2015-16 SaskEnergy Annual Report

Environmental SaskEnergy is also focused on environmental sustainability throughout its operations, and has made significant progress in the controllable aspects of its corporate greenhouse gas (GHG) emissions. While increased natural gas usage is beneficial to achieving emission targets in other sectors and in the Province as a whole, this creates challenges for SaskEnergy in terms of achieving its overall GHG emission reduction targets. Recognizing the Corporation’s opportunity to play a key role in a province-wide strategy related to GHG reductions, SaskEnergy developed an intensity-based performance measure in 2014. This measure tracks tonnes of carbon dioxide per million running horsepower hours, to reflect the efforts SaskEnergy 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 exceeded its target for this metric in 2015 due to the use of its efficient fleet of mobile compressors as well as the implementation of energy saving technologies such as LED lighting retrofits and industrial equipment and controls upgrades. 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. SaskEnergy continues to work with CIC to align its Community Relationship scorecard measures with industry best practices and Crown Sector Strategic Priorities. During 2015, the community sponsorship efforts were reduced as part of the restraint measures. However, 201 Saskatchewan communities received SaskEnergy support during 2015. Going forward, effort will continue to be placed on fostering community relationships in the most efficient and cost-effective manner. 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. However, throughout 2015 and into the winter of 2015- 16, natural gas prices demonstrated uncharacteristically low volatility. As winter progressed, unseasonably warm temperatures blanketed most of North America, drastically reducing heating load demand. In Saskatchewan, the provincial average degree days for the winter of 2015-16 confirmed it was one of the warmest winters in more than 80 years. On the supply side, natural gas production in the


Conventional Natural Gas Production




Shale Gas Revolution


Forward Price at March 31, 2016




U.S. remained at record high levels, while Canadian natural gas supplies also grew significantly. By the end of winter, the volume of natural gas in storage in both Canada and the U.S. was the highest ever recorded for the time of year and natural gas prices had declined to 20-year lows. The AECO monthly index, the benchmark price for natural gas in Western Canada, averaged $2.50 per gigajoule (GJ) during the period January 1, 2015 to March 31, 2016. This was down more than 40 per cent from an average of $4.19 per GJ during 2014. The above chart presents 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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