Accelerated Site Closure Program

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. As the program advances, an Indigenous procurement strategy will also be developed.

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.

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 liability as a percentage of the total deemed 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. This calculation is subject to minimum funding allocations.

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. A list of eligible licensees and their funding allocations will be posted on Saskatchewan.ca. A bulletin will be posted no later than May 29, 2020 notifying licensees when the information is posted.

Well and Facility Site Eligibility

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

• The well, facility, or site 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 site.

When nominating wells, facilities and sites 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 sites; and
• A declaration stating that the licensee is current on surface lease payments to private landowners with respect to the nominated wells, facilities and sites.

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 flow-lines;
• 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 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, flow-line 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.

Eligible Licensees: Nomination of Wells and Facilities

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

A bulletin will be issued to notify licensees in advance of the launch date for the Phase 1 nomination process. Phase 1 will close once the $100 million is fully prescribed, or at a date to be determined with sufficient advanced notice.

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 or facility site 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 sites, eligible licensees will identify preferred contractors. The program will make every effort to facilitate the licensee's use of preferred contractors, though this may not be possible in all circumstances.

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 providers. Eligible service providers will be able to bid on procurement contracts tendered by the SRC. The application period will open on SaskTenders in the first week of June 2020.

Licensees

Licensees will nominate their wells and facilities for abandonment and reclamation through the IRIS system. A how-to guide is being prepared and will be posted no later than May 29, 2020. A bulletin will be issued to notify licensees that the document is posted.

Service Companies

Service companies looking to participate in the program will apply through SaskTenders. The application period will open on SaskTenders in the first week of June 2020. Check back here for updates. Additional information will be posted no later than May 29, 2020.

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.