Applying for the Saskatchewan Accelerated Site Closure Program
The Government of Canada allocated $400 million to fund the abandonment and reclamation of inactive oil and gas wells in Saskatchewan.
The Government of Saskatchewan has launched the Accelerated Site Closure Program (ASCP) to distribute the funding.
Key Details
The $400 million Accelerated Site Closure Program (ASCP) is expected fund the abandonment and reclamation of up to 8,000 wells and facilities and support approximately 2,100 full-time equivalent service industry jobs in Saskatchewan.
Purpose
The primary purpose of this program is to put Saskatchewan people back to work in the struggling oil and gas sector.
Oversight & Administration
The ASCP is overseen by the Ministry of Energy and administered by the Saskatchewan Research Council (SRC).
Source of funding
Along with the British Columbia Site Reclamation Programs and the Alberta Site Rehabilitation Program, the Saskatchewan Accelerated Site Closure Program is funded by a $1.72 billion Government of Canada initiative to support site rehabilitation across the Canadian energy industry.
$1.2 billion of the total funding was assigned to Alberta, $120 million to British Columbia, and the remaining $400 million to Saskatchewan.
For more information, see our detailed articles about the Alberta and British Columbia programs.
Timeline & Phased Roll Out
The ASCP is set to run until December 31, 2022 and will be rolled out in several phases.
Phase 1
Phase 1 allocates up to $100 million to service companies for abandonment and reclamation work.
Licensees will be assigned a portion of the planned $100 million, based their share of the total provincial liabilities for inactive wells and facilities.
Eligible licensees can nominate wells and facilities into the program and identify preferred contractors.
Future phases
Future phases will be developed with learning from Phase 1 to ensure that abandonment and reclamation work continues to be advanced in support of the program objectives.
Program Goals & Allocation Model
The primary goal of the Accelerated Site Closure Program is to put Saskatchewan-based oil and gas workers and companies back to work.
To meet this goal, the program is expected fund the abandonment and reclamation of up to 8,000 wells and facilities and support approximately 2,100 full-time equivalent service industry jobs in Saskatchewan.
Procurement-based work allocation model
The SRC will use a procurement-based model to allocate work, which has the following benefits:
area-based closure can be implemented by bundling work into packages for procurement
drives up overall efficiency to keep more people employed in Saskatchewan
ensures all contracting for services remains between eligible licensee and service companies
Work under Phase 1 will be funded at 100% of the eligible costs and be paid directly to eligible service companies.
Site control and licensee sign-off for tendering
Under no circumstances will a third-party take control of a licensee’s well, facility, or site. All affected licensees will be required to sign-off on work packages created by the SRC before they are put to tender.
Licensee Funding Allocation & Eligibility
The $100 million in Phase 1 funding is allocated to each licensee based on their share of the total deemed liability of all eligible licensees.
For example, if licensee A has a total deemed liability of $8 million, and the total deemed liability of all eligible licensees combined is $160 million, licensee A would be allocated 8/160 or 5% of the $100 million total for phase 1: $5 million.
Minimum funding allocation
Each eligible licensee will receive a minimum funding allocation of $50,000 to support reclamation and abandonment activities. The allocation calculation will consider the minimum allocation.
Disqualification for outstanding debts to the Crown
Producers or licensees that have outstanding debts to the Crown are not eligible for Phase 1 of the program.
To be eligible for the ASCP under Phase 1, the following debts to the Crown must be in good standing as of March 1, 2020:
amounts owing to the Oil and Gas Administration Levy or Orphan Well Levy
Crown oil and gas royalties
Crown mineral disposition rentals
Crown surface lease rentals
The Ministry of Energy will determine eligibility and licensees will be notified of their funding allocations by June 1, 2020.
Site Eligibility & Nomination
To be eligible for the program, wells, facilities, and sites must be nominated by the licensee.
The licensee must be current on their municipal taxes and private surface lease payments, depending on the location of the well, facility, or site.
The licensee is required to make the following two declarations when nominating wells and facilities:
They do not have any outstanding municipal taxes owing.
They are current on the surface lease payments.
Eligible Activities
For Phase 1, eligible activities include:
abandonment of oil and gas wells, facilities, and associated flow lines
environmental site assessments
site remediation activities and site reclamation activities.
Ineligible activities include:
abandonment of pipelines
To ensure the rapid roll-out of funding for Phase 1, routine abandonments and reclamation activities are preferred. Area-based closure models are a priority, so exceptions may be made for non-routine activities.
Prior and uncompleted work
Any work that commenced or was completed prior to the ASCP launch date is not eligible for the program. However, remediation and reclamation work remaining from a previously completed abandonment is eligible for the ASCP.
Allowable Expenses
All expenses associated with completing the work and in accordance with the procurement contract are eligible under the program. The following are allowable expenses:
materials and supplies
wages
equipment rentals
laboratory analysis
transportation of workers and equipment to and from sites
Details on ineligible expenses will be available as part of the procurement process set out by the SRC.
Licensee Funding Allocation & Contractor Nomination
Once the eligible licensees have their funding allocations, they will be required to submit projects that nominate wells facilities and sites and take advantage of area-based closures.
Requesting excess funding
Licensees are encouraged to submit projects that cover up to 125% of their funding allocation.
The over-allocation is intended to promote area-based closure projects and provide the licensee with flexibility in case they are unable to abandon a well or facility site.
A licensee will only be able to perform work that does not exceed their total allocation.
Nominating preferred contractors
As well, licensees are encouraged to nominate preferred contractors. The program will make every effort to facilitate the licensee’s use of preferred contractor in most circumstances.
Service Company Eligibility & Pre-qualifying Requirements
The ASCP includes a pre-qualifying process for service companies to ensure that eligible service companies are Saskatchewan-based and are capable of safely and effectively executing the work.
Service companies must also meet technical requirements to be eligible for the program.
Application process
To be eligible for the ASCP service companies must apply through the SaskTenders website.
The application period starts in the first week of June 2020.
These applications will be evaluated using the eligibility criteria and the service company will be added to the list of eligible ASCP service providers if eligible.
Once on the list, companies are eligible to bid on procurement contracts tendered by the SRC.
How to meet the “Saskatchewan-based” requirement
Only Saskatchewan-based service companies can participate in Phase 1 of the program.
To be considered Saskatchewan-based, the company can be in Saskatchewan, employ Saskatchewan people, pay Saskatchewan taxes, or source their supplies from Saskatchewan-based business based upon capacity, quality, and availability.
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Regulatory application processes are often administrative and time-consuming work. Understanding the appropriate requirements and compiling the necessary documentation is essential, but it can quickly add overhead to any project.
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Learn more about our Well Abandonment experience →
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Read our article about Managing Well Abandonment Projects →
Sources
Accelerated Site Closure Program, Saskatchewan.ca – viewed June 8, 2020
https://www.saskatchewan.ca/Business/Agriculture-Natural-Resources-and-Industry/Oil-and-Gas/Accelerated-Site-Closure-Program
Accelerated Site Closure Program Questions and Answers, May 21, 2020 – Viewed June 8, 2020
https://publications.saskatchewan.ca/api/v1/products/105485/formats/117756/download