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Accelerated Site Closure Program

The Government of Saskatchewan is launching the Accelerated Site Closure Program (ASCP) to utilize $400 million in federal funding for the abandonment and reclamation of inactive oil and gas wells and facilities. The program is scheduled to run until December 31, 2022. The primary purpose of this program is to put Saskatchewan people and companies back to work in the struggling oil and gas services sector.

The ASCP will be overseen by the Ministry of Energy and Resources and administered by the Saskatchewan Research Council (SRC). The program will maximize the use of Saskatchewan-based service companies. Meaningful Indigenous participation in the ASCP will be an important consideration over the life of the program.

It is estimated that up to 8,000 inactive wells and facilities will be abandoned and reclaimed over the life of this program. This funding is expected to support approximately 2,100 full-time equivalent jobs in the service industry.

The ASCP will be rolled out in several phases. Phase 1 will allocate up to $100 million in funding to Saskatchewan service companies to do abandonment and reclamation work. The goal of Phase 1 is to move as quickly as possible to get the service sector working on well and facility abandonments.

Under the ASCP, eligible licensees will use the Integrated Resource Information System (IRIS) to nominate inactive wells, facilities and flowlines into the program. Through this process, licensees will also be able to identify preferred service companies. Each licensee will be assigned a portion of the planned expenditures based on its share of the total provincial liabilities for inactive wells and facilities.

Based on these nominations, the SRC will commence the formation of work packages utilizing eligible service companies to carry out the abandonment and reclamation work. The SRC will pay service companies directly. Details on the schedule of payments to service companies will be part of work package agreements. All contracting for services will take place exclusively between eligible licensees and service companies.

Future phases will be developed with insights gained in Phase 1 to ensure that abandonment and reclamation work continues to be advanced in support of program objectives.

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1. Benefits

The primary goal of the program is to support Saskatchewan-based service sector workers and companies. It is expected that 2,100 jobs will be supported by this initiative and that up to 8,000 wells and facilities will be abandoned. Abandonment and reclamation work approved under Phase 1 will be funded at 100% of the eligible costs, paid directly to eligible service companies.

As program administrator, the SRC will create opportunities to achieve additional program benefits. Using a procurement-based model to allocate work will allow for the implementation of area-based closure through the bundling of work into packages for procurement. This will drive program efficiencies, generate more abandonment and reclamation work under the program, and keep more Saskatchewan people employed.

This model will also allow for the implementation of a supplier development function over the life of the program to maximize the development and use of Saskatchewan-based companies. Meaningful Indigenous participation in the ASCP will be an important consideration over the life of the program.

Under this model, all contracting for services will remain between the eligible licensee and the eligible service company. Under no circumstances will a third-party take control of a licensee's well or facility site. All affected licensees will be required to sign-off on work packages created by the SRC before they are put to tender.

To this end, up to $400 million will be made available through a number of funding phases.

  • Phase 1 – up to $100 million; and
  • Future phases – up to $300 million. Funding tranche amounts and timing for future phases commensurate with service sector capacity.
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2. Eligibility

Phase 1 Funding Allocation and Eligibility

Determination of Eligible Licensee Funding Allocation

Eligible licensees will receive a funding allocation established by considering the eligible licensee's total deemed inactive infrastructure liability as a percentage of the total deemed inactive infrastructure liability of all eligible licensees. This ratio will be applied to the $100 million Phase 1 funding tranche to arrive at a licensee's eligible funding allocation.

Each eligible licensee will receive a minimum funding allocation of $50,000 to support reclamation and abandonment activities.

Licensee Eligibility Criteria

In Phase 1 of the ASCP, eligible licensees are licensees who were in good standing in relation to debts owing to the Crown as of March 1, 2020. For the purposes of eligibility under ASCP, Crown debts include:

  • Amounts owing for the Oil and Gas Administrative Levy;
  • Amounts owing for the Orphan Well Levy;
  • Amounts owing for Crown oil and gas royalties;
  • Amounts owing for Crown mineral disposition rentals; and
  • Amounts owing for Crown surface lease rentals.

The Ministry of Energy and Resources will determine licensee eligibility and funding allocations. Eligible licensees were notified of their funding allocation via their IRIS service administrator email address on June 1, 2020.

Well and Facility Site Eligibility

Any wells, facilities and flowlines nominated into the program (see: How to Apply) must meet the following eligibility criteria:

  • The well, facility, or flowlines located in a municipality in which the eligible licensee owes municipal taxes will not be eligible; and
  • If located on private lands, the licensee must be current on surface lease payments to the landowner with respect to the specific well, facility or flowlines.

When nominating wells, facilities and flowlines into the program, the eligible licensee will be required to submit two declarations:

  • A declaration stating that the licensee does not have any outstanding municipal taxes owing with respect to the nominated wells, facilities and flowlines; and
  • A declaration stating that the licensee is current on surface lease payments to private landowners with respect to the nominated wells, facilities and flowlines.

Submitting a false declaration may result in collection actions by the Crown and could render a licensee ineligible for future funding under the ASCP.

