贰诲补尘听鈥� It was good news for an economic sector that has seen its fair share of bad news as of late.
March 1 marked the official commencement of steam operations at Husky Energy鈥檚 Edam East heavy oil thermal project.
It is one of three new thermal projects expected to commence operations this year. According to company officials, Edam East will produce 10,000 barrels per day; along with Edam West and the Vawn project which are still to be completed, about 24,500 bpd are expected by the end of 2016.
The 10,000 bpd Vawn development and the 4,500 bpd Edam West project are set to begin production in the third quarter of 2016.
Among political officials on hand to welcome the project was Premier Brad Wall. For Wall, it was one of the last events he attended as premier before the start of the spring election campaign.
His remarks at the grand opening seemed less directed to those in attendance and more towards political officials far from Saskatchewan.
鈥淢ake no mistake, this sector creates economic opportunity and job creation, new jobs, sustained jobs direct and indirect, and it also supports transfer payments so that all of Canada benefits from the work that you do,鈥� said Wall.
鈥淚t鈥檚 important that all of us right across the country in politics remember that鈥檚 what you鈥檙e contributing to.鈥�
The premier鈥檚 remarks seemed targeted particularly at political officials in Quebec, who had made some news of their own.
Earlier in the day came word the Quebec government was seeking an injunction against the Energy East pipeline, to make sure it was meeting environmental requirements.
In his scrum with reporters, Wall made known his unhappiness with this latest turn of events.
鈥淲e seem to be forgetting what鈥檚 best about Canada,鈥� Wall said. 鈥淎s Canadians we鈥檝e always come together to help sectors when there鈥檚 trouble.鈥�
He pointed to the assistance provided to the auto sector and the aerospace sector, and also agriculture when it was in difficulty.
鈥淭hat鈥檚 missing, it seems with respect to energy of late,鈥� said Wall.聽聽聽聽
鈥淥n one hand we have the province of Quebec, that鈥檚 going to place an injunction on a pipeline that will replace the need for us to import as much foreign oil, on a pipeline that will take oil off the rail, which frankly is a less desirable, less safe way to ship oil than by pipeline, and a project that will create thousands of jobs. Here鈥檚 a shovel ready project that doesn鈥檛 take any federal dollars at all, the Energy East pipeline. And we have Quebec opposing it.鈥�
Wall also aimed his remarks at the Justin Trudeau government over the possible imposition of a national carbon tax, which he has also opposed.
鈥淲e also have the federal government talking about a national carbon tax at a most inopportune time, at a time when I would say the economy can afford it the least.鈥�
When asked to comment on what Quebec Environment Minister David Heurtel had said, that this was not pitting East and West, Wall disagreed.
鈥淚t does. It just does. You know, maybe that鈥檚 not their intent, and I鈥檓 not arguing with their intent in all of this, but it鈥檚 going to cause some problems.鈥�
The premier also pointed out a number of times there was a rigorous process already in place to approve pipelines, through the National Energy Board.
鈥淪hould you have official standing or seek to approve or not approve or have a de facto veto on a pipeline, when it is the national regulator鈥檚 job to either decide in favour or against these projects? No, the provinces shouldn鈥檛 have that kind of standing.鈥�
Wall later hinted a further response may be coming from the province.
鈥淚鈥檝e asked our trade minister and our trade officials to look at what options we have and say 鈥榶ou know, enough is enough.鈥� Saskatchewan and Western Canada also has to protect its own interests and send some strong messages if that is what the province of Quebec is doing. I don鈥檛 have any more details on that but I have asked officials to report back on what options we have on a trade perspective.鈥澛犅犅犅�
Still, the Husky Energy grand opening in Edam did provide an antidote to the political doom and gloom, at least for one day.聽
Particularly welcome was the job creation in the region. The Edam East project created 30 permanent operating jobs and another 250 construction jobs, and similar numbers are projected for the other two projects in the region, as well.
These particular heavy oil thermal plants were preferred by Husky because, as vice-president Edward Connolly told the audience, they 鈥渟tand in the front line in terms of capital efficiency.鈥� The plant is sized to fit the deposits in the area, and those plants are standardized for builds elsewhere.
Husky also touted the plants鈥� low operating costs and fast build times of about 30 months, which included the regulatory approval times.聽聽
Husky CEO Asim Ghosh said the projects would 鈥減osition Husky to be profitable at some US$40 WTI (West Texas Intermediate).鈥�
鈥淧rojects like this are an important part of the transformation because they actually give you a nice return at $40 WTI, and they鈥檙e a very important part of positioning Husky because 40 per cent of our volume will come from projects such as these, which, on an ongoing basis, will require very little capital to keep the production flat,鈥� said Ghosh.
鈥淪o that鈥檚 a very important part of how we are using these projects to reposition the company overall.鈥�
Ghosh also acknowledged the current struggles of the oil industry and the job losses.聽
鈥淭hese are very difficult times,鈥� said Ghosh, who said his company was 鈥渧ery, very sympathetic鈥� to laid off workers.
鈥淲e as a company try our best to be respectful of them and treat their travails respectfully. I don鈥檛 trivialize the difficulty that the industry is going through, and we鈥檙e all pulling up our belts.鈥�
Since 2010, Husky has invested $8 billion in its Saskatchewan operations, including more than $3 billion building heavy oil thermal plants in northwest Saskatchewan. By the end of 2016, the company will operate 10 plants producing 80,000 bopd. That number exceeds the maximum production of the Bakken play in southeast Saskatchewan, which peaked around 71,000 bopd in December 2012.
