The Saskatchewan resource sector: Five things you can’t ignore

Of course, I remember the Cold War—I’m 63 years old. I recall the nuclear war scares of the Yom Kippur War, of the ascendancy of Ronald Reagan and the sabre-rattling over “Strategic Defense,” and “Nuclear Winter.” Obliteration of life as we know it was a real possibility, and for many people, world news always carried a deep, dark, and grim undertone of potential nuclear annihilation.

Remember watching The Day After or Threads? If you can, you know what I’m talking about.

Then down came the Berlin Wall and with it, the crumbling of the Soviet Union. Arms control, not proliferation, began to decrease stocks of nuclear weapons. I could throw away my stash of potassium iodide tablets, as radioactive fallout was not longer a possibility. The Cold War was over.

As was said at the time, this was the “End of History.”

To be clear, this was not to say that the “End of History” meant the “End of War.” There remained to be played out the tragedies of the fragmentation of Yugoslavia, the Gulf War, Iraq, Yemen, Syria, Sudan, 9-11 and the “War on Terror,” yet, these conflicts did not strike the same fear as did the Cold War’s “hot wars,” simply because no one had their finger on the big red nuke button.

Then came February 24, 2022. Putin’s armed forces rolled into Ukraine, and with the tanks came a generational reorganization of global business, not to mention the birth of the Second Cold War and with it, the spectre of thermonuclear war.

If I have learned anything in my life, it is that I am not in any way a prognosticator, having learned the hard way that prophecy is the weaker companion to planning. Nor am I a politician or historian, but a geologist.

Nevertheless, my 40-plus years in the various resource patches of this province have given me some insights into what may be ahead for us in the next decade or two. Allow me to share these with you.

1. Investment in Saskatchewan’s rich endowment of 21st-century commodities will grow by orders of magnitude over the next decade.

One example is helium: in November 2021, Energy and Resources Minister Eyre announced that the province’s target for Saskatchewan’s helium sector will be 10 per cent of the global market, which is about half of Russia’s production by my count. Russia planned to boost production to 25 per cent to 30 per cent, roughly equal to the leading producer Qatar. However, this expansion is unlikely. I am sure Minister Eyre did not foresee what a few short months would bring to global helium supplies, however I congratulate her for her bold and aggressive target. I did the math, and to reach this target will require the drilling of several hundred new helium wells over the next few years. That is a lot of drilling, completion, and construction activity.

The second example is potash: Saskatchewan’s production and export capability of some 22 million tonnes is equal to the combined export capacity of Russia and Belarus. It is safe to assume that distributors the world over will seek the safe and secure potash supply Saskatchewan offers; however, to meet this target will require doubling our province’s current rate of production. Achieving this means gearing up existing projects such as BHP’s Jansen mine and implementing disruptive technologies such as modular selective solution mining to rapidly open up new projects.

2. Use of alternative energy will expand as all manner of industries and civic infrastructure pivot away from high carbon taxes.

Geothermal, hydrogen, lithium and other “green metals” like magnesium and carbon fibre will grow as the world continues its pivot to sustainable carbon-neutral energy processes. Leaders in the Canadian business world are beginning to realize the burden that the carbon tax will place upon all manner of fossil fuel users. Estimates place the cost of carbon at $170 per tonne by 2030, an increase of some $100 from today. If you doubt this, just check your monthly gas bill.

There is nothing political in this—it is simply practical. What is important is not to determine whether global warming and climate change is real or not, what is important is to ask whether people believe it is real or not. Large pools of investment capital are moving in this direction, so we would be fools to ignore it for political reasons.

3. Traditional energy production will grow, not shrink.

Saskatchewan’s Growth Plan set as a goal of increasing oil production by 25 per cent to 600,000 barrels by 2030. When the plan was written, it wasn’t clear what factor would be the economic driver to sustain this goal, but now it is clear. Like it or not, Europe and North America cannot pivot away from fossil fuel. Also consider coal. A key hub of energy and resource development is the southeast of the province, with Estevan as its focal point.

Estevan and Coronach’s coal sector has well over 100 years of history so shutting the mines because the power plants have phased out will be a major blow to these communities. An idea that has been around since the early 2000s is to convert the coal to another source of energy, such as synfuel—either vehicle gasoline or diesel—using some of the more modern processes to allow for this to be done in a cleaner manner. Tied to this is carbon sequestration, as is being done at the Shand power plant. How about clean, green fuel that is carbon neutral due to carbon sequestration and has hydrogen fuel as a by-product?

4. Saskatchewan Indigenous Nations will increasingly be owners in Saskatchewan’s resource sector.

Without a doubt, that the biggest benefactor of Saskatchewan’s emerging resource wealth are the First Nations whose territory is within the boundaries of Treaties Four and Six. Let’s look at some of the numbers for potash. Not working towards real and meaningful economic engagement with Saskatchewan’s First Nations means a significant portion of our Province’s economy remains shuttered.

First Nation territories that are within the potash area hold a total area of almost 290,000 hectares with Reserve lands in Treaty 4 covering some 256,600 hectares and Reserve lands in Treaty 6 covering some 33,000 hectares for total of 289,000 hectares.

My informal reckoning is that the above land may contain a total potential recoverable resource of 327,250,000,000 tonnes of recoverable potash. We are talking about hundreds and hundreds of years of production. Given prices are about $800 per tonne (farmgate) the value is incomprehensibly big. By virtue of Treaty and other declarations like the United Nations Declaration on the Rights of Indigenous Peoples, a First Nation has the same basis for economic sovereignty as does the province. Like the Province, the First Nations would receive four per cent royalty, so based on some 13 billion royalty tonnes, Treaty 4 and 6 Nations would collectively own a priceless asset.

5. Saskatchewan’s government has the tools at its disposal to take leadership.

Russia’s invasion of Ukraine has done irreversible damage to the global flow of several specific commodities. Exports of Russian and Belorussian commodities such as natural gas, oil, fertilizers, helium, uranium, wheat, and corn may dwindle due to export restrictions and sanctions. There is also the supply of 21st-century commodities such as lithium, calcium, magnesium, boron, bromine, and iodine, which if not exported from Russia, are exported from China. This may not matter now, but what if China allies itself with Russia, and decides to put pressure on the EU and America?

Here’s an idea: the province could show strategic leadership by setting up a “Critical Commodity Infrastructure Fund” using windfall revenues from oil and potash production. Then, offer to lead the building of a “Critical Commodity Infrastructure Port”—Churchill, Man., or further up the Arctic Coast—by uniting with our neighboring provinces, territories, and Indigenous Nations. Imagine having such direct access to global markets, especially to European energy buyers who wish to wean away from Putin’s oil and natural gas.

Final thoughts

I have no idea how the Russia-Ukraine struggle will play out, or whether we are now into a Second Cold War. People smarter than me must opine upon this question.

What I do know is this: Saskatchewan has all the resource commodities desperately needed by the global community, and we also have all the tools and skills to either extract, harvest, or process valuable 21st-century products.

I really don’t think people understand how profound this refocusing could be upon our province’s economy. Do we, as a province, have the vision, the will, and plain old guts to make this happen?

I think we do—let’s get at it!