Oil and gas-lighting continues in Saskatchewan

Province unable to back up figures it used to decry federal emissions cap

Saskatchewan's pushback against a proposed federal cap on emissions from the oil and gas sector resembles a scribble on the back of a napkin.

Last week, a news release from the province claimed the proposed cap-and-trade system on emissions and a 75-per-cent cut in methane emissions from the oil and gas sector could cost the province $7 billion to $9 billion by 2030.

That estimate, according to “Saskatchewan's own preliminary economic analysis,” which was not made public, also suggests 20 to 30 per cent of Saskatchewan's production could be “at risk” by 2030.

In an interview, provincial Energy and Resources Minister Jim Reiter failed to provide specifics on the analysis, saying only that it was based on “high-level estimates” from provincial officials.

It's puzzling that a more explicit evaluation was apparently unavailable — even from a government that may have miscalculated its budget projections by as much as $2 billion — since the federal Liberal government released its preliminary plan in early December at the COP28 climate conference.

So the province had nearly three months to come up with a robust analysis. The deadline for feedback to the federal government passed in early February, so presumably the province passed along its breakdown to the feds at that time.

But the timing for releasing this vague analysis might be explained by the need to create a distraction from the Saskatchewan Party government's quiet approval of

$757 million in new spending.

The NDP Opposition's news release about the spending followed a couple of hours after the emissions cap release.

Meanwhile, the federal government has proposed to reduce emissions from oil and gas to 35-38 per cent of 2019 levels by the decade's end using a cap-and-trade system. The reduction could be lowered to 20-23 per cent through the use of carbon offset credits.

The draft legislation is expected later this year with the final regulations set for next year and, if passed, the cap phased in from 2026 to 2030.

So it's difficult to see how such a cap would mean the loss of $7 billion to $9 billion, particularly without seeing the final plan for phasing it in.

Given the amount of time Scott Moe's provincial government spends talking about oil and gas, you might think it accounts for a third of the province's economic output. Or maybe 20 per cent.

It's actually less than 10 per cent of Saskatchewan's gross domestic product, according to the latest numbers available.

In 2022, according to Statistics Canada, oil and gas extraction and support activities generated a combined $7.1 billion towards Saskatchewan's $76.7-billion GDP. That amounts to about nine per cent, which is a decline over 2021 figures, even though the economic activity in the sector increased.

That represents a significant chunk, but it's hardly the province's dominant industry as we are led to believe. For comparison, the oil and gas sector in Alberta generated more than 10 times as much as Saskatchewan in 2022, representing nearly 20 per cent of that province's GDP.

Given these numbers, it looks like Saskatchewan officials simply calculated a third or so of the sector's economic activity and multiplied it by four to get its wonky estimate of the emission cap's impact.

Reiter also suggested a significant reduction in employment would happen if a cap was imposed.

But Statistics Canada numbers show those employed directly in the oil and gas sector (5,100 in 2021) amount to less than one per cent of the total number of employed people in Saskatchewan, which topped 591,000 in January.

And those oil and gas job numbers have been bolstered by the program to clean up inactive wells, which has involved hundreds of Saskatchewan companies since it was launched four years ago.

Meanwhile, the number of oil companies that donate to the Saskatchewan Party has been well documented, like the $15,000 Calgary-based Serafina Energy Ltd. donated in 2022 — the party's second highest donation that year.

This influence makes it easy to conclude Saskatchewan is being oil-and-gaslighted on this sector's importance — and the questionable response to the proposed emissions cap will do nothing to alleviate this perception.