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Reduce Venting and Flaring of Associated Gas

The Government of Saskatchewan's Ministry of the Economy requires licensees of oil wells and facilities to evaluate the economic feasibility of conserving associated gas that would otherwise be flared, incinerated, or vented. 

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1. Guidance

Requirements and compliance

  • Licensees must comply with the regulatory requirements outlined in Directive S-10: Saskatchewan Upstream Petroleum Industry Associated Gas Conservation for reducing flaring, incinerating, or venting of associated gas at licensed oil well and oil facility sites in Saskatchewan.
    • Please note: On December 28, 2014, the Glen Ewen/Oxbow Area Associated Gas Conservation Minister's Order was issued stating that new oil and gas wells or facilities licensed after January 1, 2015,  in the specified area may no longer apply the economic, air emission and associated gas volume flaring and venting exemptions provided under Directive S-10. See the Order to determine if your wells or facilities fall within the specified area. 
  • All flaring and incineration systems must be designed and operated to destroy the waste gases to the specification prescribed in Directive S-20: Saskatchewan Upstream Flaring and Incineration Requirements.
  • Licensees must conserve associated gas at all licensed oil well and facility sites where the combined flaring and venting volumes are greater than 900 m3/day and meet the economic criteria specified in Appendix 1 of Directive S-10 for conserving natural gas. 
  • Conservation economics must be updated every 12 months for any sites that have combined flaring and venting volumes greater than 900 m³/day and the licensee has determined they are not required to conserve the associated gas based on the economic criteria. 
  • Any applicable oil well or facility sites in Saskatchewan where the combined associated gas volumes incinerated, flared, and vented are greater than 900 m³/day may be subject to an audit by the Ministry. The licensee is required to provide the conservation economics to the Ministry within 5 working days. 

Economic evaluations

  • Economic evaluations must be completed for every site producing more than 900 m³/day of associated gas.  All oil wells and battery sites must be tested in order to obtain data for economic evaluation and for sizing conservation equipment.
  • For sites that have combined flaring and venting volumes greater than 900 m³/day and are not currently conserving associated gas, conservation economics must be updated every 12 months.  This information, along with the responsible individual names and the document dated, is to be kept on file by the licensee, and must be provided to the Ministry upon request.  Evaluation information must be stored at a central location rather than stored on site.
  • If testing shows that combined flaring and venting volumes do not exceed 900 m³/day per site, economic evaluation of associated gas conservation is not required, and the well may proceed to produce without conserving the associated gas.  It's expected that the licensee will pursue continuous improvement in reducing associated gas flaring, incinerating, and venting in Saskatchewan. 
  • Evaluation documentation must be kept for 3 years in the event the information is requested by the Ministry.  Upon request, the licensee must provide the evaluation to the Ministry within 5 working days.

Testing periods for wells

  • The testing period for non-heavy oil wells is limited to 10 days.  If it's determined by the licensee that a longer testing period is required, for example to recover flow-back fluids, technical rationale must be provided to the Ministry for approval. 
  • The testing period for heavy oil wells is limited to the lesser of 6 months or until combined flared and vented volumes exceed a rolling average of 900 m³/day for any consecutive 3-month period.  The Ministry may extend the test period up to 12 months if the licensee can provide technical rationale. 

Definition of economic and uneconomic

If the economic evaluation of gas conservation generates a net present value (NPV) before tax:

  • Greater than -$50,000 (CDN) a conservation project is considered economic, and the associated gas must be conserved. 
  • Less than -$50,000 (CDN) a conservation project is considered uneconomic on its initial evaluation, and the associated gas does not need to be conserved at that time.  However, the economics must be re-evaluated annually using updated prices, costs, and forecasts.

Data for economic evaluations

Total associated gas production volume, lease fuel, flaring and venting data associated with a licensed well or facility is available to licensees online through either Petrinex or the Integrated Resource Information System (IRIS).

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2. Eligibility

  • Licensee's of oil wells or facilities licensed under The Oil and Gas Conservation Act  which produce, handle, transmit process, measure, test, inject, incinerate, flare or vent associated gas are required to comply with Directives S-10 and S-20.
  • An economic evaluation is required to accompany facility licence applications where the proposed maximum flaring, incineration or vent rate is greater than 900 m³/day.
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3. How To Apply

To submit an economic evaluation for gas conservation package:

1.  Prepare the S-10 Economic Evaluation using the criteria provided in Appendix 1 of Directive S-10: Saskatchewan Upstream Petroleum Industry Associated Gas Conservation. This may be submitted as a PDF, Excel spreadsheet, or a combination of the two. It must include:

  • NPV calculation, including the supporting documentation:
    • Detailed capital and operating cost schedules as set out in Sections 2.9.1(6) and 2.9.1(7) of the Alberta Energy Regulator (AER) Directive 60.
    • Oil and gas reserve calculations and supporting information, including a discussion of planned drilling programs and pressure maintenance schemes.
    • A production forecast for both the oil and gas streams and the economic limit (date and production rates) of the project based on the oil production rate including planned drilling programs and pressure maintenance schemes.
  • A copy of the gas analysis from the project, or a representative analog complete with gas heating value and gas liquid yields.
  • A copy of the Facility Survey specifying the distance to the nearest resident.
  • Documentation of alternatives that were considered in order to eliminate or reduce flaring, incinerating, or venting, how they were evaluated, and the outcome of the evaluation. 
  • Air dispersion modelling conducted in accordance with the most current Ministry of Environment Saskatchewan Air Quality Modelling Guideline if:
    • Maximum H2S content of inlet gas/fluid is 10 mol/kmol or higher;
    • Requested by the Ministry.

2.  Prepare a cover letter summarizing the outcome of the economic evaluation, the alternative options that were considered if uneconomic, as well as the following information:

  • Distance to the nearest occupied dwelling (m);
  • Maximum H2S content of inlet gas/fluid (mol/kmol); and
  • Maximum continuous flaring/incineration/venting rate (103m3/d).

3.  Log in to IRIS and complete the appropriate application for authorization process.

Once the economic evaluation is processed by the Ministry, application approval or denial is communicated as a notification in IRIS. 

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4. Apply

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