Upstream oil and gas licensees are levied annually pursuant to clause 20.98(c) of The Oil and Gas Conservation Act (OGCA). The Orphan Fund Procurement Program uses the collected Orphan Fund Levy to pay the third-party costs to carry out the abandonment and/or reclamation work to bring the orphaned well and facility sites to closure.
Who pays into the Orphan Fund Levy
Each Saskatchewan upstream oil and gas licensee that has abandonment and/or reclamation liability associated with their well and facility licences, under the LLR Program, is required to pay an Orphan Fund Levy.
Note: The Orphan Fund Levy is only applicable to Oil and Gas Producers. Therefore, any Licensees holding only non- oil and gas well/facility licences, for purposes other than oil and gas production (such as potash mining, storage facilities, waste facilities, etc.) would be exempt from the levy. If a licensee receives a levy invoice and believes they qualify for exemption, please contact ER.Servicedesk@gov.sk.ca and provide supporting evidence for the ministry to review.
How the Orphan Fund Levy is Calculated
The annual Orphan Fund Levy amount is set by the Ministry of Energy and Resources, in consultation with the Oil and Gas Fund Advisory Committee (which includes representatives from government and industry), the Canadian Association of Petroleum Producers (CAPP), and the Explorers and Producers Association of Canada (EPAC).
The annual budget amount is based on the following:
- estimated costs for carrying out suspension, abandonment/decommissioning, remediation and reclamation work, under the Orphan Fund Procurement Program, for the upcoming fiscal year.
- anticipated reimbursement of defunct licensees' working interest participant costs;
- technical, administrative, legal or other costs related to acquiring professional services that are incurred in pursuing the above two points,
- any other costs directly related to the administration and operation of the Orphan Fund; and
- any surplus for emergency or contingencies and non-budgeted expenditures the ministry deems necessary.
Each fiscal year, the ministry determines each Saskatchewan upstream oil and gas licensee's total liability, under the LLR Program, associated with all upstream facilities, wells and unreclaimed sites. Each licensee is then levied to pay a portion of the Annual Budget based upon their percentage of the upstream oil and gas industry's liability. Under section 119 of The Oil and Gas Conservation Regulations, 2012 (OGCR) each licensee's levy amount is calculated as follows:
Orphan Fund Levy = (Licensee Liability / Industry Liability) X Annual Budget
When is the Orphan Levy Fund Issued
Each year, the ministry determines the amount each licensee is levied and issues invoices in May based on the licensee's total liability, under the Licensee Liability Rating (LLR) Program, as of April.
Note: In 2020, the issuance of the Orphan Fund Levy invoices will be delayed to allow the invoicing process to be integrated into IRIS. The ministry anticipates the 2020 Orphan Fund Levy invoices will be issued in July and the levy amounts will be determined based on each licensee's total liability, under the LLR Program, on June 28.
How is the Orphan Fund Levy Issued
Starting in 2020, licensees will be able to access their Orphan Fund Levy Invoices and supporting Licensee Liability Inventory Report through IRIS.
Licensees may refer to their Licensee Liability Inventory (LLI) Report to view their total liability along with the liability associated with each of their well and/or facility licences. Further information on the calculations used to derive the licensee's liability shown on the LLI report is provided in Directive PNG025 Licensee Liability Rating (LLR) Program.
Note: The ministry will no longer issue invoices by mail. Therefore, all licensees are encouraged to sign up in IRIS, if you have not already done so, to receive notification when the invoice is issued.
When and how is the Orphan Fund Levy collected?
The Orphan Fund Levy is collected annually. Each year, a licensee receives an invoice from the Ministry for its share of the total levy and payment must be submitted within 30 days of the invoice being issued.
Note: Ensuring that a levy is paid promptly after issuance is in the interest of industry and the regulator. Any licensee that does not pay the Orphan Fund Levy may face consequences. Section 12(2)(d) of The Oil and Gas Conservation Act allows for the minister to amend, suspend or cancel a licence if the licensee fails to pay the Orphan Fund Levy within the prescribed period, which is prescribed in section 119(1) of the OGCR as 30 days after issuance.
Ministry Accepted Payment Methods
Orphan Fund Levy payments must be made payable to the Minister of Finance and include reference to the Invoice # being paid. The invoiced amount can be paid by Pre-Authorized Debit (PAD), Electronic Funds Transfer (EFT), direct deposit or cheque.
Note: In 2020, PAD is now an accepted method of payment for the Oil and Gas Orphan Fund Levy. Licensees wishing to sign up to pay the Orphan Fund Levy invoice via PAD should complete the following form.
Inquiries related to the payment methods should be directed to the ER Service Desk at 1-855-219-9373 or ER.Servicedesk@gov.sk.ca.