Province under fire from NDP over sale of Saskenergy plants

The NDP is criticizing a Saskatchewan government decision to entirely privatize two natural gas processing plants.

A Sept. 14 order-in-council shows Saskenergy, through two subsidiary companies, has been approved to sell the Coleville gas plant and its 50-per-cent stake in a Kisbey gas plant.

Calgary-based Steel Reef Infrastructure Corp. bought the processing plants for $31.3 million.

“We know that the residents of Saskatchewan would be concerned about the sale of these gas plants, and we wanted questions answered with regards to why these gas plants were sold to an out-of-province corporation and what (are) the intentions of the Saskenergy minister,” said NDP critic Nicole Rancourt.

Rancourt and the NDP are questioning why the sale was made.

“People in Saskatchewan have been loud and clear about how they’re concerned about any privatization of our Crown corporations, and if this could potentially lead to a loss of employment in any of these areas,” she said.

According to Saskenergy spokesman Dave Burdeniuk, the gas processing plants are “non-core assets” for Saskenergy and there are no job losses resulting from the sale.

Gas processing plants are considered “midstream” operations in the natural gas world. “Upstream” is exploring and extracting natural gas, “midstream” is processing it, and “downstream” is shipping or delivering the product to customers.

Burdeniuk made clear shipping and delivery is the “focus” of Saskenergy, which is why the decision to sell a “midstream” operation was made.

Over the past decade, the col evil le and Kisbey facilities have generated $100 million for Saskenergy.

During that same period, Saskenergy’s revenue was $9.5 billion, meaning the processing plants accounted for one per cent of the company’s total revenue.

But consistently declining prices of natural gas have taken a toll on revenues generated from the two sites.

There are roughly 30 privately owned gas processing plants operating in Saskatchewan.

Saskenergy’s 2017-18 annual report noted the gas processing plants were being held for sale.

“During 2017-18 the Corporation committed to a plan to sell a natural gas processing plant within the next 12-month period,” it said.

The carrying amount — which refers to the amounts Saskenergy had on its books for the assets — in 2017-18 was $8 million.

Last year, the facilities made $7 million, while Saskenergy’s total revenue was $910 million.

“A number of natural gas processing plants, some of which are located along the border of Saskatchewan and Alberta, are extracting fewer liquids and in some cases temporarily suspending operations due to the low natural gas liquids prices,” read a portion of the Crown’s 2016-17 annual report.

Bronwyn Eyre, the minister responsible for Saskenergy, reiterated the sale is more about the Crown corporation “focusing on core assets.”

She pointed to Saskenergy’s 2018-19 capital build plan. According to the 2018-19 Saskatchewan Builds Capital Plan, Saskenergy is investing $268 million “to ensure safe and reliable service that meets continually growing customer demand.”

Eyre responded to Rancourt’s privatization accusations as “tiresome rhetoric.”