Province launches program for abandonment of inactive oil wells

The Government of Saskatchewan is launching the Accelerated Site Closure Program (ASCP) for the abandonment and reclamation of inactive oil and gas wells and facilities to get Saskatchewan people back to work.

ASCP will access up to $400 million, over two years, subject to the conclusion of an agreement with Canada, through the federal COVID-19 Economic Response Plan. It will be overseen by the Ministry of Energy and Resources and delivered in partnership with the Saskatchewan Research Council (SRC), which has technical expertise to provide engineering and oversight work.

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The program will prioritize Saskatchewan-based service companies and support some 2,100 full-time equivalent jobs. Up to 8,000 inactive wells and facilities will be abandoned and reclaimed over the life of the program.

“We have worked hard to develop a common sense, administratively simple program that creates much-needed jobs in the struggling oil and gas sector,” Energy and Resources Minister Bronwyn Eyre said. “The ASCP will accelerate the retirement of wells and facilities, which have reached the end of their life cycle, and complete a substantial amount of environmentally important work in a short period of time. For that, we would like to acknowledge the support of the federal government.”

The ASCP will be rolled out in several phases, with the funding component of the program administered by the SRC. Phase 1 will allocate up to $100 million in funding to Saskatchewan service companies contracted to do abandonment and reclamation work.

“Working with Minister Eyre and the Government of Saskatchewan, we are creating needed jobs, cleaning up our environment, and supporting the hard-working people in our oil and gas sector,” Canada’s Minister of Natural Resources Seamus O’Regan said.

Under the ASCP, eligible licensees (operators) will use the Integrated Resource Information System (IRIS) to nominate inactive wells and facilities into the program. Each licensee will be assigned a portion of planned expenditures, based on their share of total provincial liabilities for inactive wells and facilities.

Based on these nominations, the SRC will procure services from eligible service companies. All contracting for services will take place exclusively between eligible licensees and service companies. The SRC will provide direct funding, including an initial advance, to service companies for abandonment and reclamation work.

“We’d like to thank the Saskatchewan government for working to implement the ASCP in a timely manner,” Canadian Association of Oilwell Drilling Contractors President and CEO Mark Scholz said. “We are excited by the prospect of long-term jobs for Canadian Association of Oilwell Drilling Contractors members who have been struggling to keep their employees working and their businesses viable.”

“Canadian Association of Petroleum Producers appreciates the Government of Saskatchewan’s efforts to design an Accelerated Site Closure Program that will help get Saskatchewan people back to work by focusing efforts on closure of inactive oil and natural gas sites,” Canadian Association of Petroleum Producers Vice-President, Western Canada Operations Brad Herald said. “The initial phase of the program recognizes principles important to the sector including the efficient management of liability closure, while offering fair access to funds. We continue to support Saskatchewan’s pragmatic approach to the program design while achieving government’s objectives.”

“Petroleum Services Association of Canada (PSAC) welcomes today’s announcement that will support urgently needed jobs for the oilfield services sector that PSAC represents during this unprecedented downturn,” PSAC Interim President and CEO Elizabeth Aquin said. “We are pleased that this funding aligns with PSAC’s advocacy for a mechanism to close inactive wells and that the Government of Saskatchewan has supported this win-win solution that creates jobs while also providing environmental benefits. This program will also help to retain and expand key skills and expertise for Canada’s responsible resource development and stewardship of the land.”

For further information about ASCP, companies can contact the Ministry of Energy and Resources Service Desk at 1-855-219-9373, or ER.servicedesk@gov.sk.ca, visit www.saskatchewan.ca/Business/Agriculture-Natural-Resources-and-Industry/Oil-and-Gas/Accelerated-Site-Closure-Program or https://src.nu/wells.