Investors bail on trapped Canadian oil as pipeline woes deepen

Investors bail on trapped Canadian oil as pipeline woes deepen

Kinder Morgan pipe

Canada’s energy companies can’t get any love, even from many Canadians.

With pipeline, regulatory and political frustrations reaching new heights, the nation’s energy stocks slumped to their lowest level in almost two years this month. The iShares S&P/TSX Capped Energy Index ETF, which tracks Canadian energy companies, has seen about $56 million in outflows this year versus $32 million in inflows for an ETF focused on U.S. stocks. The pain has extended to the fixed-income market, with U.S. dollar high-yield bonds from Canadian energy issuers returning less than their global peers in the past 12 months.

At the heart of the sector’s woes is a dearth of pipeline capacity, which has depressed Canadian oil and natural gas prices. A new regulatory regime designed to speed up pipeline approvals is instead seen delaying projects while Alberta and British Columbia are fighting over one of the conduits the federal government has approved. On top of that, the industry is facing carbon taxes other jurisdictions don’t have to pay and it’s competing with American drillers which are seeing taxes cut under the Trump Administration.

“I’m not crazy about Canada,” Paul Tepsich, founder and portfolio manager at hedge fund High Rock Capital Management Inc. in Toronto, said by phone. “We’ve got taxes going up and regulations going up.”

Tepsich said he reduced the average exposure to Canadian energy equities in his clients’ to well under 3 percent from 8 percent a year ago. And while credit exposure remains relatively steady, he has no plans to add new holdings. He’s been adding to short-dated U.S. Treasuries amid market volatility and will look to selectively add U.S. energy names.

The big albatross for Canadian energy companies has been weak prices, caused by the pipeline pinch. Western Canadian Select, the main grade of oil extracted by Canadian oil-sands producers, is trading near the widest discount to West Texas Intermediate crude in almost four years. Alberta Energy Co. natural gas prices are also lagging their U.S. equivalent. WCS discounts would cost the Canadian economy about C$15.6 billion a year, or 0.75 percent of GDP, if maintained at current levels, Scotiabank Chief Economist Jean-Francois Perrault said in note.

The pipeline frustrations recently erupted into a trade war between oil-producing Alberta and neighboring British Columbia after the coastal province proposed limiting new shipments of oil-sands crude through its borders, possibly stalling a major expansion of the Kinder Morgan Inc. oil pipeline. Alberta Premier Rachel Notley banned imports of B.C. wine and abandoned talks to possibly buy more electricity from its neighbor.

Prime Minister Justin Trudeau’s government also announced earlier this month a plan to revamp the national energy regulator with a goal of giving the industry a speedier, more efficient approval process. But the plan also may include adding new types of projects that require federal approval and allows more input for some stakeholder groups, sparking industry fears it won’t become any easier.

Legal Challenges

The proposed legislation appears to effectively prevent any major new project from reaching any form of positive recommendation, the research team at GMP FirstEnergy, a major investment bank to the energy sector, said in a note. “A lack of hard timelines and a regulatory process that has been subject to dithering and near endless legal challenges will become the major stumbling block for domestic and international investor confidence in the Canadian energy sector.”

Federal Resources Minister Jim Carr said earlier this month the Liberal government has balanced government support for the energy industry with protecting the environment and receiving input from Canadians, noting C$500 billion in projects are planned over the next decade.

Banker and bondholder willingness to refinance debt and give companies time to boost output helped keep many struggling producers out of bankruptcy as oil prices slumped in recent years. Investor flight means it will be tougher for Canadian energy companies to access financing for capital-intensive projects. Suncor Energy Inc.’s $14 billion Fort Hills project, approved when WTI was $100 a barrel but started production last month, may be the last of a generation of mega Canadian oil-sands projects.

‘Zero Confidence’

“I’m inclined to believe that we don’t see another oil-sands project built,” Geof Marshall, the guardian of $40 billion of assets at CI Investments’ Signature Global Asset Management in Toronto, said by phone. The majority of his energy holdings are concentrated in U.S. regions like the Permian Basin, where there’s more capacity to move the commodity, he said.

