2015-16 SaskEnergy Annual Report

Weyburn to bring new supply onto the provincial system, creating revenue for both SaskEnergy/TransGas and private sector parties working in the area, while reducing reliance on third-party supply and transport. In addition to these financial benefits, flare gas capture projects and other supply diversification efforts represent a significant opportunity to reduce harmful greenhouse gas emissions in Saskatchewan, capturing natural gas which would otherwise be released into the atmosphere or burned as a waste byproduct. In collaboration with the Ministry of Economy, SaskEnergy will continue to identify opportunities to leverage private sector investment to increase the volume of flare gas captured and processed within the Province. COLLABORATING FOR PROVINCIAL SUCCESS Looking ahead, the ever-changing dynamic of the North American energy sector presents both challenges and opportunities for SaskEnergy/TransGas. Commodity price trends, regulatory and public engagement on infrastructure projects, evolving national and social priorities regarding emissions — factors much larger than our provincial borders are at play, with the potential to fundamentally change the way we operate. Collaboration will be critical to our success in the coming years, as SaskEnergy works with industry associations, other Crown and government entities, and the private sector to develop effective, efficient solutions and provide value to our customers. Encompassed within this collaborative approach is a focus on the development and execution of long-term, joint plans to meet both the current and future infrastructure demands of growth in Saskatchewan. Along with the other members of the SaskEnergy Executive, I extend my thanks to our team across the Province for their contributions to our past and future success.

front, expanded deployment of the joint Crown Safety Patrol program resulted in a six per cent reduction in third-party line hits in 2015, bringing the total reduction to nearly 30 per cent since 2013. System integrity programming was a major focus once again in 2015-16, with $107.5 million dedicated to programs and processes to increase the safety of SaskEnergy/TransGas infrastructure for employees, customers and the public. This included continued system remediation work in the Last Mountain Lake area, where geotechnical conditions have created challenges for buried infrastructure, including natural gas pipelines. Through dedicated effort and innovation — including the use of custom-designed remote monitoring devices and satellite imagery to detect soil movement — our teams continue to work closely with those communities to mitigate risk and increase public safety. SUPPORTING GROWTH An economic advantage for Saskatchewan residential, commercial and industrial customers, low natural gas commodity prices continue to drive strong provincial demand. In 2015, domestic transmission volumes increased once again — part of a 35 per cent increase since 2009. This growth has been driven mainly by industrial demand in the potash, electrical generation and enhanced oil recovery sector, which required significant expansion of TransGas pipelines in 2015 to customer facilities in the west-central part of the Province. Stakeholder engagement remains a critical factor in the success of any growth project, whether driven by community expansion or customer demand. As SaskEnergy seeks to develop long-term infrastructure plans in and around urban centres like Regina and Saskatoon, we will need to continue to effectively collaborate with a wide range of stakeholders — including land owners, rural municipalities, community associations, provincial Ministries and other Crown corporations. Similarly, TransGas teams will work closely with existing and new customers to maintain a solid understanding of their business needs and deliver value to them. DIVERSIFYING SUPPLY Sustained low commodity prices have also reduced interest in conventional natural gas drilling in Western Canada — only one new gas well was drilled in Saskatchewan in 2015, down from a record 2,138 in 2003 — just as demand has increased to historic levels. In response, SaskEnergy has identified opportunities to support the capture of additional volumes of “flare gas” in areas where associated gas is being produced in conjunction with Saskatchewan oil drilling/development in-province. Last year, these efforts saw TransGas install innovative compression and gathering infrastructure near


[Original signed by D. Kelln]

Doug Kelln President and Chief Executive Officer, SaskEnergy



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