A new program to help incentivize oil production from low-producing or inactive wells is being launched by the provincial government today.
The Low Productivity and Reactivation Oil Well Program (LPRP) will look to promote industry investment in low-producing or inactive horizontal oil wells through a new royalty structure for eligible wells.
The province projects that in the final year of its four-year stretch, the program will add 30,000 barrels per day of oil production and generate $21 million in additional royalty revenue for the province.
"Growing Saskatchewan's oil and gas industry is a priority for our government," said Energy and Resources Minister Colleen Young. "This new program will encourage companies to make new investments in existing assets and increase oil production in our province. With our abundant resources, competitive regulatory environment, and targeted incentives, Saskatchewan is one of the best places in the world to develop oil and gas projects."
The program will also extend the life of some wells which have already been drilled and allow companies to access oil that may otherwise have been left in place.
The province says this program will help their Saskatchewan Growth Plan goal of increasing oil production to 600,000 barrels per day.
"Not only does the LPRP support the government's goal of increasing oil production, it has the added benefits of reducing inactive asset retirement obligations, improving environmental performance and enabling companies to convert liabilities into assets," said Saturn Oil and Gas CEO John Jeffrey.
Jeffrey says they've already completed one re-entry near Frobisher and are starting to look for new opportunities.
"We believe the LPRP will spur increased production, activity and revenue for the province; reduce the inactive well count and create additional employment and investment opportunities. Ultimately, the new LPRP represents a win-win for all stakeholders."
Last year, the value of Saskatchewan oil and gas production reached $13.5 billion, with the sector employing over 26,000 people.