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The Government of Saskatchewan has launched the Accelerated Site Closure Program (ASCP) to use $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 February 28, 2023. The primary purpose of this program is to put Saskatchewan people and companies back to work in the 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 oil and gas service sector companies. Meaningful First Nations and Métis participation in the ASCP will be an important consideration over the life of the program.
It is estimated that the equivalent of 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 oil and gas service industry.
The ASCP will be rolled out in several phases. Phase 1, released in June 2020, allocated $100 million in funding to eligible oil and gas licensees to engage Saskatchewan's oil and gas service sector to carry out site closure work. The goal of Phase 1 was to move quickly to get Saskatchewan's oil and gas service sector back to work. In December of 2020, Phase 2 allocated an additional $200 million in ASCP funding to eligible licensees.
Eligible licensees will receive a funding allocation that is commensurate with their share of total inactive liability in Saskatchewan. 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.
Using these nominations, the SRC will commence the formation of work packages. Licensees will engage qualifying service companies to carry out site closure activities contained in an SRC issued work package. The SRC will pay service companies directly. Details on the schedule of payments to service companies will be contained in the work package agreements. All contracting for services will take place exclusively between eligible licensees and qualifying service companies.
Phase 3 of the program will be developed with insights gained in Phase 1 and Phase 2 to ensure that site closure work is advanced in support of program objectives.
The intent of the Accelerated Site Closure Program is to ensure that all program funding is allocated to licensees that are willing and able to use it prior to February 28, 2023, the end date of the program. Therefore, all eligible licensee who received Phase 1, 2 and 3 allocations must comply with the following conditions by end of business day (5:00 pm CST) on February 28, 2022:
Any licensee allocations that do not meet those conditions will be subject to recapture and reallocation.
To ensure the full spend of the program funding, the ASCP will identify work packages with no invoices submitted for six consecutive months. Licensees with those packages will be requested to submit a plan for execution of the work outlined in the package. Failure to provide a satisfactory plan within the specified timeframe will result in termination of the work package contract and recapture of any allocation(s) tied to the subject work package contract(s).
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