Is Saskatchewan poised to overtake Alberta as the country’s largest conventional oil producer? Could the former have-not province be preparing to steal Alberta’s mantle as the energy capital of Canada?

The evidence is a bit circumstantial at this point, but there are tantalizing signs that Saskatchewan could eventually supplant Alberta as Canada’s No. 1 energy province.

To start with, Saskatchewan is expected to see a 9% increase in oil and gas drilling, to a record 4,725 wells in 2009. Alberta, on the other hand, will probably see an 11% decrease, to 10,400 wells, according to the Petroleum Services Association of Canada.

This is the second year in a row that oil and gas drilling will have decreased in Alberta, which saw 1,350 fewer wells drilled in 2008 vs 2007, the only province to see a decline in drilling this year, PSAC says. Of course, the overwhelming majority of wells drilled in Alberta are gas wells, which, in recent years, have outnumbered conventional oil wells by a ratio of five or six to one.

In the past eight years, conventional oil well drilling in Alberta has generally been trending downward — to 1,400 in 2007 from 2,300 wells in 2000. By contrast, Saskatchewan’s conventional oil well drilling has been trending upward since 2002 (with a slight dip in 2007 due to adverse drilling conditions in the spring) and outpaced Alberta’s drilling every year since 2005.

In the production sector, too, activity in Alberta is on the decline. Conventional oil production in that province has declined to 525,000 barrels a day in 2007 from 750,000 BOPD in 2000, while Saskatchewan’s production has doubled over the past 20 years, to 428,000 BOPD in 2007.

So, why are Canada’s two biggest oil-producing provinces going in opposite directions? One answer is related to recent changes to Alberta’s royalty regime, which will hike royalty rates by 20%, or an estimated $1.4 billion, when they take effect in 2009.

“The new regime simply makes it more attractive for companies to diversify into places such as B.C. and Saskatchewan,’’ PSAC president Roger Soucy says. “They are now seen as more competitive.”

Another, perhaps bigger, reason is the Bakken play: a deeper, light-oil formation found in southeastern Saskatchewan.

The U.S. Geological Survey estimates that the entire Bakken formation, which extends throughout the Williston Basin in southwestern Manitoba and parts of the Dakotas and Montana, contains upward of 400 billion barrels of oil-in-place. Even if only a fraction of that oil can be recovered — say, 10% — it would still rank as one of the largest oil pools discovered in North America.

Based on Saskatchewan’s share of the Bakken (roughly one-quarter of the formation lies within its borders), the province could be sitting on 25 billion to 100 billion barrels of oil, of which 2.5 to 10 billion barrels may be recovered.

While these are rough estimates, it does suggest that Saskatchewan could rival and eventually even overtake Alberta as Canada’s largest conventional oil-producing province.

Still, Alberta’s conventional reserves at the end of 2006 stood at more than 1.6 billion barrels, vs Saskatchewan’s 1.1 billion barrels. Clearly, Saskatchewan has a long way to go to catch up to Alberta‘s conventional reserves, let alone its massive reserves of oilsands and bitumen (13.5 billion barrels) and its natural gas reserves (40.2 trillion cubic feet).

On the other hand, Saskatchewan has one energy source Alberta doesn’t have — its ace in the hole, as it were. In addition to being Canada’s second-largest producer of oil and third-largest producer of natural gas, Saskatchewan has the word’s largest production and reserves of uranium.

Supplying about one-quarter of the world’s production of uranium, Saskatchewan has 800 million pounds of uranium reserves. Considering that one pound of uranium (U3O8) is equivalent to 6,000 barrels of oil, that’s a lot of energy. And with nuclear energy generating zero emissions of greenhouse gases, uranium is relatively green compared with fossil fuels such as oil and coal.

Given rising concerns about climate change, Saskatchewan’s ascendance to the top of Canada’s energy heap could happen sooner rather than later. IE