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Reimbursement of a Defunct Licensee's Working Interest Participant Costs

Overview

The Ministry of Energy and Resources has the ability to use the orphan fund to reimburse working interest participants (WIP) for a defunct licensee's share of the facility decommissioning, well abandonment, and related well and facility site reclamation costs under The Oil and Gas Conservation Regulations, 2012.

For the purposes of reimbursement consideration, a licensee is considered defunct when they:

  • do not exist;
  • cannot be located; or
  • do not have the financial means to contribute to the costs of meeting the obligations pursuant to The Oil and Gas Conservation Act.

Guidance

When a licensee is deemed an orphan by the ministry, the Orphan Inventory list is updated to reflect the associated well and facility licences. In addition, the lists will identify any known/viable WIPs associated with the orphaned licences.

At this point the WIPs would be responsible for carrying out the abandonment and/or reclamation work required under the orphan program. After which time, the WIP may apply to the ministry for reimbursement of the defunct licensee's proportionate share of abandonment, decommissioning or reclamation cost incurred. Therefore, WIPs should review the Orphan Inventory and confirm they have been correctly identified as a WIP, where applicable, to ensure the orphan procurement group is not scheduling work to be carried out at those sites and duplicating efforts.

Note: If the ministry does not have your company name identified as a WIP on the Orphan Inventory list where it should, you must notify the ministry via email to ER.Servicedesk@gov.sk.ca with the subject line "Deemed Orphan WIP Notification" and provide a list of the licence numbers and the associated working interest (participant name and percentage) for each licence.

Eligibility

Before submitting a Request for Reimbursement of a defunct licensee's WIP cost, you must:

  • Have previously notified the ministry of the working interest (name and percentage) in relation to the deemed orphan licences for which you are seeking reimbursement.
  • Have completed the abandonment and/or reclamation work in accordance with the ministry's requirements. Note that:
    • Abandonment is considered complete when the well is cut and capped, or the facility has been decommissioned and IRIS has been updated to reflect this.
    • Reclamation is considered complete when the well or facility site has received an Acknowledgement of Reclamation approval from the ministry.

How to Apply

To apply for reimbursement of a defunct licensee's WIP costs:

  1. Ensure all eligibility criteria are met.
  2. Prepare an Invoice Package which includes the following supporting documents:
    • A detailed breakdown of the costs incurred to complete the abandonment, decommissioning or reclamation work for the given licence;
    • All associated invoices (which identify the well or facility licence) for work performed; and
    • A summary of any salvage revenue.
  1. Prepare a Working Interest Package which includes the following supporting documents:
    • Complete list of working interest percentages of each licensed entity held by the defunct licensee for which reimbursement is being requested and totalling 100 per cent;
    • A copy of the executed working interest agreement;
    • Complete list of directors and officers for all WIPs related to the deemed orphan licence(s) as the ministry needs to establish there is no overlap of persons within the corporations. Where a list cannot be obtained, the WIP applying for reimbursement must provide a statement guaranteeing that there is no overlap between WIPs.
    • A summary of the steps taken to collect the costs from the defunct licensee; and
    • Any other relevant information.
  1. Prepare a letter making a request for reimbursement which summarizes the important details from the supporting documents (prepared in steps 2 and 3 above), such as:
    • Defunct licensee's full corporate name;
    • Confirmation that the defunct licensee has no relation to the WIP who is applying for reimbursement (i.e. no common directors or officers);
    • Summary of the well or facility licence and the associated working interest (participant and percentage); and
    • Total amount of reimbursement being requested for the abandonment, decommissioning and/or reclamation costs incurred.
  1. Attach the letter, invoice package and working interest package as separate PDF documents (no security applied and pages orientated to be read on a computer screen) and email to ER.Servicedesk@gov.sk.ca with subject line "Reimbursement of a Defunct Licensee's WIP Costs."

If all eligibility criteria are met and the ministry is in agreement that the reimbursement is warranted, the WIP will be contacted via email to arrange payment.

Note: The submission of an application does not guarantee that the defunct licensee's share in the costs will be reimbursed. The ministry reserves the right to approve or deny the request based on evidence provided n the application as to whether the costs are, in the opinion of the ministry, reasonable and necessary to have completed the work

Apply

Complete and attach the application.

Submit your application now

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