A media event happened on Monday morning at the Saskatchewan legislature to share information on a record number of oil and gas well abandonments between April 2019 and February 2020.
While the province saw 2,030 well abandonments in that time frame – an increase of 40 per cent from 2018 to 2019 statistics, another subject took the spotlight.
Oil prices took a plunge in North America over the weekend as Western Canadian Select sits near $26 US per barrel and Western Texas Intermediate rests below $35 per barrel.
This comes as Saudi Arabia and Russia argue over policy regarding oil production, which has taken its toll on North American prices.
Bronwyn Eyre, minister of energy and resources in Saskatchewan, hopes those numbers corrects, but it’s too early to tell in terms of long-term impacts.
“We’re all monitoring this and certainly the ministry of finance will be looking at this very carefully with our experts from the ministry of energy and resources,” explained Eyre.
“The way the budget is set is based on forecasts for the coming year, which is a relatively involved and not simple process.”
So how does this affect the provincial budget when it’s released next week on March 18?
Eyre said those numbers have already been finalized as of February 28. She admitted it’s difficult to get into the speculation game looking ahead post-budget announcement.
“We’re going to wait for budget day at this point and hope that in the meantime this is a short-term thing that won’t impact long-term forecasts for the price of oil.”
She expects Finance Minister Donna Harpauer will have something to say on the matter in the next day or so.
Despite concerns in Saskatchewan, Brad Herald, vice president of Western Canada operations with the Canadian Association of Petroleum Producers, said it’s a very resilient sector that can overcome challenges.
“We’re not in the situation we were in five years ago when we had very high prices and high cost structures,” stated Herald. “We’ve been on a diet for quite a while. We have an incredibly resilient sector in Canada and we’ll ride through these challenges.”
Herald believes there will be challenges in the short-term, but doesn’t think the impacts will be long-term.
