April 06, 2021

Growing A Strong Natural Resource Sector

The 2021-22 Provincial Budget will support the growth of Saskatchewan's strong natural resource sectors, which are key drivers of our economic recovery.

"Our energy, forestry and mining sectors are important engines of innovation, job creation and crucial to our future economic success," Energy and Resources Minister Bronwyn Eyre said.  "Traditional and emerging resource sectors have shown remarkable resiliency throughout the pandemic, and this budget focuses on these areas of growth."

The Budget includes $200 million for the Accelerated Site Closure Program (ASCP) to support Saskatchewan-based oil and gas service companies and jobs.  The ASCP, which allocates federal funding for the clean-up and environmental reclamation of inactive oil and gas wells and facilities, is expected to support more than 2,000 full-time equivalent jobs and reclaim up to 8,000 inactive wells and facilities over two years.  The program has experienced strong uptake since it was launched in May 2020, and an Indigenous component was recently included to support First Nations and Metis participation.

The Budget also fulfills a Growth Plan commitment to introduce a moratorium on associated gas royalties which will take effect as of April 1, 2021.  This initiative, part of the province's Methane Action Plan, will provide oil producers with approximately $3.8 million in annual royalty relief over five years.  It will enable them to invest in new methane emissions reduction projects and undertake capture and commercialization of associated gas instead of venting or flaring it.

The provincial government is also introducing additional measures to attract capital investment and create jobs in the oil sector by modernizing and expanding the High Water-Cut Program, which is designed to extend the production cycle and improve recovery rates for wells that produce high volumes of water.  Changes to the royalty structure will make these wells, which traditionally incur higher operating costs, more economical for producers.  The new program will run until March 31, 2026.

The government is also simplifying and reducing the royalty rate for sodium sulphate production and implementing measures to promote the diversification and competitiveness of the potash fertilizer sector.  The royalty rate will be reduced from four to three per cent on sodium sulphate production.  A ten per cent incentive credit will also be introduced for approved capital projects that diversify products or improve operating efficiency.  The changes are intended to help the sector navigate current market challenges and achieve new growth opportunities.

Budget 2021-22 provides $40 million, an increase of $11 million, for the clean-up of the Gunnar and satellite uranium mine sites in northern Saskatchewan.  This fundingwill allow clean-up efforts to get back on schedule following delays as a result of the COVID-19 pandemic.  Since 2006, Saskatchewan has spent over $189 million on the Gunnar remediation, while the federal government has provided only $1.1 million.  The provincial government continues to press the federal government, including through legal means, to provide its equal share of funding for this remediation.

Finally, the provincial Budget increases the fee for the cost of mineral forfeiture proceedings from $6 to $100.  This fee, which has not been revised since its introduction in 1958, is designed to recover costs associated with mineral title forfeiture proceedings for unpaid mineral rights taxes.