CAPITAL ADDITIONS
Capital additions, as reported in the consolidated financial statements, were as follows:
Three months ended June 30,
(millions)
2020
2019
Change
Strategic
Customer growth System expansion
$
8
$
9
$
(1)
16 24
28 37
(12)
Operational
Risk management
12
12
-
Reliability of natural gas service Business and technology optimization
4 2
5 2
(1)
-
18
19
(1)
Capital additions
$
42
$
56
$
(14)
Capital additions during 2020-21 of $42 million were $14 million lower than prior year as spending on system expansion projects declined. Higher spending on transmission urban infrastructure projects in the prior year resulted from growth in and around the City of Saskatoon. This consisted of a multi-year initiative that addressed increased natural gas capacity and moving high pressure transmission lines further away from populated areas.
Customer growth spending in 2020-21 consists of urban, rural and large industrial customer projects to the distribution system and is consistent with prior year.
Risk management spending in 2020-21 consists of system integrity projects, specifically pipeline integrity projects and is consistent with the prior year.
OUTLOOK
SaskEnergy continues to focus on the impacts of the COVID-19 pandemic, promoting and maintaining the health and safety of the Corporation’s personnel and the public while maintaining its ability to deliver core services. In addition to the pandemic, the volatility of global oil prices continues to create uncertainty for producers and consumers of natural gas. Over 70 per cent of the production of natural gas in Saskatchewan is associated with oil production; hence, as oil producers were forced to shut-in wells due to record low oil prices, associated natural gas production was also shut-in. The reduction in Saskatchewan gas supply will require more natural gas to be imported from Alberta. Changing customer demand, global supply chain disruptions, and social distancing requirements have caused challenges and delays to system improvements, but have not impacted the Corporation’s ability to transport or market natural gas. SaskEnergy will continue to monitor and manage the impact of both COVID-19 and the volatility of oil prices on its business strategies as both situations evolve.
2020-21 First Quarter Report
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