Released on July 23, 2007
After extensive consultation with industry, Saskatchewan has introduced a new program to pay for the clean-up of orphan oil and gas wells and facilities in the province. An orphan well or facility is one which is inactive, and where the company that owns the well or facility has either gone out of business or cannot be located.
This new program will allow the government to establish a fund which is solely paid for by oil and gas companies to cover the cost of cleaning up orphan wells and facilities.
"Managing orphan wells and facilities has been a challenge for regulators in balancing the need to protect the environment with the significant cost of cleaning up these abandoned wells and facilities," Industry and Resources Minister Maynard Sonntag said. "This program, designed with the input of our oil and gas industry, provides clarity and transparency to operators on their responsibilities and also recognizes the dynamic of the many small, independent operators who make up such a large part of our top industry."
The new program has two key components, a security deposit and an annual levy. The security deposit will be based upon a formula that considers assets of the well and facility licensee against the estimated cost of decommissioning the well and facility once it is no longer producing. The annual levy assessed to each licensee will provide funding to pay for the clean-up of a designated number of orphan wells and facilities every year, and is expected to be a reasonable amount that does not cause hardship for the industry.
Changes made to The Oil and Gas Conservation Act came into effect in late June to set up the Saskatchewan Orphan Well and Facility Liability Management Program. There were also regulatory changes approved by the province to support the program.
More information about the program is available on the Industry and Resources website at www.ir.gov.sk.ca and click on Saskatchewan's Oil and Gas Resources, What's New section.
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For more information, contact:
Bob Ellis
Industry and Resources
Regina
Phone: 306-787-1691
Email: rellis@ir.gov.sk.ca