Rafi Tahmazian, who helps manage about C$1 billion in energy investments at Canoe Financial in Calgary, said he began trimming holdings of Canadian energy equities after Justin Trudeau was elected in 2015. He started shifting further into the U.S. after Donald Trump became president and vowed to trim regulations and environmental protection.

Canada needs to cut taxes and ensure pipelines and LNG terminals get built, Tahmazian said.

“My job as an investor is to gauge and make investments based on my confidence in a leader of a company and a country, or a province or a state,” he said. “And I have zero confidence there right now.”

Scotiabank says pipeline constraints to cost economy $10.7 billion in 2018

Scotiabank says pipeline constraints to cost economy $10.7 billion in 2018

Saskatoon / 650 CKOM
Canadian Press

Scotiabank says pipeline constraints to cost economy $10.7 billion in 2018

Ian Bickis, The Canadian Press

CALGARY — Delayed oil pipeline construction is causing a steep discount for Canadian crude prices that is costing the economy roughly $15.6 billion a year or about 0.75 per cent of GDP, according to Scotiabank.

“Pipeline approval delays have imposed clear, demonstrable and substantial economic costs on the Canadian economy,” said bank chief economist Jean-Francois Perrault in a report Tuesday.

The discount, however, is expected to ease through the year as more rail capacity becomes available to ship oil, bringing the expected cost to roughly $10.7 billion or 0.5 per cent of GDP for 2018 and then $7 billion or 0.3 per cent of GDP a year until more pipeline capacity comes online.

The costs come as delays continue for all three major proposed oil pipelines to export more oil from Western Canada, including Kinder Morgan’s Trans Mountain expansion, Enbridge’s Line 3 replacement, and TransCanada’s Keystone XL.

Canadian producers would need Line 3 and at least one of the other pipelines to go forward or face indefinite pipeline constraints that would have an impact on Canada’s well-being with consequences that extend well beyond Alberta, said Perrault.

“The elevated discounts come with a steep economic cost, and represent to a large degree a self-inflicted wound,” he said.

The latest economic impacts of the pipeline constraints come as Alberta and British Columbia continue to quarrel over the construction of the Trans Mountain project, pitting arguments of economic impact against the importance of protecting coastlines and limiting greenhouse gas emissions.

The current squeeze in pipeline capacity has been expected for some time, but the leak and temporary shutdown on TransCanada’s Keystone pipeline last November sped up the problem, said Perrault.

The shutdown led to oil storage tanks in Alberta to fill to record volumes and sent the spread between Western Canadian and U.S. crude to more than US$30 a barrel, while the regulator-imposed 20 per cent reduced capacity on Keystone has continued to limit a recovery.

The discount on Western Canadian oil production since the spill has hovered around US$24 a barrel, much higher than the US$13 spread for the past two years, and Scotiabank expects it to average US$21.6 a barrel for 2018.

Western Canadian production is discounted somewhat both by quality and transportation costs, but has spiked several times in the past decade as pipeline space runs tight.

Saskatchewan Has Second Lowest Unemployment Rate in Canada

Second Lowest Unemployment Rate in Canada

Released on February 9, 2018

Saskatchewan’s unemployment rate was 5.4 per cent (seasonally adjusted) in January – tied for the second lowest rate among the provinces and below the national rate of 5.9 per cent according to Statistics Canada.

There were 560,100 people employed, 1,500 more jobs compared to January 2017, including an increase of 4,900 full-time jobs.

Employment in Saskatchewan was up 1,100 from the previous month (0.2 per cent), the highest percentage increase among the provinces (seasonally adjusted).  There were 6,200 full-time jobs created month-over-month.

“This is definitely a positive indicator that Saskatchewan’s economy is on the rebound,” Minister of Immigration and Career Training Jeremy Harrison said.  “With our unemployment rate being second lowest in the nation and employment up, in addition to recent good news on building permits and urban housing starts, 2018 is looking to be a good year for our province.”
Major year-over-year gains were reported for accommodation and food services up 2,300; public administration up 2,000; business, building and other support services up 1,700.

