BIZWORLD

Nat­u­ral gas plant sale raises is­sues on op­pos­ing/gov­ern­ing sides

Moose Jaw Express.com - - News - By Ron Wal­ter For Moose Jaw Ex­press

The New Demo­cratic Party Op­po­si­tion asked pointed ques­tions last month over the sale of two nat­u­ral gas pro­cess­ing plants by Crown-owned SaskEn­ergy. The deal to a pri­vate Al­berta com­pany sold a plant in Coleville and a half-in­ter­est in one at Kis­bey to Steel Reef In­fra­struc­ture Corp. of Cal­gary.

The deal, ac­cord­ing to the NDP, pos­si­bly broke the Saskatchewan Party’s prom­ise to not sell crown cor­po­ra­tions with­out a ref­er­en­dum. Or it was a case of pri­va­ti­za­tion by a thou­sand cuts.

The gov­ern­ing Saskatchewan Party, via a SaskEn­ergy spokesman, claimed the sale was as­sets that are non-core to the nat­u­ral gas util­ity.

The Coleville plant was built when few nat­u­ral gas pro­cess­ing plants ex­isted in Saskatchewan.

The two plants pulled in $7 mil­lion last year com­pared to the $910 mil­lion SaskEn­ergy rev­enues dur­ing that pe­riod. They aren’t large money- earn­ing op­er­a­tions.

Nat­u­ral gas from pro­duc­tion at the well site to the fur­nace takes sev­eral steps — ini­tial pro­cess­ing to re­move im­pu­ri­ties and adding the smell, to ship­ping and de­liv­er­ing the fuel to cus­tomers. Given the abun­dance of pro­ces­sors and the rel­a­tively low re­turns the sale seems rea­son­able.

How­ever, Bron­wyn Eyre, min­is­ter re­spon­si­ble for SaskEn­ergy, mud­died the dis­cus­sion by stat­ing that many nat­u­ral gas com­pa­nies are sell­ing off their nat­u­ral gas pro­cess­ing plants be­cause they are no longer core as­sets.

Yes she is cor­rect. They are sell­ing. But the main rea­son why in­dus­try gi­ants like En­bridge and Al­taGas are sell­ing nat­u­ral gas pro­cess­ing plants is a need to re­duce high debts. In the nat­u­ral gas in­dus­try, pro­cess­ing plants are built af­ter the size of a nat­u­ral gas pool is de­ter­mined. They are op­er­ated as a piece of in­fra­struc­ture, grad­u­ally gain­ing value with time.

Nat­u­ral gas pro­duc­ers reg­u­larly need ac­cess to cash for de­vel­op­ment of new fields or other in­vest­ments. When that cash need arises and there is no de­sire to sell more shares or in­crease debt, sale of so-called non-core gas pro­cess­ing as­sets comes in handy.

Sale of the cash cow pro­cess­ing plants al­lows de­vel­op­ment of new fields and new cash cows by this in­dus­try-wide piggy-bank prac­tice.

The NDP used this sale to make a point that it doesn’t be­lieve the Saskatchewan Party’s prom­ises on Crown cor­po­ra­tions. That is a point fre­quently made by the NDP to scare its base sup­port of 35 per cent, but does lit­tle to bring in new sup­port­ers.

If the NDP is to be­come more suc­cess­ful in pro­vin­cial Op­po­si­tion, the party needs to of­fer more ro­bust crit­i­cism of is­sues – is­sues like if times are so good why are small busi­nesses and big ones across the prov­ince hurt­ing? Why are we los­ing peo­ple again?

Why are we over-build­ing by­passes with cost over-runs around Regina when Moose Jaw can’t even get a traf­fic light at the Trans-Canada High­way?

If the NDP did that, the party would be re­warded with more cred­i­bil­ity. Heaven knows this prov­ince needs a strong Op­po­si­tion to counter the feel­ing of in­fal­li­bil­ity and stu­pid­ity that power by three-term gov­ern­ments of­ten de­vel­ops.

Ron Wal­ter can be reached at ron­joy@ sask­tel.net

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