Author Archives: prosperitysaskatchewan
TIM MCMILLAN STEPPING DOWN AS MINISTER AND MLA
Released on September 18, 2014
Rural and Remote Health Minister Tim McMillan today announced that he is stepping down from cabinet effective immediately and resigning as the MLA for Lloydminster effective September 30.
McMillan has accepted the position of President of the Canadian Association of Petroleum Producers (CAPP), effective October 1.
McMillan said it has been an honour to serve in the provincial government led by Premier Brad Wall.
“This province has seen such a positive change over the past seven years,” McMillan said. “I feel extremely fortunate to have been part of the government during this remarkable period of growth and progress.”
Premier Wall said McMillan will be missed and wished him all the best in his new career.
“Tim has been a great MLA and Minister and I will miss his unique perspective at the cabinet table,” Wall said. “As President of CAPP, I know Tim will continue working hard to develop our resource industry in western Canada, including here in Saskatchewan.”
McMillan noted he will be following all of the provisions of the new Saskatchewan Lobbyists Act which requires that a former minister cannot lobby the provincial government for one year after leaving cabinet.
McMillan was first elected in 2007 and was re-elected in 2011. He has held several different cabinet portfolios prior to his appointment as Minister of Rural and Remote Health in June of this year. These include Energy and Resources, Crown Investments Corporation, Saskatchewan Liquor and Gaming Authority and Tourism Saskatchewan.
Wall said for the time being, Health Minister Dustin Duncan will also handle the Rural and Remote Heath duties. He plans to appoint a new minister shortly.
A byelection must be called by the Premier within six months of the date the seat becomes vacant.
For more information, contact:
Karen Hill Executive Council Regina Phone: 306-787-2127 Email: email@example.com Cell: 306-5299207
New technology means a fast-pace output response to falling oil prices
Special to The Globe and Mail
Published Wednesday, Sep. 17 2014, 5:00 AM EDT
Last updated Wednesday, Sep. 17 2014, 5:00 AM EDT
When the economy slows down, wallets thin out and people have less money to spend. Drivers make fewer trips to the gas pumps. The demand for oil slackens quickly. The price of a barrel goes down. It’s not rocket science.
What about the other side of the oil market? If producers have less money to spend, does production decline swiftly too?
Historically, the output response to lower prices has been slow, much slower than consumer thrift. But that lagging reaction may be history. Because of science and innovation, the character of world oil production has radically changed. Since 2009, oil output has rocketed up in the United States and Canada, and not much elsewhere (see Figure 1). That’s not news. But what may be news is how vulnerable North America’s growth may be to the dropping oil price.
The price of a barrel of international light crude oil – measured by Brent – has hit its lowest level in more than two years. Discounted North American oil prices are softening sympathetically; inside the continent, crude prices are at least $5 to $10 cheaper than barrels labelled with Saudi, Nigerian and British flags. Some oil price analysts, feeding off slowing demand fundamentals in Europe and China combined with growing Libyan production, suggest that price could weaken more. And while we agree that lower prices are possible in the short term, we do not expect price markdowns to be long-lasting.
Here is why. For oil producers, a crude oil discount translates into less cash flow, less appeal to capital markets and therefore less spending power. Yet not all oil production is affected equally by less investment. The world’s 92 million barrels a day of oil production can be divided into four distinct types of production: Canadian oil sands; age-old onshore conventional wells; increasingly high-tech offshore production; and new-age hydraulically fractured tight oil.
Contrary to popular belief, oil will steadily flow from Canada’s oil sands, even with lower prices. Massive sunk costs, scale, and negligible decline rates mean that most existing operations in the region will keep producing, even if the oil price for West Texas intermediate were to reach $55 a barrel (U.S.) or below. The resilience of oil sands production was proven out during the financial crisis: Oil supply remained steady when the price of oil dropped to under $50 in the last few months of 2008.
Overwhelmingly, the bulk of the world’s output still comes from “conventional” vertically drilled onshore wells, combined with a growing wedge of supply from the larger scale and more technically challenging offshore projects. Historically, these production types have flowed reliably during low price episodes, and there has been a steady string of global megaprojects that have come online to offset legacy production declines.
