Waterflood Development Program
The Waterflood Development Program (WDP) offers repayable royalty/freehold production tax deferral for eligible wells that have been converted to injection wells or newly drilled injection wells for the purpose of waterflooding an oil reservoir.
Waterflooding is a secondary oil recovery technique that utilizes non-potable water for re-injection into the oil reservoir to restore reservoir pressure and sweep the oil to nearby producing wells. Waterflooding is a capital intensive undertaking and the time period before a response in the reservoir can be lengthy. As such, WDP is designed to help offset initial capital investments by providing a three-year repayable royalty credit for eligible waterflood injection wells.
- WDP provides a repayable royalty deferral with a low interest rate to eligible wells for a period of three years. The royalty deferral is applied at the corporate level.
- Beginning in the fourth year, the repayable royalty deferral and accrued interest is returned to the Ministry of Energy and Resources in 10 monthly instalments.
- WDP repayable royalty deferral amounts for eligible wells:
- Drilling a new dedicated horizontal injection well – $1,000,000.
- Drilling a new dedicated vertical injection well – $500,000.
- Converting a vertical or horizontal production well to an injection well – $500,000.
- WDP can be used alongside other incentive and grant programs available in Saskatchewan.
To qualify for the WDP your company must be the licensee of an injection well that has first injected water on or after January 1, 2019, and before April 1, 2024, and is approved as part of a waterflood project pursuant to Section 17 of The Oil and Gas Conservation Act.
The applicant must also pass a financial stress test that consists of the following four measures:
- The applicant does not have outstanding debts that are past due to the Ministry of Energy and Resources;
- The applicant has a Licensee Liability Rating (LLR) of 2.0 or greater as established by the Ministry of Energy and Resources;
- The applicant's cumulative value of outstanding royalty deferrals does not exceed 30% of the applicant's average monthly value of oil production; and,
- Provide any additional information, as requested by the Minister of Energy and Resources.
Please refer to the Waterflood Development Program Information Circular for more information.
3. How To Apply
To apply for the WDP, companies need to complete and submit the WDP Application Form to PetroleumRoyalties@gov.sk.ca. If you have questions about the application process, refer to the Waterflood Development Information Circular or contact PetroleumRoyalties@gov.sk.ca.
The ministry will be accepting applications between December 1, 2019, and December 31, 2024.