industry changing in the province in the next 10 years?

The energy sector is a lot stronger than it was a year ago. The oil price alone speaks to that, but the overall picture isn’t without complexity.
We have companies who have gone bankrupt during the past 19 or so months or who have taken on a lot of debt. A lot of capital allocations for projects had stalled, and production is not where it was, certainly, at the beginning of COVID.

It will take a little more time to get rolling again, but obviously there is quite a lot more optimism than there was. In terms of the growth plan, we’re very bullish about the projections for the energy sector. In the growth plan we had released the November before COVID hit, the target was to grow provincial production to 600,000 barrels a day by 2030.
Prior to COVID, we were producing about 500,000. That is down now, but we certainly think we can get back to that level and move beyond it closer to the 600,000 going forward through the decades because of some of the programs we have in place around enhanced oil recovery and so on. Some of the infrastructure incentives that we put in place for building pipelines or looking at the CO2 pipeline space—we think there are a lot of areas where production can grow if we go with the 'all of the above" approach. We have some very effective investment incentive programs. We think that it is completely consistent and realistic that we can hit those growth plan targets.

There have been some headwinds in energy development at the federal level, and now we have a new Federal Environment Minister who has expressed some pretty strong opposition to the entire industry in the past and has even been arrested in the past for his activism, and we had the Prime Minister reiterate the need for a hard cap on emissions from the energy industry at COP 26.
Do you worry about what signal those things send on the federal government’s approach to the industry?

We’ve already seen a great deal of anti-energy policies and regulations coming from the federal government over the last few years. I think of Bill C69 of course, I think of shutting down Northern Gateway, shutting down Energy East.

A lot of the narrative emerging from Ottawa has not been particularly friendly to the energy sector. So are we concerned at this latest appointment? There have been a number of Environment Ministers in Ottawa now who have not been particularly energy friendly. Minister Guilbeault did say the federal government doesn’t regulate production, only pollution. Of course that leaves it up to interpretation. When you have a cap on emissions levels that they want to put in place, it really would have the same effect as a cap on production, and could freeze new production. Of course that is very, very concerning.

What we have to hope for is a realization that hobbling the energy sector could actually hurt the federal bottom line. John Ivison wrote in the National Post this weekend, “The Bank of Canada’s decision to end its bond buying program which has previously soaked up seven per cent of the government’s bond issues over the course of the pandemic, means Canada cannot afford to hobble its biggest export earning sector,” and that of course would be energy.

We have to continue to tell our own story and really to stand up for the sector and do everything we possibly can.

I spoke to Minister Wilkinson, he’s the former Environment Minister now Energy Minister, a few hours ago and I raised some of our concerns about that capping of emissions levels, what that would mean. I raised to him that we stand very strongly behind the enhanced oil recovery side of carbon capture, utilization and storage. We know that enhanced oil recovery is very good for oil production but also very good for the environment because CO2 enhanced oil recovery wells produce 82 per cent fewer emissions than traditional wells, I told him that. I’m trying to get the story out as much as possible.

The federal government doesn’t like enhanced oil recovery I guess because they don’t like oil and have excluded enhanced oil recovery from a federal tax credit for carbon capture, utilization and storage. I was saying to Minister Wilkinson today, I would hope that could be reconsidered in light of net zero goals because enhanced oil recovery really has a very, very strong profile in that regard. There are leading environmentalists that say you can’t get to Paris Accord targets without enhanced oil recovery. So we just have to keep saying what we do and getting this story out and always remaining a little bit on our guard about some of the rhetoric coming out of the federal government. We’ve gotten used to it, and I hate to say that, but it isn’t perhaps going to get a heck of a lot easier now with Minister Guilbeault.

With the continued limits on export capacity because of the pipelines, do you see a limit on growth potential for the industry or do you see potential to overcome those constraints?
The biggest project, Keystone XL, was cancelled on President Biden’s first day. Northern Gateway was cancelled. Energy East was cancelled by the current federal government. There were problems with Enbridge Line 5.
The Enbridge main line carries 70 per cent of Saskatchewan’s oil. The Enbridge main line does ultimately connect to Line 5 and up into Ontario and ultimately to Quebec on Line 9. It is a major transporter for us in Saskatchewan. We’re obviously very pleased that the Line 3 replacement project is now operational, and so that’s a huge relief because a massive amount of oil does go on that pipeline for Saskatchewan producers. But there are still a lot of challenges in terms of getting our oil to tide water because all those other projects have been cancelled.

We remain cautiously hopeful about Trans Mountain and in the meantime do everything we can provincially and we are trying to do everything we can to incentivise any kind of infrastructure, pipeline infrastructure, that will move product and increase production for us. We have seen some successes in that regard, under some of our infrastructure programs where we have had projects that have increased production and increased egress be approved under those infrastructure programs, which are based around transferrable royalty credits and so on. We just have to do what we can here. We’re land-locked and unfortunately vulnerable to a lot of other people’s decisions, but we have to just keep doing everything we can for our producers.

Where do you see room for growth in the province’s energy industry?
Enhanced oil recovery is key. There is also a lot of room for growth in value added processing and we have seen some major investments there. Gibson’s increase of the Moose Jaw refinery capacity is one, Reef Resources’ construction of a new fractionator plant, that’s another one, and we have brought in these targeted investment incentive programs around research and development and infrastructure to increase investment in some of these areas. What I always say about our incentives is that government money follows private investment, it doesn’t lead.

What do you see as the biggest challenges facing the energy industry in Saskatchewan?
Pipeline egress and federal government regulatory intervention. The carbon tax is one area of concern, Bill C69 was another, and around federal environmental impact assessments and encroachment on provincial jurisdiction, that is a huge concern.
On the horizon is the clean fuel standard. I brought that up with Minister Wilkinson and have written him on that as well. It is a second carbon tax, it comes at a time when globally gas prices are very, very high and we have a lot of uncertainty around that and so much else coming out of COVID, this is not the time to put in place something that will further hit households, people paying for gas at the pumps, businesses, agricultural producers, rail transporters, and so on. That’s a big concern and it has always been a little bit under the radar, the clean fuel standards, but it’s another one in a long line of regulatory positions on the energy sector, but also on ordinary consumers.

Out of all the issues that you deal with, which of them keeps you up at night if any?
I think the biggest issue is all the talk of a just transition or a green transition. We have to be so cautious with that transition, which you can call energy evolution or transformation, careful to never be too rapid or too glib because on the line are literally hundreds of thousands of energy workers’ jobs.

In Saskatchewan, and I personally believe that we build on our strengths, we take an "all of the above" approach, we look at exciting new opportunities, but we always keep in mind that we cannot turn our backs on our traditional sector and that they are at serious risk if policy makers who are too into just transition, as they call it, at the expense of everything else. These are sectors that are proud sectors and are incredibly important sectors for Saskatchewan and for everything that fills our lives. So I think that’s one thing I’m very, very concerned about, this trend to just move away from energy industry without really analyzing how that’s to be done and how that’s to be paid for.

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