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For more information, contact:

Deb Young
Economy
Regina
Phone: 306-787-4765
Email: deb.young@gov.sk.ca

Saskatchewan oil-rights sales up 30%

TOTAL PUBLIC OFFERING REVENUE FOR 2017-18 FISCAL YEAR REACHES $65 MILLION

Released on February 8, 2018

Sustained interest in Saskatchewan’s southeast region generated the majority of revenue in the February public offering of Crown petroleum and natural gas rights on Tuesday, with the $3 million from that sale pushing the final total for the 2017-18 fiscal year to $65 million.

This total exceeds the previous fiscal year-end total of $50 million as industry activity and investment shows sustained signs of trending upward in the province.

“Saskatchewan is consistently a jurisdiction of choice for conventional producers looking for stability and solid returns,” Energy and Resources Minister Bronwyn Eyre said. “Increased drilling activity and industry investment indicate that one of our key economic sectors continues to gather momentum and stimulate growth in the province.”

Southeast Saskatchewan remained the focus of attention with 52 leases, consisting of 3,448.152 hectares, fetching $2,452,992.19. Spartan Energy Corp. bid $1,039,679.96 for 18 leases in southeast Saskatchewan totaling 1,295.206 hectares. One lease south of Carnduff received a bonus bid of $325,346.74 for 129.5 hectares. This lease was purchased by Spartan Energy Corp. and is prospective for oil in the Midale and Frobisher Beds of the Madison Group.

Saskatchewan’s oil and gas industry accounts for an estimated 15 per cent of the province’s total real Gross Domestic Product (GDP), and is the largest contributor among primary industries to provincial GDP.

In the Fraser Institute’s Annual Global Petroleum Survey for 2017, Saskatchewan ranked seventh out of 97 jurisdictions in the world in terms of overall attractiveness for oil and gas investment, and has consistently been among the top 10 jurisdictions over the past six iterations of the survey.

The next public offering of petroleum and natural gas rights will be held on April 10, 2018.

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For more information, contact:

Deb Young
ECON
Regina
Phone: 306-787-4765
Email: deb.young@gov.sk.ca

Shore Gold Inc. Announces Name Change to Star Diamond Corporation and New Trading Symbol

Shore Gold Inc. Announces Name Change to Star Diamond Corporation and New Trading Symbol

Shore Gold FALC aerial

Stock Symbol: SGF: TSX

SASKATOON, Feb. 8, 2018 /CNW/ – Kenneth E. MacNeill, President and CEO of Shore Gold Inc. (“Shore” or the “Corporation”) is pleased to announce that Shore has changed its name to Star Diamond Corporation. Effective at the start of trading on February 12, 2018, Star Diamond Corporation will also commence trading on the Toronto Stock Exchange under this new name and a new stock symbol “DIAM“.

This new corporate name is in honour of the Star Kimberlite, located in the Fort à la Corne forest of Saskatchewan, Canada. It was the exploration and evaluation work completed on the Star Kimberlite that demonstrated the significant quality, size and value of the contained diamond populations. These high value diamonds facilitated the consolidation and advancement of the Corporation’s Fort à la Corne area kimberlites, including the Star – Orion South Diamond Project.

The name change does not affect the rights of the Corporation’s shareholders. No further action is required by existing shareholders with respect to the name change, and certificates representing common shares of Shore Gold Inc. will not need to be surrendered or exchanged unless a transfer is being requested. Shareholders had previously approved a special resolution to allow an amendment to the Articles of the Corporation to change the name of the Corporation at the Corporation’s 2017 Annual and Special Meeting of Shareholders.

Following this name change, Shore’s domain name will change to www.stardiamondcorp.com and visitors to our current website address and communication to our current electronic mail addresses will be redirected.

On behalf of the Board,
Kenneth E. MacNeill
President and CEO

SOURCE Shore Gold Inc.

