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High Water-Cut Oil Well Program

The High Water-Cut Oil Well Program (HWCP) has been amended and became effective April 1, 2021. The HWCP provides a royalty status re-assignment for qualifying high water-cut oil wells that incur an average minimum investment of $20,000 per well, to directly improve water handling capabilities and extend the producing life of the well.
  1. Guidance
  2. Eligibility
  3. How to Apply
  4. Apply
  5. Further Information
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1. Guidance

The high water-cut oil well program is administered under The High Water-Cut Oil Well Program Regulations.

Through the program, oil wells producing large volumes of water will receive a royalty status re-assignment based on their finished drilling date after qualifying investment has been executed:

  • Oil wells drilled prior to October 1, 2002, will receive Fourth-Tier Royalties on their incremental high water-cut oil; and
  • Oil wells drilled on or after October 1, 2002, will receive a 2% royalty rate deduction on all oil produced.

Note: Qualifying high water-cut oil wells will receive a royalty status re-assignment on oil produced after the eligible investment has been executed.

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2. Eligibility

  1. Eligible oil wells (vertical and horizontal) include individual oil wells or a group of oil wells that produced oil at an average water cut of 90% or greater for the most recent three months reported with hours on production, before the qualifying applicant submits an application to the program;
  2. Qualifying Investments – the qualifying investment must be directly related a high water-cut oil well, or its associated facility, for the purpose of improving water handling capability and extending the production life of the well. Normal repair and maintenance activities are ineligible.
  3. Minimum Investment – the qualifying investment must be a minimum of $20,000 per qualifying high water-cut oil well.
  4. Qualifying investments made on or after April 1, 2021 will be recognized.
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3. How to Apply

To apply for the HWCP:

  1. Complete the High Water-Cut Initial Application Form.

  2. Log into IRIS and complete a submission under the high-water cut oil well application by attaching the High Water-Cut Initial Application Form.
  3. The ministry reviews the detailed information, approves eligible applications and assigns an incremental high water-cut oil factor (if applicable).
    • Companies are encouraged to start investments after the ministry has approved the Initial Application.

  4. After completion of the eligible investment, complete the Investment Summary and submit it as an attachment within the High Water-Cut – Qualifying Investment Application in IRIS.
    • Once the ministry has verified the investment and approved the High Water-Cut – Qualifying Investment Application in IRIS, the royalty status re-assignment, along with the approved incremental high water-cut oil factor will be implemented.

The ministry will be accepting applications until March 31, 2026.

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4. Apply

Log in to IRIS

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5. Further Information

For additional information on the program, please review Information Circular (PR-IC12): High Water-Cut Oil Well Program or contact petroleumroyalties@gov.sk.ca.