On June 2 The Government of Saskatchewan held a townhall to share additional details about the previously announced Accelerated Site Closure Program.

Summit was pleased to take part in this informative session and we have attached some of the key points.

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Accelerated Site Closure Program (ASCP) Update

On June 2 The Government of Saskatchewan (GoS) held a townhall to share additional details about the previously announced Accelerated Site Closure Program (ASCP).

Previously Shared Details

• ASCP is part of the federal economic response plan related to COVID-19

  • Designed to support oil and gas employment

  • Targets abandonment and reclamation activities in Saskatchewan.

• The $400 million program will be divided into multiple phases moving towards closure of wellsites and facilities by December 31, 2022.

• Up to $100 Million in grants will be available during Phase I.

• Details on subsequent phases will be available in the future.

• The program will be implemented through joint efforts of SaskBuilds, Saskatchewan Ministry of Energy and Resources(MER) and Saskatchewan Research Council(SRC).

June 2nd Townhall Details

Eligible licensees will be able to nominate inactive wells and facilities into the program through the Integrated Resource Information System (IRIS) with expenditures based on their portion of the total provincial liabilities for inactive wells and facilities. Preferred contractors can be identified through the nomination process.

Project Eligibility

The scope of work must be part of well abandonment and reclamation process. The intent of this first stage is to expedite funding to the service sector and utilize existing contractor/licensee relationships.

Activities that are eligible for Phase I grant funding include routinely approved activities:

• Abandonment of oil and gas wells, facilities, and associated flowlines

• Environmental Site Assessments (Phase 1 and 2)

• Remediation activities

• Reclamation activities

Licensee Eligibility

Licensee must be in good standing with the Crown as of March 1, 2020 including:

• Oil and Gas Administrative Levy

• Orphan Well Levy

• Crown oil and gas royalties

• Crown mineral disposition rental

• Crown Surface Lease rentals

Licensees owing money to the crown, municipalities or landowners (if on private land) are not eligible for the first phase of funding

Licensee funding allocations were disbursed on Monday June 1, 2020.

Funding allocations are based on a ratio of the licensee's total deemed inactive liability as a percentage of all eligible licensees

• Minimum of $50K will be assigned to each eligible company to facilitate at least one closure

• Maximum funding will be capped to ensure equitable distribution

Service Company Eligibility

Eligible Service Companies must be pre-qualified Saskatchewan-based:

• Located in Saskatchewan (brick and mortar location that is staffed)

• Employing Saskatchewan People

• Paying Saskatchewan Taxes

• Utilize suppliers and subcontractors in Saskatchewan based upon capacity, quality and availability

• Service providers must meet all technical requirements to be eligible for the program including:

  • safety programs, insurance, WCB registration and valid COR/SECOR

Program Funding and Distribution

Funds will be released on the following basis:

• $100 Million will be funded 100% up to the eligible Licensee maximum funding

• Funds are to be provided directly to the service provider executing the work

• Payment for individual services will not be issued

• Allocated to licensee but payments go directly to service companies

• 3rd party administration - due to capacity, SRC to help get it out quicker

• SRC will be monitoring progress of work and costs

Nominations

Licensees will submit nominations for their own wells and facilities up to the amount of their individual cap

Licensee can identify the preferred contractor in their application and best efforts will be made to honour the preference (no guarantee for single wells or small packages)

• Licensee has opportunity to reject ASCP selected vendor

• Standard industry contract T&C apply, and the program will not interfere with producer and contractor relationships

• Site supervision and signoff - remain licensee responsibility

When do nominations open?

• A specific date has not been identified, however as soon as possible.

Area Based Closure and Multi-Well Packages

Deployment of area-based closure model is considered a priority. SRC will ensure multi-well packages are available throughout the life of the program, making sure there is a constant flow through to December 2022.

• Multi-well packages may range from 10-50 wells based on complexity and location

• Wells are encouraged to be packaged in nominations to encourage the economy of scale, reducing mobilization/demobilization costs

• Multi-well packages could include multiple licensees and be competitive for contractors

Additional Information

1. Lloydminster contractors may be eligible and will be treated as a special circumstance as a border town employing both Saskatchewan and Alberta.

   1. Prequalification details for this region will be released at a future date

2. Subcontractors do not need to apply; they are to be selected by the lead contractor

3. Approximately 75% of work will be required to be completed by Saskatchewan residents

4. No cap on spending on individual wellsites or projects (other than maximum funding allocation)

5. Future funding allotments and criteria are to be determined

6. Work that commenced prior to the launch of this program is not considered eligible, however future stages of work can be applied for.

Working for you

Summit is available to help develop cost estimates and work plans for your sites in Saskatchewan. We have been proudly employing Saskatchewan residents and engaging in projects in Saskatchewan through both our Lloydminster and Weyburn offices since 2008 and 2010 respectively. More information will be shared as it becomes available.

Contact Summit

Please reach out to your Summit Project Manager or Business Development Representative if you have any questions or would like assistance nominating your sites for grants.