For further information:

shoregold@shoregold.com or (306) 664-2202, www.shoregold.com

This information is being distributed to you by / Cette information vous est transmise par : Shore Gold Inc.

300, 224-4th Ave. S., Saskatoon, SK., S7K 5M5
http://www.shoregold.com

Evraz responds to pipeline dispute between B.C. and Alberta

Evraz responds to pipeline dispute between B.C. and Alberta

CJME News

Evraz responds to pipeline dispute between B.C. and Alberta

Evraz North America, the company that operates Evraz Steel in Regina, is responding to the pipeline dispute between Alberta and British Columbia.

Alberta Premier Rachel Notely recently announced her province will be banning imports of wine from B.C.

This trade sanction is in retaliation to the B.C. government’s announcement of limiting the increase of diluted bitumen, which will effectively block the Trans Mountain Pipeline.

Now Evraz is weighing in on the issue because thousands of jobs in Canada rely on the expansion of the pipeline.

“(Evraz) was awarded a contract to produce approximately 275 thousand tons of pipe for this pipeline at our Regina, Sask. operations. The pipe is produced here in Canada by Canadians and uses Canadian raw materials,” said Conrad Winkler, president and CEO of Evraz North America, in a news release.

Evraz Steel began manufacturing pipe for the project in October 2017 after being awarded the contract by Trans Mountain. Manufacturing is to continue through May 2019.

“This project is real and we are building it with Canadian workers, materials and technology,” Winkler said in the release.

“Evraz North America operations in Canada employ over 2,000 people directly and generate between six and 10 times as many indirect jobs throughout the supply chain mainly across Western Canada. We are looking forward to a resolution to this impasse and to continuing production of the most technologically advanced, clean and safe steels for pipelines and oil country tubular goods right here in North America.”

PSAC urges the Government of Canada to uphold the rule of law and our Constitution

PSAC urges the Government of Canada to uphold
the rule of law and our Constitution
Calgary, Alberta (February 5, 2018) – The Petroleum Services Association of Canada (PSAC) is extremely disappointed and concerned that the Government of British Columbia has announced that it is proposing “a second phase of regulations to improve preparedness, response and recovery from potential spills” related to pipelines transporting liquid petroleum products. Over two years, stringent research and studies were conducted by the National Energy Board, the Canadian Energy Assessment Agency and the BC Environmental Assessment Office for the expansion of the Trans Mountain pipeline. The result of this rigorous process was to approve the expansion of Trans Mountain and to declare it to be in the national interest by the Government of Canada.

Further proposed study and regulations by the BC government can only be viewed as yet another tactic to deny to land-locked provinces, vital access to tidewater that BC freely enjoys and all while pursuing export opportunities for its own petroleum products. “This is not the time for inter-provincial trade wars as we pursue free trade agreements with the US and Asian countries,” says Mark Salkeld, President & CEO of PSAC. “Now is the time for the Government of Canada to uphold Canadian rule of law and our constitution.”

“Investment capital is already fleeing Canada due to competitive concerns. Lack of certainty for major project development and infrastructure will not help but only serve to drive away even more potential investment and with it Canadian jobs and economic prosperity,” continued Mark Salkeld.

The oil and natural gas industry is the leading contributor of private capital investment in this country supporting over 640,000 jobs across the country and thousands of businesses, including over 700 in BC. The industry’s responsible development of our natural resources also provides the funds for technical innovation, research and development and clean-tech to improve environmental performance and reduce GHG emissions.

Canada is already losing billions of dollars a year having only the US as its one customer for oil and natural gas negatively affecting job creation and funding for health care and education while the US moves to become a leading exporter, reaping benefits that could be ours.

“Pipelines are the safest way to transport our energy which supplies us with the fuel we need for our vehicles, planes and transport for our food and other products; the fuel that provides us with our quality of life that so many take for granted and that those in developing countries who live in energy poverty can only dream of,” says Scott Van Vliet, Chair of PSAC and CEO of Environmental Refuelling Systems Inc.  “We may want to move to renewable energy but it will take years and right now we need all forms of energy. Canada has one of the most robust regulatory regimes in the world with leading environmental standards. Canadians should be proud to supply the world with our responsibly developed oil and natural gas for a better quality of life.”

