SaskEnergy’s intensity-based GHG emissions performance measure tracks tonnes of carbon dioxide per million running horsepower hours. This reflects the efforts the Corporation has undertaken, and will continue to undertake, to reduce GHG emissions by operating more efficiently while delivering increased volumes of natural gas to customers. The Corporation undertook three major emissions reduction projects during 2016-17 that focussed on improving compressor fuel efficiency and reducing emissions. These projects were nearing completion at the end of 2016-17 and the full impact of the associated emission reductions will be realized in the upcoming fiscal year. The uncertainty around federal emission regulations may also have a profound effect on SaskEnergy’s business and the Corporation continues to closely monitor the situation. Community Relationship Acting as a responsible and contributing member of the communities it serves is an essential part of SaskEnergy’s business strategy. Working closely with customers and Saskatchewan communities helps ensure successful business operations and is consistently noted in SaskEnergy Customer Satisfaction surveys as a key strength for the Corporation. However, difficult choices had to be made during 2016-17 to achieve the efficiency targets communicated by the shareholder and, as a result, SaskEnergy has significantly reduced the level of monetary sponsorships and donations it makes. SaskEnergy actively encourages employees to donate their time and talents to support various charities and community events that are important to them personally. The Corporation continues to foster community relationships through modest sponsorships and donations to community events and maintains a community presence through its SaskEnergy-sponsored barbecues. Another important element of SaskEnergy’s contribution to Saskatchewan involves supporting the strong and vibrant Aboriginal labour and business markets. This growing market serves as an opportunity to create new, sustainable business and employment opportunities for Aboriginal people today and into the future.
INDUSTRY OVERVIEW SaskEnergy monitors a number of important factors that could influence financial performance.
AECO Monthly Index Historical Prices
Natural Gas Prices Natural gas prices are set in an open market and are influenced by a number of factors including production, demand, natural gas storage levels and economic conditions. Given the high demand to heat homes and businesses during the cold winter months, and the demand for natural gas to produce electricity for air conditioning, weather typically has the greatest impact on natural gas prices in the near-term. Due to the high degree of uncertainty associated with weather, natural gas prices have historically been very volatile. Natural gas market fundamentals have remained in a reasonably strong supply position relative to demand over the past number of years due to the advancements in shale gas production. The 2015-16 winter exacerbated the oversupply with unseasonably warm temperatures across most of North America. The combination of relatively high inventory and the decline in heating load demand for natural gas pulled market
$14
Conventional Natural Gas Production
$12
$10
$8
Shale Gas Revolution
$6
Forward Price at March 31, 2017
$4
$2
$0
prices down to 20-year lows – including in the AECO market, which is the benchmark price for natural gas in Western Canada. This was highlighted during the spring when, after record high storage inventory in Western Canada, the AECO monthly index settled at a low of $1.04 per gigajoule (GJ) for the month of May 2016. Since that time, market prices have rebounded modestly. Despite the 2016-17 winter season being the second consecutive abnormally warm winter across most of North America, AECO market prices have generally been trading in a $2.00 - $3.00 per GJ range. The chart shows AECO natural gas prices. Most natural gas in Saskatchewan is priced at a differential to the AECO price and is typically between $0.05 per GJ and $0.20 per GJ higher than AECO.
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2016-17 ANNUAL REPORT SASKENERGY
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