But this landscape has changed. Producers from outside North America have been plagued with falling output, technical challenges, a lack of investment, outages due to civil war, corruption, sanctions or all of the above. New large megaprojects such as Kashagan or Brazil’s deep-water subsalt have been long delayed. Organization of Petroleum Exporting Countries production is increasingly prone to outages. Even assuming that new international developments come on line, once declines from the existing production base are factored in, the collective capacity expansion from outside North America is flat at best. Or looking through the lens from the other side, the reverse argument is that U.S. and Canadian hydraulically fractured light oil fields will mostly determine the industry’s free-market response to lower oil prices (OPEC may respond at some point, but that’s another story).
North America’s hydraulically-fractured, tight oil production follows a “just-in-time delivery” business model. When prices are robust, production can grow quickly, because each new well delivers very high initial production rates. However, high decline rates in these wells imply that output should fall off quickly when investment (drilling) is reined in. This downside hypothesis has never been tested, but if low prices were sustained, the economic experiment would be on.
Tight oil or shale oil exploitation is heavily dependent on the rapid recycling of cash flow and access to capital markets. Price weakness slashes unhedged cash flow. Price weakness also sours the appetite of capital markets to invest in oil companies. So production growth should moderate, or even retreat, with a low-price cash famine. This would, in effect, set a floor for the oil price. Depending on the rocks and the operator, the break-even price for North American tight oil varies widely. But we would expect that, notionally, the trigger price to start to witness an investment slowdown is about $85 a barrel for the West Texas intermediate benchmark (still about $10 under today’s price).
The just-in-time nature of North American tight oil, combined with the difficulties in adding new supply elsewhere, suggests that the world’s oil supply will quickly adjust to falling demand or surplus production. The lower prices go, the greater the probability they will rocket up again. But that’s not rocket science either.
Peter Tertzakian is chief energy economist at ARC Financial Corp. in Calgary and the author of two best-selling books, A Thousand Barrels a Second and The End of Energy Obesity.
PROJECTIONS SHOW STRONG, CONTINUING GROWTH FOR SASKATCHEWAN
Released on September 17, 2014
Saskatchewan’s population could top 1.5 million people by 2038, according to a new report released today by Statistics Canada.
StatsCan issues its population projections every five years, outlining seven possible scenarios for population growth in Canada and the provinces. Its projections for Saskatchewan range from the province having a population of anywhere from 1,174,000 people to 1,527,000 people by 2038. The lower growth projections are based on population trends dating back to Saskatchewan’s zero-growth period of the 1990s and early 2000s, while the higher growth scenarios are based on Saskatchewan’s strong population growth trends in recent years.
Premier Brad Wall said he believes the strong growth scenarios are more likely, based on the experience in Saskatchewan in the past few years.
“Saskatchewan is strong and growing,” Wall said. “These projections show we are expected to keep growing and that’s a good thing. There are many challenges that come with growth, but I would rather deal with those than the challenges of decline our province was facing just a few short years ago.”
Wall noted that when Statistics Canada issued its population projections in 2005, four of the six scenarios saw Saskatchewan actually losing population over the next 25 years. Even the most optimistic scenario at the time saw Saskatchewan growing to just 1,064,000 people by 2031. Today, there are more than 1,120,000 people living in the province.
“Saskatchewan has now grown by more than 120,000 people in just the past seven years,” Wall said. “Today, the least optimistic projection shows stronger growth than the most optimistic one just a decade ago. Things have changed a lot in Saskatchewan.”
Wall said the government will continue working hard to keep Saskatchewan strong and meeting the challenges of growth.
For more information, contact:
Karen Hill Executive Council Regina Phone: 306-787-2127 Email: firstname.lastname@example.org Cell: 306-529-9207
INFOGRAPHIC: Visualizing the changing landscape in nuclear power
There’s been talk about a coming potential uranium bull market for awhile now, but here is a different look at the nuclear picture. The below visualization shows every nuclear reactor in the world by country and breaks down their timeline including construction, commercial power generation, and decommissioning. In addition, planned reactors for the future are also shown for each country.
This data visualization makes it clear where the future of nuclear is. Former nuclear stalwarts such as France, Germany, and the UK all have aging reactors with no new plants planned. Meanwhile, China and Russia do not seem to be afraid of leaning heavily on nuclear energy in the near future. In China alone, 28 or 49 reactors are under construction and there are an additional 35 planned for the future. This is despite nuclear only accounting for 2% of Chinese energy supply in 2012.
Also of note is Japan, which once relied on 29% of its energy coming from nuclear before the Fukushima accident in 2011. In recent years, Japan has cut nuclear out of their grid, although some reactors are still technically operational. To make up the difference, they have imported more natural gas and oil.
Original graphic from: Popular Science