Abstract

Prior to 1985 October 31, the natural gas industry was one of the most regulated industries in Canada. In Saskatchewan, the only place producers could sell their natural gas was to the Saskatchewan Power Corporation (SaskPower) at Provincial Government regulated prices. Also, the only place consumers could buy natural gas was from SaskPower., again at regulated prices.

On 1985 October 31, Canada, Saskatchewan, Alberta and British Columbia signed the Agreement on Natural Gas Markets and Prices to deregulate the Canadian natural gas industry. Deregulation in Saskatchewan was introduced in two phases. Under Phase I in 1987 February, government regulation of prices for gas sold to SaskPower was eliminated. Under Phase II, in 1987 October, the merchant and transportation functions of SaskPower's natural gas system were separated allowing consumers to purchase natural gas directly from producers and only contract with SaskPower for the transportation service. At the same time, the government addressed the issue of exporting natural gas from the province. They allowed a significant increase to the amount of gas which could be exported.

The transportation of natural gas using utility systems was something quite new to the gas industry and many made-in-Saskatchewan solutions had to be developed to overcome some problems unique to Saskatchewan. What evolved was a Saskatchewan natural gas transportation po1icy. As well as the new transportation policy which had to be put in place very rapidly to accommodate deregulation, significant physical facilities had to be built to handle the increased requirements for natural gas transportation. In 1988, approximately $91 000 000 was spent on new transmission facilities. System capacity increased by approximately 6200 103 m3 per day (220 MMcf per day). A more modest expansion program is planned for 1989 which should bring on stream au additional capacity of approximately 3325 103m3 per day (118 MMcf per day).

Deregulation has had a significant impact on the natural gas industry in Saskatchewan. Any number of criterion can be used and they all show the impact which it has had. Natural gas well drilling, Saskatchewan natural gas production, employment, and Provincial royalty revenue have all increased. Also, due to the rise in activity in the field, the remaining established natural gas reserves have a1so grown.

Natural gas transportation, which was a necessity for deregulation, has very rapidly changed the natural gas Industry and markets 1n Saskatchewan. From all perspectives, the changes, so far, seem positive.

Introduction

One of the significant aspects of our western economies over the last decade has been the move towards deregulation of various sectors of the economies. There has been a striving to allow the free market forces to guide the various sectors towards efficient allocation of resources and towards optimization rather than relying on the very slow and, at times, inefficient regulation of these sectors. The natural gas industry is one of the industries in North America which has recently moved towards deregulation. This first began in the United States and is still evolving there. In the last few years, deregulation began in the Canadian gas industry.

This content is only available via PDF.
You can access this article if you purchase or spend a download.