Sask. expects to add up to 200 oil wells with multi-lateral drilling program

The provincial government is making a move which could see as many as 200 more oil wells drilled in Saskatchewan each year.

The government announced its multi-lateral well drilling program on Tuesday, in an effort to provide a boost to the oil industry in Saskatchewan, which supports more than 26,000 jobs.

The program offers competitive royalties for the use of multi-lateral horizon oil wells, which allow a single well to access more of the underground oil reservoirs. The government said it expects the program will add 100 to 200 more oil wells in the province each year, and will boost investment in the industry.

Jim Reiter, Saskatchewan’s energy and resources minister, said using multi-lateral drilling will put more oil rigs and more workers into the field, and support the government’s goal of increasing production by 25 per cent, up to 600,000 barrels each day.

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“On the first 16,000 cubic meters of oil that’s done under this process they get a reduced royalty rate, and then after they reach that level it goes back to a normal royalty rate,” Reiter explained.

“It recognizes the increased investment and increased cost to industry, recognizes that in the early stages the province still gets revenue from it, and once it reaches that level then it’s back to normal revenue sources for the government, so it’s a win-win. It helps industry in the early stages develop those wells, and it increases revenue for provincial coffers that we use for health care, education and highways.”

Lisa Baiton, CEO of the Canadian Association of Petroleum Producers, praised the program as a great way to draw more investment to the province.

“The competition for capital investment is fierce and Saskatchewan’s plan to modernize the royalty regime to recognize the use of new drilling technologies provides the right policy environment to attract investment to the province,” Baiton said, quoted in a government release.

“A more competitive royalty framework will help unlock valuable oil resources in Saskatchewan and will, in turn, create more jobs and additional revenues for the government and municipalities.”

Dave Burton, president and CEO of Lycos Energy, said that multi-lateral wells are more eco-friendly.

“There’s substantially lower surface impact on these wells, for sure. I think the other thing is that we have almost zero water utilization when we drill these wells, and we are not fracking them,” said Burton.

He added that the program will also help smaller producers.

Saskatchewan is the second-largest oil producing jurisdiction in Canada, behind Alberta.

–with files from 980 CJME’s Roman Hayter