Canada is currently experiencing a massive spike in gas prices as a direct result of the ban on Russian oil. 

Minister of Energy and Resources, Bronwyn Eyre, said that although Saskatchewan may see a minor impact, there are much greater factors at play, ultimately affecting oil prices globally. 

“Overall, for Saskatchewan and Southern Saskatchewan, there is the potential that the bans on imports of Russian oil into the U.S. and into Canada could lead to a minor extra lift for future investment in Saskatchewan’s oil production and oil production sector, but really it'll be the bigger players,” she said.  

Eyre states that the departure of American and European oil producers from Russia, as well as the expected decline in oil production in Russia are much larger factors. 

She added that oil production is about turn-around, and increased production is not instant. 

“I guess for the sector there's always an interest in increasing oil production when prices are high,” she stated. “That just makes sense, but the investment climate, you know, needs to be certain all the time. Because of course building new facilities and pipelines and drilling lots of new wells is very expensive and these are long-term investments. And so, investors and oil companies of course really need to know that there's support for making new investments in production and shipping capacity.” 

The Minister added that because Saskatchewan is landlocked, clear federal support for the sector is needed to see a significant growth in Canada’s oil and gas production. 

She elaborated further, stating that there are many actions the federal government could take to negate the increasing cost. 

“Right now, the federal government, in light of all the geopolitical things that we're seeing, certainly the with the Russian invasion of Ukraine and the resulting impact on prices, the federal government could Rekindle energy east,” she said. “They could rekindle, you know, from the Saguenay liquid natural gas facility, which they killed only last month formally after it failed an environmental assessment under Bill C. 69. It could repeal bill C 69.  

“It could pause the increase in the carbon tax on April 1 and pause the carbon tax altogether because it's had a major impact on competitiveness and fuel prices in this country. It could pause the federal fuel standard, which is looming and still moving ahead. So, there are a lot of things that the federal government Could do to help foster the oil and gas sector in this country.” 

Eyre also added that the statement from federal ministers stating that Canada may be able to help Europe depend less on Russia, does not come without irony. 

“The federal government has done so much to shut down and hurt the oil and gas sector in Saskatchewan and across Western Canada,” she said. 

She said that in relation to decreasing dependency on rogue nations, we should be using Western Canadian oil, and fostering that recourse. 

“In terms of a long-term outlook for the sector, it's faced a lot of headwinds until now,” she said. “And yes, prices are high right now and so there may be some increased investment as a result of that, but the actual climate has to remain stable going forward for there, I think to be a real change.” 

Eyre said that if the province were to increase gas and oil production, the next challenge would be getting that product to market which brings up the topic of controversial pipelines. 

She also said that many companies in the sector are still recovering from losses they faced over the last couple of years. 

“What we're seeing coming out of COVID and the perfect storm really in 2020, which was both COVID and the OPEC plus price war, is a skittishness in the sector, she said.” Obviously, the price increases are more positive than if they were negative, but there's a lot of debt that companies are paying down, a lot of capital allocations on hold, and production still coming back online.  

“If we were 2014, I think we would have seen a more instant rebound, but there have been so many challenges since that time, including the events of 2020, which certainly had an effect on companies, and I think that they are still dealing with that, despite the fact that price increases are positive and will probably lead to more production. There are still issues that the sector is facing to come back online. More fully, challenges that they're still addressing in terms of as I said, debt and capital projects on hold.” 

Eyre added that a stronger response may been seen in the industry after spring break ends, and the summer drilling season kicks off.