The Petroleum Services Association of Canada is the national trade association representing the service, supply and manufacturing sectors within the upstream petroleum industry. As the voice of Canada’s petroleum service, supply and manufacturing sector, PSAC advocates for its members to enable the continued innovation, technological advancement and in-the-field experience they supply to Canada’s energy explorers and producers, helping to increase efficiency, improve safety and protect the environment.

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PSAC Media Contact:
Mark Salkeld
President & CEO
Email: media@psac.ca
Phone: 403.264.4195

Why pipelines matter to SK: $320 million in missed royalties plus billions in capital spending per year!

The difference between what western Canada is getting for our oil and could be getting, is; vast, caused by pipeline constraints, and is costing Saskatchewan $320 million in missed royalties per year and reasonably $-billions in capital spending per year.

WTI crude is trading at $65 US per barrel today, while Western Canada Select (WCS) is trading at $35 (see charts below).  WTI is the often quoted price in the news and is largely the USA price – however, most Canadian crude is priced as WCS.  Brent crude is generally the price of oil shipped by tankers around the world – Brent is at $68 per barrel today.

WCS prices at a discount to WTI because it is a lower quality crude and because of a transportation differential. The price of WCS is currently set at the U.S. Gulf Coast. It costs approximately $10 per barrel for a barrel of crude to be transported from Alberta (the major hubs) to the U.S. Gulf Coast, accounting for at least $10 per barrel of the WTI-WCS discount.

So of the current $30 differential we can account for $10 – but what about the other $20 differential?

Pipeline constraints have caused the transportation differential to rise significantly – see the CBC story below.  Heavy discounts on our crudes were attributed to crudes being “landlocked” in the U.S. Midwest due to pipeline constraints.

So, what does this cost Saskatchewan?

That is unclear, but, from the Government of Saskatchewan 2017/18 budget, “a US$1 per barrel change in the fiscal-year average WTI oil price, results in an estimated $16 million change in oil royalties.”  How the WTI/WCS pricing factors into this formula is not readily apparent, but; the $20 differential (above) at $16 million per barrel impact is logically approaching $320-million in missed oil royalties to the Province of Saskatchewan – every year!

More importantly, if the price we received for our oil was 57% higher – from $35/barrel up to $55/barrel ($65 WTI less $10 for shipping) – more wells would be drilled and more oil produced.  This would cause significant job increases and local spending in Saskatchewan. The economic impact measure of this is best represented by the last oil boom, with; the dramatic increase in housing values in Estevan and Weyburn over the past several years, demands for employees sky-rocketing, car-sales taking-off, etc.

And, with more oil being produced, royalties when them climb again due to a production increase being added to the price increase.

What is holding all of this back – a lack of pipelines!

 

WTI Pricing – $US – for the past year

WTI Feb 2 2018

Source:  http://www.oilsandsmagazine.com/energy-statistics/real-time-oil-prices-wti-brent-wcs-energy-stocks#WTIfutures

Western Canada Select (WCS) Crude Pricing – $US – for the past year

WCS Feb 2 2018

Source:  http://www.oilsandsmagazine.com/energy-statistics/real-time-oil-prices-wti-brent-wcs-energy-stocks#WTIfutures

Brent Crude Pricing – $US – for the past year

Brent Feb 2 2018

Source:  http://www.oilsandsmagazine.com/energy-statistics/real-time-oil-prices-wti-brent-wcs-energy-stocks#WTIfutures

_______________________________________________________________

Crude comparisons

Source:  http://www.oilsandsmagazine.com/technical/western-canadian-select-wcs

______________________________________________________________________

Pipeline bottlenecks push Canadian oil price to deepest discount in 4 years

Canadian oil selling for just $30 a barrel, even as West Texas Intermediate nears twice that price

By Pete Evans, CBC News Posted: Dec 13, 2017 2:34 PM ET Last Updated: Dec 13, 2017 3:19 PM ET

http://www.cbc.ca/news/business/canada-oil-price-1.4446698

 

The price gap between the price of Canada’s oil benchmark versus its U.S. equivalent, West Texas Intermediate, has widened to its biggest difference in almost four years, with Canadian crude now selling at a $25 discount.

