April 14, 2020

Provincial Support for Saskatchewan’s Oil Industry

The Government of Saskatchewan is implementing a series of relief measures for the provincial oil and gas sector, in response to the unprecedented 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,” Energy and Resources Minister Bronwyn Eyre said.  “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.”

Provincial relief measures by the Government of Saskatchewan 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.
  • 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).

Methane Equivalency

The Government of Saskatchewan has also reached a draft agreement with the Government of Canada on the regulation of methane reductions in the upstream oil and gas industry.  The federal government will now begin the process of confirming the terms of the agreement through the federal review process.  This agreement is the result of several months of engagement between the two levels of government and fulfills the request of industry to be regulated by the province.

“We are very pleased that the federal government has agreed with the strength of our Methane Action Plan, and that we have regained provincial jurisdiction over our regulations,” Eyre said.  “We will now work with our operators in a common sense way to reduce emissions from venting and flaring by 4.5 million tonnes per year by 2025.”

“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.”