No royalty review here: Wall

Weyburn – He wasn’t scheduled to attend, but Premier Brad Wall couldn’t stay away from the Saskatchewan Oil and Gas Show. He attended on Wednesday, June 3, and was able to get in a few brief comments before touring the show.

Those comments sounded a lot like the ones he often said in 2008-2009, when the then-Progressive Conservative government in Alberta was modifying its resource royalty structure. Now, with a newly-elected NDP government in Alberta planning on conducting its own royalty review, Wall is going with what worked before: promising stability in Saskatchewan.

“I just wanted to say thank you to the industry, to you and all those you know who work in the oil and gas sector in our province,” he started out. “I want you to know how grateful we are, as a government, and as province, to the sector.

“You know, since 2007, the economy’s been creating about a job per hour, 25 jobs per day, one of the best job creation records in the Dominion of Canada. The reason for this, a big part of that success story, is this sector, and this part of the province of Saskatchewan. So, I just want to say thank you.

“By the way, for our part, we would like to provide a new, bright, competitive environment to do business. We know we can always do better, and will be looking in the next couple days for, perhaps, how we can do better, creating that environment.

The pitch

And that’s when Wall made his pitch, saying, “A couple of announcements: One, Saskatchewan will not be engaging in a royalty review at this time. We think the royalty structure works well for the province in terms of returns to the owners of the resources, the people. Hopefully it’s working for the sector as well.

“I can also confirm something Minister (Bill) Boyd said a few months ago. We were contemplating some updates on surface rights issues by legislation. Someday, those updates need to be made, but they would have presented some significant, not shock, perhaps, but significant change to the sector when you don’t need change; when you’re trying to continue to operate and invest and be here in the province of Saskatchewan. We’re going to continue that delay. We’re mindful changes are needed, but we just think the industry does not need any more changes right now. When we do return to that issue, we’ll do so together.”

“If you happen to be from the province of Alberta, you found us to get here to the show. It’s really easy to find us on a more permanent basis. We have some incentives in the provincial budget you might be interested in.”

The night before Wall’s speech, Pipeline News canvassed a number of prominent local Estevan and Weyburn oilmen on what they would ask the premier. A half dozen agreed on asking for a level playing field, particularly on the application of PST on capital equipment. They feel if a company is coming into Saskatchewan, they can get an incentive, but if you’re based here, you don’t get much.

Asked about this, Wall said, “That’s the kind of feedback that’s helpful to us. I think we are trying to make sure this is as competitive as we can, not just to attract greenfield investment, but what they call brownfield – existing guys that want to stay at their current level of activity, or grow.

“That’s good feedback. I’m sure the minister will be interested.”

CPEC’s impact

Crescent Point Energy Corp. has grown to the point where, with the recent acquisition of Legacy Oil + Gas, it will be producing close to one-third of Saskatchewan’s total oil production, with Husky being the other big player. While Husky is a global operator, Crescent Point is not, and is principally focused in Saskatchewan.  Pipeline News asked if we’re getting to the point where Crescent Point is too big to fail?

Wall said, “It’s the oil business we’re talking about, not banking. So that phrase maybe doesn’t apply in certain sectors like where government would step in to save, say, a bank.”

Regarding the southern Saskatchewan oilpatch becoming a de facto company town, with Crescent Point being that company, Wall said, “I heard that. We were talking to some of the guys today. They’ve heard that as well.

“It’s not a bad thing if the company is good. I think Crescent Point has been a great corporate citizen. It’s a good company to have investing. You know, they announced their recent capex (capital expenditures) a little while ago and have signalled that maybe more is coming. They’re disproportionately investing in the province. That billion-dollar tranche they committed to when oil was 50 bucks, I think everyone was thinking ‘Thank goodness they are here,’ because other companies were fleeing.”

In the first quarter, Crescent Point led drilling for all of Canada, and had all but two of its at-times 26 rigs working in Saskatchewan. 

Wall said, “I think they were doing some hedging. They were doing it right. How do you take anything but positives away? The only thing that would make it better is if they were headquartered in Saskatchewan.”

Has the premier been speaking to Crescent Point CEO Scott Saxberg about that?

Wall responded, “I think a lot of people in Saskatchewan have. We understand Calgary is the oil capital, the energy capital. So you do business with your colleagues, with the other energy sector companies, the travel issue… I understand completely why you would want to be there, even if most of your activities are in Saskatchewan.

“But we’re always going to ask. You know, ye have not if ye ask not. So we’re always going to ask. In the budget, we have new growth tax incentives for the export business, which oil is. We have tax incentives for those who bring new corporate office jobs here. We’ve shared that with Crescent Point, and others. Maybe we’d be able to look at other things.

“I think Mr. Saxberg says Saskatchewan people are making the invitation on a regular basis. I hope they keep doing that. We have 1.13 million ambassadors, so that works out pretty good,” Wall concluded with a smile.