The heavy oil coming out of Alberta’s oilsands is known Western Canada Select. It usually trades at a discount to the better known U.S. benchmark, West Texas Intermediate, in part because it is more difficult to process.

But this week, the gap expanded to more than $25 US a barrel, due to transport bottlenecks on pipelines and by rail.

WTI WCS differential late 2017

Most Canadian oil is shipped down to refineries on the U.S. Gulf Coast to be refined into usable products like gasoline, diesel and jet fuel. That means Canadian producers have to compete with U.S. shale oil companies, who also sell to those same refineries and don’t have nearly the same level of transportation headaches to deal with.

TransCanada’s Keystone pipeline was shut for several weeks after a spill last month, and rival Enbridge said this week it plans to ration its capacity on a key oil pipeline between Edmonton and Wisconsin by one fifth this month.

At the same time, shipments of crude by rail are inching higher, but are still lower than they were several years ago.

The transportation bottlenecks are putting the squeeze on Canadian oil. “We have a lot of oil in the oilsands,” said Conor Bill, managing director of Mount Auburn Capital Corp., “and the problem is there aren’t a lot of ways to get that crude out of the area where it’s produced.”

The supply imbalance is especially vexing considering the price of WTI has been on a run lately, ever since an OPEC deal last month to maintain production cuts. The WTI price is up by 33 per cent since June, and a barrel of U.S. oil was changing hands at $56.81 on Wednesday.

Contrast that with a barrel of Western Canada Select, which can be had for just $31.72 US on Wednesday. That’s a gap of $25 a barrel — the widest seen since 2013, before the price of oil collapsed.

“Producers with access to international markets are earning higher receipts,” said Shane Thomson, a foreign exchange trader with Cambridge Global Solutions. “The Canadian economy is not seeing the full benefit of the increase in global prices.”

Instead of higher prices, Canadian producers are having to cut their prices to get their product to market. “You need to cut the price in order to incur the costs to ship it out of there,” Bill told the CBC’s On The Money on Tuesday.

The price gap could stick around a while longer, since transportation issues show no signs of easing any time soon.

“It will continue,” Bill said.

 

 

What’s Behind Canada’s Oil Driller Exodus?

What’s Behind Canada’s Oil Driller Exodus?

By Tsvetana Paraskova – Jan 31, 2018, 12:00 PM CST

https://oilprice.com/Energy/Crude-Oil/Whats-Behind-Canadas-Oil-Driller-Exodus.html

oil processing pipe

Canadian drillers are moving rigs south to the U.S. to seize more profitable opportunities. But it’s not just the bright prospects of the Permian that is attracting Canadian companies—moving south of the border has more to do with favorable tax rates and more takeaway capacity and market access opportunities than there is in Canada.

Last week, Calgary-based AKITA Drilling said it would be expanding in the Permian and has contracted a rig with a major U.S. operator that has a significant presence in the Permian. AKITA Drilling has redeployed the rig from the Western Canadian natural gas basin, where it faced limited opportunities to work, the company said.

Another Calgary-based firm, Trinidad Drilling, said on Monday that it would be moving eight rigs to the Permian to meet increased customer demand, redeploying idle rigs from its existing global operations with weaker demand, including Canada.

Trinidad Drilling’s CEO Brent Conway told The Canadian Press in an interview that he would rather avoid the move if he could find profitable drilling work in Canada. The rigs moved to the U.S. would be crewed by U.S. workers, as Canadian crews likely won’t move with the rigs, the manager added.

