Released in January 2019, the Methane Action Plan (MAP) is the Government of Saskatchewan's comprehensive approach to reducing greenhouse gas (GHG) emissions from venting and flaring activities in the upstream oil and gas industry. MAP combines flexible results-based regulations with 10 new complementary policies and programs to protect industrial competitiveness and limit carbon leakage risks.
MAP will reduce methane* emissions by 4.5 million tonnes of carbon dioxide equivalent (CO2e) annually by 2025. Total MAP emissions reductions between 2020-2030 will be at least 38.2 million tonnes CO2e.
MAP is one of the main components of the Government of Saskatchewan's Prairie Resilience: A Made-in-Saskatchewan Climate Change Strategy, released in December 2017. Provincial efforts to reduce GHG emissions in the province's oil and gas sector are covered by both MAP (venting and flaring emissions) and the province's new Output-based Performance Standards for industrial facilities regulations (stationary fuel combustion emissions), which came into force in January 2019.
MAP focuses on addressing unique local conditions and challenges in ways that only a made-in-Saskatchewan approach can. This includes regulations, policies and programs that align to the specific emission management, infrastructure and investment requirements in each of the province's four major oil producing regions.
MAP is the Government of Saskatchewan's roadmap to responsibly guide the upstream oil and gas sector in a multi-year transition away from venting and flaring and towards methane capture and commercialization opportunities.
*A Note on Methane and Associated Gas: By and large, when oil is produced it comes from a reservoir to the surface mixed with a combination of gases, which the industry refers to as gas produced in association with oil or "associated gas." To avoid confusion, the term "methane" is used throughout the MAP document in place of the less well-known term "associated gas." Associated gas emissions from venting and flaring in 2015, the Prairie Resilience baseline year, were 10.9 million tonnes CO2e.
Oil and Gas Emission Management Regulations
On January 1, 2019, the Government of Saskatchewan introduced The Oil and Gas Emission Management Regulations (OGEMR), which will reduce upstream oil and gas industry emissions from venting and flaring by over 40 per cent between 2020-2025, and provincial methane emissions are then capped at that level irrespective of any potential overall growth of provincial oil and gas production. OGEMR's mandatory emissions reductions are equivalent to a decrease of 4.5 million tonnes of CO2e annually by 2025 from 2015 levels.
OGEMR is a results-based approach that focuses on achieving proven and verifiable emissions reductions without rigidly prescribing to industry the exact reduction methods or unnecessarily restricting the way to achieve the desired reductions. This provides companies the ability to strategically plan their emissions reductions across all their facilities so they can achieve the most cost-effective approach, which eliminates the prospect of being forced to prematurely shut down and strand assets before their natural end of life.
Map Complementary Programs and Policies
- Power Generation Partner Program (PGPP): Launched for applications in November 2018 and administered by SaskPower, PGPP will enhance the upstream oil and gas industry's ability to produce electricity for sale to SaskPower for projects that utilize methane from oil production as the primary fuel source. The PGPP has a total program allocation of 50 Megawatts (MWs) of new electricity production capacity from projects that utilize methane from oil production as the primary fuel source, with the option for SaskPower to increase the program size to a total of 75MWs.
- SaskPower and First Nations Power Authority Agreement: SaskPower and First Nations Power Authority have signed an agreement to source 20MWs of electricity from power generation projects that utilize methane from oil production as the fuel source and that are led by First Nations communities and businesses. This 20MW allocation is above and beyond the PGPP program allocation.
- Associated Gas Conservation Program (AGCP): AGCP is administered by SaskEnergy/TransGas and creates more opportunities in the upstream oil and gas industry for the sale and movement of associated natural gas between oil and gas producers. This will allow producers and consumers to work together in situations where associated gas would otherwise be flared or vented, allowing for the capture of associated gas in a cost-effective manner.
- Technology Fund: The Ministry of Environment is establishing a Technology Fund. Penalty payments under OGEMR will be deposited in the Technology Fund, but held separately from other payments made to the fund. The OGEMR portion of the fund will prioritize all types of methane capture and commercialization projects and other emissions management projects in the sector. Additional details about Technology Fund will be available soon.
- Oil and Gas Processing Investment Incentive (OGPII): OGPII is administered by the Ministry of Energy and Resources and offers transferable royalty/freehold production tax credits for qualified greenfield or brownfield value-added projects at a rate of 15 per cent of eligible project costs. OGPII is open to oil and gas value-added processing projects as well as methane, production byproduct, or waste product commercialization projects across all segments of the sector.
- Saskatchewan Petroleum Innovation Incentive (SPII): SPII is administered by the Ministry of Energy and Resources and offers transferable royalty/freehold production tax credits for qualified innovation commercialization projects at a rate of 25 per cent of eligible project costs. The program targets a broad range of innovations deployed across all segments of Saskatchewan's oil and gas sector, including emissions management projects.
The SPII program is open to both pilot projects and commercial scaling projects – giving applicants the ability to test their innovations in a pilot setting, and then deploy them at larger commercial scales. In addition to this, projects executed across multiple sites and projects that include multiple phases may also be considered eligible to the program under a single application.
- Associated Gas Royalty Review: The Ministry of Energy and Resources has implemented a five-year Associated Gas Royalty Moratorium (Moratorium) on the collection of Crown Royalty and Freehold Production Tax (royalty) on associated gas produced from wells other than gas wells, including natural gas produced from oil wells. The implementation fulfills a commitment announced in the Government of Saskatchewan's Growth Plan to assist producers in meeting their regulatory obligations to reduce methane-base greenhouse gas emissions by 40 to 45 per cent between 2020 and 2025.
The Moratorium will apply to natural gas produced on or after April 1, 2021, and before April 1, 2026, and will effectively start with the billing of the April 2021 production month and end after the billing of the March 2026 production month.
- Geographic Information System: The Ministry of Energy and Resources, Ministry of Environment, SaskPower and SaskEnergy will collaborate to create an integrated comprehensive GIS that will encompass all relevant upstream oil and gas information collected by provincial regulatory bodies and all relevant infrastructure to support methane capture and commercialization projects. View the Gas Commercialization Mapping (GCM) Service.
- Industry-Utility-Government Joint Planning Areas: The Ministry of Energy and Resources, Ministry of Environment, SaskEnergy and SaskPower will collaborate to establish Industry-Utility-Government Joint Planning Areas in regions of the province where significant volumes of methane venting and flaring occurs. These planning areas will assist stakeholders in developing and executing methane capture and commercialization projects with a focus on overcoming unique local challenges. View the Gas Commercialization Mapping (GCM) Service.
- Methane Action Plan Annual Progress Report: Beginning in 2021, the Government of Saskatchewan will release an annual progress report on all commitments, targets, programs and policies listed in the Methane Action Plan.