The burgeoning oilpatch in Manitoba’s southwest corner has a tremendous amount of potential to aid business growth in this province.
And that potential is a direct result of the substantial increase in oil production in Manitoba over the last decade.
As the Canadian Association of Petroleum Producers points out on its website, Manitoba has increased its crude oil production four-fold since 1999, and doubled it since 2008, thanks to the development of the Sinclair oil field and the use of horizontal hydraulic fracturing technology.
The latest published stats show that in 2012, Manitoba produced more than 48,000 barrels of crude oil per day, and companies spent more than $1 billion on exploration and development.
A Winnipeg Free Press story from last June reported that the oilpatch sustains 4,150 direct and indirect jobs in this province. It also provides provincial coffers with a strong return on investment. The government reports that it collected about $30.3 million in revenues in 2012.
Though Manitoba’s oil production pales in comparison to the massive oil reserves of Alberta and Saskatchewan, industry growth has been stronger in this province. Since 2005, Manitoba has witnessed a 257 per cent increase in oil production, compared to nine per cent in Alberta and 42.5 per cent in Saskatchewan in that same time frame.
As a result, Manitoba’s oil industry has created many high-paying jobs and drawn investment from oil companies based within and outside of the province. And as the oil industry becomes more and more a part of the fabric of the province’s economy, the companies that drill and provide services to extract the resource grow and prosper, and aid local communities — including Brandon.
Simply put, for the time being at least, the oilpatch is a growth industry for this province.
It’s a fact underscored by the large turnout of business people, academics and investors who packed a day-long conference at the Keystone Centre on Wednesday, called Manitoba to Montana: Business Opportunities in the Bakken.
But there is a cost to this industry that has largely been ignored by the provincial government, even as it takes in more and more revenue as a result — infrastructure degradation. Municipal roads in the formerly sleepy southwest were not designed for heavy tanker truck traffic, and many municipalities have been unable to keep up with expensive road repairs.
That’s not to say oil companies don’t help paying for road upkeep, but it is a consistent problem that only gets worse as production increases.
On Wednesday, the president of Tundra Oil and Gas Ltd., Dan MacLean, added his voice to a growing chorus of people, businesses and municipalities with interests in the oil industry, calling upon the provincial government to improve roads and infrastructure in affected municipalities, especially one road in particular.
“Highway 256 is a major artery,” MacLean told a room full of business people at a luncheon held during yesterday’s conference. “It needs to be upgraded to an all-weather road.
“Some kind of long-term solution needs to be found for the municipalities.”
There is, however, a lingering question out there — should the province invest further resources in what amounts to a finite, non-renewable resource industry?
Even MacLean admits that when he is asked how long the industry’s striking growth can be sustained in Manitoba, he simply doesn’t know. A lot depends on new technology and improved extraction methods, continued excavation and well drilling, and the continued welcome from landowners in the region. Right now, there’s no reason to believe any of these factors are in decline.
And according to the United States Geological Survey, there could be more than 500 billion barrels of oil in the Bakken formation, meaning Westman should be busy with oil activity for several more years.
Unless another oil formation is found, Manitoba’s oil industry will likely never be a huge money maker for the provincial government, but it certainly has been transforming our little corner of the province. To help sustain that growth, the province needs to continue investment in local infrastructure.
Improvements to Highway 256 would be a good start.
Republished from the Brandon Sun print edition February 27, 2014