“What’s happening in the U.S.? They’re lowering taxes, they’re building pipelines and they’re starting to export oil,” Conway told The Canadian Press, adding that in Canada, taxes have been raised, pipelines are not getting built, and there isn’t much regulatory certainty.

His sentiment is shared by AKITA’s chief executive Karl Ruud, who said that the U.S. offers more attractive prospects with more favorable tax rates and regulatory system.

Last November, the Canadian Association of Oilwell Drilling Contractors (CAODC) said in its 2018 Drilling Forecast that it expected Canadian wells drilled this year to number 6,138, up by just 107 from 2017.

“One of the Canadian oil and gas industry’s biggest hurdles continues to be lack of market access and regulatory stability,” CAODC said.

“Market access and a predictable regulatory environment are the most significant factors in creating an environment that will allow our industry to deliver stronger results in the coming years,” CAODC President Mark Scholz said back then.

Speaking to The Canadian Press, Scholz said on Tuesday that the lack of market access continued to be one of the biggest obstacles to Canadian producers to get their barrels to market at higher prices. Western Canadian Select (WCS) is currently trailing WTI prices by a discount of more than $30 a barrel.

By Tsvetana Paraskova for Oilprice.com

Exploration agreement aims to help junior mining companies in northern Saskatchewan

Exploration agreement aims to help junior mining companies in northern Sask. and Man.

Future of Creighton, Sask.’s main industry ‘up in the air,’ according to longtime Mayor Bruce Fidler

By Bridget Yard, CBC News Posted: Jan 31, 2018 6:00 PM CT Last Updated: Jan 31, 2018 6:00 PM CT

Seabee gold

An agreement between the Saskatchewan and federal governments worth approximately $2 million will aim to help junior mining companies in their exploration of northern Saskatchewan and Manitoba.

The agreement was signed in December 2017. 

The future of the mining camps near Creighton, Sask., which is approximately 430 kilometres northeast of Saskatoon, is “up in the air,” according to the town’s mayor.

“The forecast put out a year ago by Hudbay [Minerals] was that the 777 mine, the one in operation right now where they’re producing ore, is going to run out and shut down in three or four years,” said Bruce Fidler.

He estimates a shutdown would affect roughly 700 employees, who live for the most part in Creighton and Flin Flon, Man.

A processing plant in Flin Flon is still in operation, processing ore from a mine in Snow Lake.

“We’ve been hoping for some kind of program to come out for a couple years now, to assist the juniors in getting out there and doing exploration and drilling and finding another ore body that could save, or at least be, the next mine,” said Filder.

Overhead survey

The agreement will fund an airborne survey of the Flin Flon and Creighton region, which is a well-known, “highly prospective” area.

Three mines are already in operation in the region. The 777 mine, near Flin Flon, mines zinc and copper, and smaller amounts of gold and silver. The Lalor mine in the Chisel Basin produces the same minerals.

Nearby Reed mine produces copper. Hudbay owns the majority of each mine.

“The challenge is actually identifying the deposits. This survey is going to be taking place and trying to see through rocks that actually cover the old volcanic rocks in Flin Flon you can see on the ground,” said University of Saskatchewan geology professor Kevin Ansdell.

While there are many kinds of geophysical surveys, the new agreement focuses on two, using both a helicopter and an airplane.

“The helicopter is flying over a piece of land and it’s emitting an electromagnetic current at low level,” said the head geologist on the project, Gary Delaney.

“That goes down into the ground and if there’s a conductive body, that will generate its own current.”

The conductive body could be indicative of a copper or zinc deposit.

Process will take years

Once a deposit is found, it is up to the mining companies to invest, explore further, and decide if a mine is economically viable.

Fidler hopes a new mine can be set up before the others dry up, in order to keep the existing zinc metallurgical plant and concentrator operating.

The town’s efforts have concentrated on economic development in recent months, to prepare for the loss of the mining sector. Creighton, Flin Flon, and Denare Beach have banded together to create a regional economic development committee.

A new economic development officer has been hired, and will start their role Feb. 1.

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