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Energy support

Saskatchewan introduces relief measures for oil and gas industry

Apr 14, 2020 | 11:46 AM

MEDICINE HAT, AB – Extending mineral rights set to expire this year and extending filing and other deadlines are among the measures the Saskatchewan government will implement to aid the province’s oil and gas industry.

The measures are intended to provide relief as the sector deals with the economic downturn resulting from the COVID-19 pandemic and the price war between Saudi Arabia and Russia.

“The Saskatchewan energy sector is the second largest contributor to provincial GDP and, directly or indirectly, employs more than 34,000 people; so doing all we can to protect jobs is a major priority,” said Energy and Resources Minister Bronwyn Eyre. “These relief measures will address certain immediate liquidity and administrative challenges to help companies focus on retaining as many workers, and as much production, as possible.”

The relief measures from the government include:

• Extending a series of filing and other deadlines to assist the oil and gas sector in stabilizing operations, as their employees transition to working from home. These extensions do not impact health or environmental safety and apply to routine reporting activities, which will be addressed when the sector returns to normal operations.

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• Extending mineral rights, scheduled to expire in 2020, by one year. This includes rights granted under the terms of an oil and gas lease, exploration license or permit. The extension will provide oil and gas disposition holders with the time necessary to properly evaluate their properties once the current situation stabilizes.

• Reducing the industry portion of the Oil and Gas Administrative Levy by 50 per cent this fiscal year and delaying the invoicing of the remaining balance until October 1, 2020. This will provide the sector with relief of $11.4 million to address immediate liquidity challenges. (It is important to note that unlike other sectors, the oil and gas sector pays for 90 per cent of its own regulatory costs).

The Government of Saskatchewan also announced a draft agreement with the Government of Canada on the regulation of methane reductions in the upstream oil and gas industry has been reached. The federal government will now begin the process of confirming the terms of the agreement through the federal review process.

“We acknowledge and are encouraged by the Government of Saskatchewan’s efforts to introduce these relief measures to the oil and natural gas industry as we deal with the unprecedented challenges associated with the COVID-19 pandemic and the global economic crisis,” CAPP Vice-President of Western Canada Operations Brad Herald said. “CAPP is also pleased the province and the Government of Canada have reached a draft methane equivalency agreement. Provinces are the best-placed regulator for their natural resource industries.”

Memorandum of Agreement Signed

The Government of Saskatchewan has taken additional steps to reduce red tape and duplicated regulations for Saskatchewan service rigs operators. The province recently signed, with the Canadian Association of Oilwell Drilling Contractors (CAODC), a Memorandum of Agreement (MOA) that harmonizes regulations with Alberta to support local service rig companies and their employees.

“The new transportation MOA reduces red tape for service rigs while ensuring the highest level of public safety in Saskatchewan,” CAODC President and CEO Mark Scholz said. “We thank the Saskatchewan Government for their leadership and helping get our people back to work.”