2015-16 SaskEnergy Annual Report

Common Components of Unprocessed Natural Gas

The Impact of Natural Gas Liquids With the transformation of natural gas supply in Saskatchewan, the composition of the natural gas in the Province has also been changing. Conventional gas supply contains primarily methane. However, natural gas that is produced with oil has a much higher content of other natural gas liquids including butane, propane and condensate, and contains a higher amount of energy than conventional natural gas. Natural gas produced from shale rock also typically has a higher composition of natural gas liquids compared to conventional production. In Western Canada, the primary area of growth in natural gas supply has occurred in the Montney and Horn River shale basins, located along the northern part of the British Columbia and Alberta border. Natural gas containing a high content of liquids is usually processed and the natural gas liquids are separated and sold in the open market. The processed natural gas is then distributed throughout the natural gas pipeline system. However, during 2015-16 it was not always economical to remove the natural gas liquids from the natural gas stream due to the low natural gas liquids prices. A number of natural gas processing plants, some of which are located along the Saskatchewan/Alberta border, extracted fewer liquids and in some cases temporarily suspended operations due to the low natural gas liquids prices in 2015-16. The result of this is that, at times, the natural gas imported into the Province is less processed or not processed at all. Rather, the liquids were sometimes






Nitrogen Carbon Dioxide Hydrogen Sulphide Helium

left in the natural gas stream due to the low liquids prices and the cost of processing. Natural gas that has a high composition of natural gas liquids has a higher heat or energy content compared to conventional natural gas and less volume is required to generate an equivalent amount of energy. In Saskatchewan, the energy content or heat value of natural gas delivered to consumers has been generally rising since Saskatchewan became a net importer of natural gas five years ago. This is due to both the higher energy content of natural gas being imported from Alberta, and the fact that natural gas associated with oil production is replacing conventional production within the Province.


15 Months

3 Months

12 Months

12 Months

Ended March

Ended March





31, 2016 1

31, 2016

31, 2015

31, 2014



Income before unrealized market value adjustments

$ 47

$ 41

$ 135

$ 47

$ 88

Impact of fair value adjustments






Revaluation of natural gas in storage






Consolidated net income (loss)

$ (33)

$ 118

$ 111

$ 26

$ 85

1  On November 30, 2015, the Government of Saskatchewan announced a change in the year end for CIC and its subsidiaries from December 31 to March 31, commencing with the 2015-16 fiscal year. Accordingly, for the 2015-16 fiscal year the Corporation reported a 15-month fiscal period ended March 31, 2016, which is compared to a 12-month period ended December 31, 2014. The results for the three months ended March 31, 2016 and 12 months ended December 31, 2015 are unaudited and are shown for comparative purposes. SaskEnergy’s performance over the 12 months ended December 31, 2015 was significantly stronger than during 2014, reflecting a return to more normal operations following the difficult operating conditions experienced during 2014. The first three months of 2014 presented some of the coldest weather ever experienced by SaskEnergy that drove transmission operations to its design capacity, drained gas in storage and created challenging conditions resulting in higher operating expenses. In contrast, the winter months of 2015 were unseasonably warm, which reduced heating load and challenged delivery revenue. SaskEnergy added customers, increased throughput on its transmission system throughout the year and effectively managed costs, reducing employee benefits and operating and maintenance expenses by $9 million from 2014.



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