Stampede Drilling Rig 22 near Lampman on Jan. 27. Photo by Brian Zinchuk

Drill, baby, drill more legs on those wells

In creating its new “investment attraction strategy,” the Saskatchewan Party government took note of several new developments in the province’s energy sector, including a new program to encourage a form of drilling that is rapidly gaining steam. And as lithium producers are moving from the pilot stage towards commercialization, there’s an incentive for them, too, as well as helium producers. Two existing oil and gas incentive programs are also being extended.

Those are just some of the items in Securing the Next Decade of Growth: Saskatchewan’s Investment Attraction Strategy, released by  Trade and Export Development Minister Jeremy Harrison in March 11.

The strategy is Saskatchewan’s roadmap to increasing investment in the province and further advancing Saskatchewan’s Growth Plan goal of $16 billion in private capital investment annually, the release said.

Of particular note is the recent trend in southeast Saskatchewan of drilling multi-lateral wells. While having two or three legs on a well has been around for quite a while (PetroBank was routinely drilling two-leg wells in 2009), Cache Island and Crescent Point led the way on Bakken wells near Corning that could see around eight legs per well, similar to how other operators have found success with similar programs in Alberta. And several more companies operating in Saskatchewan are getting on the band wagon, drilling increasing numbers of legs per well.

“The new Multi-lateral Well Program will provide an incentive to help jumpstart use of this new more sustainable drilling technology,” the release said.

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There’s not much information about this program in either the release, its website, or pdf document. But this is what the Ministry of Energy and Resources website said:

Multi-lateral Oil Well Program (MLWP)

Program Update: The Multi-lateral Oil Well Program (MLWP) will be announced as part of Budget 2024-25, to be released on March 20, 2024. Following the program’s announcement on March 20, 2024, the Ministry of Energy and Resources will release an Information Circular containing details of the program, including how to apply. The program will be administered in accordance with the Information Circular until such time as program regulations are approved and the program is launched, expected in spring 2024. Once the regulations are approved, the program will be retroactive to April 1, 2024.

The Multi-lateral Oil Well Program (MLWP) offers an additional volumetric drilling incentive for eligible multi-lateral horizontal oil wells drilled on or after April 1, 2024, and on or before March 31, 2028. The amount of additional volumetric incentive provided depends on the number of laterals drilled.

The new generation of multi-lateral wells are considered an evolution in drilling in Canada and can be drilled in multiple configurations to better access more of the oil reservoir, which increases the well’s recovery factor, reduces drilling costs and improves reservoir management. They also reduce the number of surface leases and facilities required, making oil production and the capture of associated natural gas more economic.

The MLWP is administered by the Ministry of Energy and Resources.

“The new Saskatchewan Critical Minerals Innovation Incentive will support innovation commercialization projects that target emerging critical minerals including helium, lithium, rare earth elements, copper, zinc, magnesium, nickel, gallium, and aluminum through a 25 per cent transferable royalty/freehold production tax credit,” the release said.

“The new Critical Minerals Processing Investment Incentive will support the development of critical mineral processing in our province, establishing Saskatchewan as a rare earth elements hub. The program will provide a 15 per cent transferable royalty/freehold production tax credit to support the development of processing facilities for 10 emerging critical minerals in Saskatchewan.”

The expanded Saskatchewan Technology Start-up Incentive is a non-refundable 45 per cent tax credit to individuals, corporations, and venture capital firms that invest in eligible technology startups. This program will see a doubling of its annual tax credit cap from $3.5 million to $7 million and expanded eligibility to include clean technology.

Two successful existing incentives are being extended for five more years to 2029, the Oil and Gas Processing Investment incentive and the Saskatchewan Petroleum Innovation Incentive.

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“The new strategy builds on Saskatchewan’s many advantages as the best place to invest in the nation,” Harrison said in a release. “This will lead to more opportunities for local, national and international investors, while solidifying our province as a nation leader in private capital investment. We have seen significant investments in this province over the past several years and this strategy will help build on that momentum. This will create jobs, and grow our economy for a brighter future that benefits all Saskatchewan residents.”

Private capital investment in Saskatchewan increased by nearly 25 per cent in 2023 and is expected to lead the nation with an increase of 14.4 per cent in 2024, the government noted.

The government said “The strategy is built on the Saskatchewan Advantage, which includes a competitive business environment, low tax and utility rates, a transparent and predictable regulatory environment, a strong suite of incentives and a network of nine international offices that connect Saskatchewan to the world.”

“Saskatchewan’s world class resource base, highly skilled talent pipeline and stable and supportive regulatory and investment environment, all gave BHP the confidence to make the largest single investment in the company’s history right here in Saskatchewan,” BHP Potash Asset President Karina Gistelinck said. “Our Jansen potash mine will deliver responsibly produced Canadian potash to the world. We are proud to support the ongoing economic growth of Saskatchewan and applaud the province for their commitment to advancing growth and prosperity in a responsible manner.”

The strategy focuses on three key pillars:

  • Build – creating opportunities in new and emerging sectors to drive investment and diversify the economy;
  • Grow – leveraging previous successes and capitalizing on existing strengths in Saskatchewan’s key sectors; and
  • Connect – connecting the world to Saskatchewan to ensure the province remains a secure, reliable supplier of goods and services.

As part of the strategy, the provincial government launched a new website, investSK.ca, which will serve as a gateway to the province for international business and investors. It provides an overview of the major economic sectors and the world-class investment opportunities in Saskatchewan.

“Saskatchewan’s newly announced Investment Attraction Strategy strikes the right balance between supporting our established industries and encouraging innovation,” Saskatchewan Chamber of Commerce CEO Prabha Ramaswamy said. “We look forward to showing the world what our province has to offer and welcoming new partners both in Canada and abroad.”

“To continue to be the best place in the world to invest,” the Government of Saskatchewan said it is is announcing the following new, expanded, or improved incentives.

The new and expanded programs will compliment existing successful programs such as the Saskatchewan Value-Added Agriculture Incentive, the Manufacturing and Processing Investment Tax Credit and others, the government said.

The new website is investSK.ca

 

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