Running out the clock on the federal oil and gas emissions cap: SK energy minister
BY BRIAN ZINCHUK
Late in the year, just in time for the next COP (Conference Of the Parties) event, the federal Liberal government released its planned oil and gas emissions cap details on Nov. 4. The Saskatchewan government reacted negatively to this plan, calling it a cap on production. And it looks like the newly re-elected Sask Party government plans on running out the clock in this ongoing fight with the federal government, expecting an upcoming election within the next year will result in the policy being quashed.
Minister of Energy and Resources Jim Reiter at the Lloydminster Heavy Oil Show on Sept. 11. Photo by Brian Zinchuk
The cap was released by federal Minister of Environment and Climate Change Steven Guilbeault and Minister of Energy and Natural Resources Jonathan Wilkinson.
Minister of Energy and Resources Jim Reiter spoke to Pipeline Online on Nov. 5 about the provincial government’s thoughts on the matter.
Asked if these regulations were performative virtue signaling for COP, Reiter said, “Well, I think that speaks to the timing. I think you’re right. A lot of it is virtue signaling. It’s about Steven Guilbeault wanting to do that, and Jonathan Wilkinson. Whereas we’ve been very clear in this from the start, our position on it, it’s unnecessary and it’s ridiculous.
“As we look into this more and more, I’ll just be frank. You know, their timelines are that it doesn’t take effect until 2026. I’m optimistic it’ll never take effect, because hopefully we have a different federal government in place before that.”
The backgrounder provided by the federal government, reproduced verbatim here, speak extensively about the broad implementation of carbon capture and storage. But it does not talk about using that captured carbon dioxide in enhanced oil recovery, something oil producers, the Alberta and Saskatchewan government have sought federal support for.
Reiter said, “I would say what you just said speaks volumes. You know, they talk the talk, but they never follow through. I mean, they avoid, they don’t do the tax incentives for enhanced oil recovery. If you actually want to produce oil with less footprint, there’s your way to do it. And yet, they won’t this.
“They’re paying it lip service. They say it’s not a production cap. It clearly is a production cap. Let’s, let’s just call it the way it is. I mean, this is a federal government with a radical environment minister who’s doing everything he can to completely kill and shut down this industry.”
The federal statements on this policy repeatedly say it is “not a production cap.” But if it isn’t, then why wouldn’t you use it for enhanced oil recovery?
Reiter replied, “Exactly. That’s exactly, right, because there is no good answer for that. That’s to your point. They don’t even mention it. That’s why they don’t mention it, because they have no good answer for it well.”
The proposed regulations speak of “emissions allowances,” essentially a quota, based on 2026 production levels. But that implies that there will be no new entrants into the industry. The reality has been much different. A look back at the Estevan Mercury rig reports of 25 years ago show almost ever company listed then doesn’t exist today, as new entrants come and go. The emissions cap regulations imply the imposition of something similar to the dairy quota system. You can’t just go buy 50 head of cattle and start producing milk in Canada without having a very expensive allotment of quota to do so from the supply management system. And the proposed emissions regulations are specifically designed to incrementally reduced that quota year by year.
The result means it will be next to impossible for a new entrant into the field. Yet at the same time, both Saskatchewan Premier Scott Moe and Alberta Premier Danielle Smith in recent months have spoken about doubling oil production in their respective provinces.
Asked about how a new player could enter the field if they don’t already have production in 2026, Reiter said if that is what they’re planning on doing there, it would be preventative.
“Frankly, we’re at the stage here that talking negotiating with them hasn’t worked in the past. And frankly, I’m just looking at the at the election time frames for the for the federal government, and absolutely hoping that we that we see a government in place that isn’t trying to kill this industry.”
In September, just prior to the start of the provincial election, Minister of Justice and Attorney General Bronwyn Eyre released the Saskatchewan government’s Economic Impact Assessment Tribunal report on the incoming emissions cap. That tribunal found such a cap could result in up to a 52 per cent reduction in Saskatchewan oil and gas production by 2050. Asked about that, Reiter said, “ The Tribunal sort of verified what we had been concerned about all along, which is this, this would just the cap and the methane regulations would just be immensely expensive to the province, to the industry, would do all kinds of economic damage, lost jobs. It just verified that.
Reiter concluded, “I don’t know exactly what we’ll do for next steps. We obviously are going to be having some more discussions. We’ve been very clear in our position of this from day one. This was no secret, that it was coming at some point. And Premier Moe and myself and all our colleagues have been arguing vehemently against it, falling in deaf ears with this federal government. But again, as I mentioned, quite frankly, I’m optimistic this will won’t see the light of day if the federal government changes in time.”