Sask. to increase oil production with new multilateral well drilling program

Michelle Berg/Saskatoon StarPhoenix. Energy and Resources Minister Jim Reiter.

Saskatoon StarPhoenix Staff

As the provincial and federal governments continue to differ over proposed fossil fuel restrictions, a new well drilling program aims to increase oil production in Saskatchewan by 25 per cent.

On Tuesday, the Saskatchewan government announced plans for a new multilateral well drilling program its Ministry of Energy and Resources says will lead to 100 to 200 additional wells each year.

“This innovative technique will put more rigs and workers in the field and support the Growth Plan goal of increasing oil production by 25 per cent to 600,000 barrels per day,” Energy and Resources Minister Jim Reiter said during an announcement at the Petroleum Technology Research Centre in Regina.

The province says the multilateral drilling configurations allow a well to access more of an oil reservoir. It says the program will grow oil production in the province and create a competitive royalty regime that will increase investment in the province.

Cenovus Energy CEO Jon McKenzie on Tuesday said the incentive program “opens up significant new drilling investment opportunities in Saskatchewan” for his company.

“It aligns with our focus to strategically build our integrated position in the Lloydminster region and we anticipate it will have positive impacts for provincial employment as well as new production growth,” he added.

Lycos Energy president-CEO Dave Burton said multi-lateral drilling is “the cornerstone” of his company’s business, which does most of its work along the Saskatchewan-Alberta border. He also said it “gives a competitive edge to Saskatchewan” and resulted in Lycos reallocating funds to the province.

According to Statistics Canada, Saskatchewan is the second-largest oil producing jurisdiction in the country behind only Alberta. The province says the industry supports more than 26,000 jobs.

“The competition for capital investment is fierce and Saskatchewan’s plan to modernize the royalty regime to recognize the use of new drilling technologies provides the right policy environment to attract investment to the province,” Canadian Association of Petroleum Producers president and CEO Lisa Baiton said on Tuesday.

Baiton said the competitive royalty framework “will help unlock valuable oil resources in Saskatchewan and will, in turn, create more jobs and additional revenues” for the province.

Earlier this year, the provincial government said an emissions cap proposed by the federal government could cost the province’s oil and gas sector between $7 billion and $9 billion by 2030.

Reiter said the cap and proposed Methane 75 regulations could be “devastating” for the provincial economy.

In December, federal Minister of Environment and Climate Change Steven Guilbeault announced stronger restrictions on methane emissions from fossil fuels. The amended targets aim for a reduction of at least 75 per cent from 2012 levels by 2030.

Guilbeault and Minister of Energy and Natural Resources Jonathan Wilkinson also unveiled a framework that includes a national cap-and-trade system at COP28 in Dubai in December. The framework sets a goal to cap 2030 greenhouse gas emissions from oil and gas production at 35 to 38 per cent below 2019 levels, with flexible compliancy targets allowing emitting at 20 to 23 per cent below 2019 levels.

The province has argued that the federal policies will hurt Saskatchewan communities, significantly reducing employment, gross product, royalties and other tax revenues that fund critical public services.