Sask. government optimistic of oil recovery as price stays low

Sask. government optimistic of oil recovery as price stays low

D.C. FRASER, REGINA LEADER-POST, REGINA LEADER~POST  06.09.2017

Dustin Duncan
Energy Minister Dustin Duncan

Saskatchewan Energy Minister Dustin Duncan is looking on the bright side of the province’s oil industry.

After attending the annual Saskatchewan Oil & Gas Show in Weyburn this week, Duncan said exhibitors and people within the oil industry are in a more positive mood than in the past two years.

“Just by and large, the amount of drilling that’s going on around here in the last couple of months is a pretty positive sign,” he said.

In 2007, there were 3,453 oil and gas wells drilled in Saskatchewan. In 2016, with natural resource prices dropping, there were only 1,664, according to the Ministry of Economy.

Duncan says drilling projections for 2017 show the numbers are going to be much better than last year.

The number of wells drilled in Saskatchewan in the first three months of 2017 is 856, compared to 399 wells drilled during the same period in 2016.

“I think cautious optimism would certainly be a good way to describe the mood around the show,” said Duncan.

The minister says he is more optimistic than cautious, even though the price of oil has not yet reached the level the province predicted when the budget was released March 22.

At that time, the province projected that over the 2017-2018 fiscal year, the average U.S. price per barrel of oil would be $56.25. The closest oil has gotten to that was in April, when the price hit $53.38. Since the budget was released, the average cost has been $49.37.

A barrel of oil hasn’t risen above $55 since June 2015.

Still, Duncan is remaining positive.

“I’m hopeful that at the end of the fiscal year (March 31, 2018) we’ll be in a positive position based on, compared to even the forecast we gave at budget time,” he said.

Duncan pointed to recently released land sale numbers as one source of his optimism.

The province’s public offering for petroleum and natural gas rights raised $22.8 million on Tuesday, which is the most earned for a single public offering in almost three years, according to the province.

Duncan says land sales are a “leading indicator for the industry” and the revenue generated is a good sign companies are expanding drilling operations in the province.

He says that if land sales are up, it shows companies are busy. He added one of the current struggles of oil and gas operators in the Weyburn area is finding people to work.

 

 

 

About prosperitysaskatchewan

Consultant on Saskatchewan's natural resources.

Posted on June 12, 2017, in economic impact, oil, political. Bookmark the permalink. Leave a comment.

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