Eligible Activities

Eligible activities for Phase I will include:

  • Abandonment of oil and gas wells, facilities and associated flowlines;
  • Environmental site assessments (Phase 1 and Phase 2);
  • Site remediation activities; and
  • Site reclamation activities.

In Phase I, preference will be given to abandonment and reclamation activities that can be approved routinely to support the rapid roll-out of funding to the service sector. However, deploying an area-based closure model is still a priority under this program and exceptions will be considered.

Any work that commenced or was completed prior to the program launch date and/or has not been included in a work package issued by the SRC will not be eligible under the program. However, if the abandonment was completed prior to that date, the remaining remediation and reclamation work would be eligible under the program. The same principle will apply to the stages of remediation and reclamation for well and facility sites.

Eligible Service Companies

Service companies eligible under the program will be able to conduct well and facility abandonments, flowline abandonments, Phase 1 and Phase 2 environmental site assessments, remediation and reclamation.

Service companies that wish to participate in Phase I of the program must be Saskatchewan-based. This includes:

  • Being located in Saskatchewan;
  • Employing Saskatchewan people;
  • Paying Saskatchewan taxes; and
  • Sourcing their supplies from Saskatchewan-based businesses based upon capacity, quality and availability.

Service companies must also meet a number of technical requirements to be eligible for the program. This includes:

  • Employ and keep current all safety programs or safety management systems;
  • Maintain a minimum of $2,000,000 Comprehensive General Liability Insurance;
  • Maintain a minimum of $1,000,000 Automotive Liability Insurance;
  • Be registered with the Workers Compensation Board (WCB); and
  • Where applicable, hold a valid Saskatchewan or home province Certificate of Recognition (COR) or Small Employer Certificate of Recognition (SECOR).

The ASCP will include a pre-qualifying process for service companies. This will ensure that eligible service companies are Saskatchewan-based and are capable of safely and effectively completing work under the program.

Eligible Expenses

All expenses associated with completing the work, and in accordance with the procurement contract, will be eligible, including:

  • Materials and supplies;
  • Wages;
  • Equipment rentals;
  • Laboratory analysis; and
  • Transportation of workers and equipment to and from sites.

Additional details on eligible and ineligible expenses will be made available as part of the procurement process set out by the SRC.

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3. How to Apply

Eligible Licensees: Nomination of Wells, Facilities and Flowlines

Once the eligible licensee has its funding allocation, they will be required to nominate wells, facilities, and flowlines through the Integrated Resource Information System (IRIS). Licensees are encouraged to take advantage of existing abandonment plans by nominating groups of wells, facilities, and flowlines that facilitates area-based closure.

A bulletin was issued on June 26, 2020, notifying of the launch of the Phase 1 nomination process.

If applicable, eligible licensees are asked to submit abandonment projects that cover up to 125% of their funding allocation. This will facilitate the formation of area based closure packages and will give the eligible licensee flexibility in the event that they are unable to abandon or reclaim a selected well, facility or flowlines for any reason. Note that an eligible licensee cannot receive work that exceeds their funding allocation under Phase 1.

Upon nomination of wells, facilities, and flowlines, eligible licensees will identify preferred service companies. The program will make every effort to facilitate the licensee's use of preferred service companies, though this may not be possible in all circumstances.

The template for the nomination of wells, facilities and flowline projects can be downloaded here: ASCP Data template.

The template for the identification of preferred service companies can be downloaded here: ASCP Vendor template.

The current list of BA codes to be used for the nomination process for the identification of preferred service companies can be found here: BA Vendor Codes. Note: this file will be updated frequently.

Pre-Qualifying Eligible Service Companies

To become an eligible service company under the ASCP, service companies will be required to apply through SaskTenders. The application will be evaluated using the eligibility criteria set out above and, if successful, the service company will be added to the list of eligible ASCP service companies. Eligible service companies will be able to participate in work packages issued by the SRC. The application process has been opened on SaskTenders and can be found at SaskTenders (Competition #7710).

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4. Apply

Note: All licensees should review the supplemental document ASCP Nomination Process Supplemental Information Guide in conjunction with the online training module prior to engaging in the nomination process.

Licensees

Licensees will nominate their wells, facilities and flowlines for abandonment and reclamation through the IRIS system.

The current list of infrastructure nominated for work under the Accelerated Site Closure Program can be found at ASCP Nominated Infrastructure List. Note: this file will be updated frequently.

To assist with the nomination process an on-line training module was prepared and can be found at User Learning Centre-Liability Management.

In addition to the online training module an ASCP Nomination Process Supplemental Information Guide has been prepared to address nomination questions.

To being the nomination process, login to IRIS.

Log in to IRIS

Service Companies

Service companies looking to participate in the program will apply through SaskTenders. Interested service companies should review the information found at:

SaskTenders (Competition #7710)

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6. Further Information

For further information, view the question and answer document. If you have any additional questions or concerns, contact the ER Service Desk at 1-855-219-9373 or ER.servicedesk@gov.sk.ca.

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