THE GOVERNMENT OF SASKATCHEWAN TO INTRODUCESIGNIFICANT CHANGES TO THE OIL AND GAS

CONSERVATION REGULATIONS, 1985.

The amended regulations will set the future directions of liability management and

environmental stewardship programs in Saskatchewan.

Ministry ofEnergy and Resources has introducing significant amendments to The Oil and Gas

Conservation Act and The Oil and Gas Conservation Regulations, 1985. These changes are

designed to support a new Orphan Well and Facility Liability Management Program as well as

modernize a number of regulatory standards. The purpose of these changes is to assist in

developing a regulatory environment that is more relevant to the current oil and gas development

practices and technologies currently employed in Saskatchewan.

Government and the upstream oil and gas industry representatives invested a significant amount

of time and resources carrying out extensive consultations in the development of the amended

legislation and the regulations. This investment was made to ensure that the new regulatory

changes help to create an economically competitive environment for the Saskatchewan upstream

oil and gas industry while realizing a high level of environmental stewardship.

The most notable change is the introduction of The Saskatchewan Orphan Well and Facility

Liability Management Program.

In 1989, the Government of Saskatchewan had established The Oil and Gas Environmental Fund

to provide a mechanism to pay for the cost of abandoning orphaned wells and responding to

major oil spills or other environmental disasters where a responsible operator could not be

identified. The fund was created by assessing a one-time fee of $1 00 on each well that was

drilled prior to May 1989 to a maximum sum of $20,000 contributed per company.

MINING, OIL AND GAS October 2008

2

In 1999, the Government of Saskatchewan formed a committee to review the effectiveness of

The Oil and Gas Environmental Fund. This committee was named The Saskatchewan Orphan

Well and Facility Liability Management Program Advisory Committee. The committee was

tasked with reviewing and making recommendations to improve The Oil and Gas Environmental

Fund.

The advisory committee was made up of experts from the oil and gas industry and government.

They included representatives from: The Canadian Association of Petroleum Producers (CAPP);

The Small Explorers and Producers Association of Canada (SEPAC); The Saskatchewan Swab

Producers Association (SSPA); Saskatchewan Environment (SE) and Ministry of Energy and

Resources (ER). These industry associations are responsible for almost all oil and gas produced

in Saskatchewan.

The advisory committee recommended replacing The Oil and Gas Environmental Fund with an

orphan well and facility liability management program similar to Alberta's. Given the extensive

work expended and experience gained in Alberta, it was considered prudent to draw upon their

work and experience in designing a Saskatchewan program.

The program features two key economic instrument components: a security deposit system and

an annual orphan fund levy. A security deposit is collected from companies whose liability is

greater than their assets; the security amount is the difference between the two. The security

deposit serves two purposes; it prevents an individual, who does not have sufficient economic

means, from acquiring oil and gas wells or facilities and if the company becomes bankrupt, then

the security deposit will cover the cost of decommissioning and reclaiming the orphan property.

In a case where the security deposit amount is insufficient to cover the cost of the necessary

work, all of the oil and gas companies operating in Saskatchewan will be levied a fee, The

Orphan Fund Levy, to make up the shortfall.

MINING, OIL AND GAS October 2008

)

3

A company that is required to submit a security deposit, because their total liabilities are greater

than their assets at the time when the amended regulation is introduced, will be provided with

four years to submit the total amount (25% per year). If this causes a hardship, on case-by-case

appeal basis, a company may be provided with up to ten years to submit the necessary security

deposit.

Although the Saskatchewan program is modeled after Albert's, it incorporates a number of

unique modified factors that are carefully designed to ensure that the program supports the long­

term economic prosperity of the smaller oil and gas companies. These modified factors are very

unique to Saskatchewan and are designed specifically to accommodate for the large number of

small oil and gas operations that currently exist in Saskatchewan.

One of the most unique achievements in the development of The Saskatchewan Orphan Well and

Facility Liability Management Program is that representatives from all three oil and gas industry

associations (CAPP, SEPAC and SSPA) support the proposed program. This program manages

to strike a balance between protecting the economic interests of small operators, while managing

risks associated with the growing number of orphan wells.

Another notable change in the amended regulations is the introduction of mandatory licensing of

all upstream oil and gas facilities in Saskatchewan. The licensing of upstream facilities is

necessary to ensure that the most current ownership and liability information is available to

support The Saskatchewan Orphan Well and Facility Liability Management Program.

In order to ensure minimal disruption to the industry, all upstream oil and gas facilities that

existed prior to the introduction of the amended regulations will be automatically assigned a

facility licence free of charge. However, a company constructing a new facility, after the

introduction of the amended regulations, will be required to submit a license application with a

prescribed fee of $500.

MINING, OIL AND GAS

~SK+E'S"

October 2008

4

This fall, all licensees will be provided with a detailed list of their licensed facilities, licensed

wells and estimated security deposit amounts. Ample time will be provided to the licensees to

review the information provided and make any necessary corrections or appeals before any

security deposit is collected.

Additionally, numerous changes have been made in the areas of: well licensing; safety signage;

site reclamation; equipment spacing; setback distances; emergency response plans and spill

reporting to harmonize Saskatchewan's rules with the rules ofneighboring oil and gas producing

provinces. Although we did not harmonize our entire regulations, the key safety, operational and

environmental rules have been made more consistent with the other provinces.

SUMMARY OF CHANGES TO THE OIL AND GAS CONSERVATION REGULATIONS,1985 relating to the presentation.

Old ProvisionsNew provision.

New provisions.

MINING, OIL AND GAS

New Provisions"Fee for first-time applicant10.3 A first-time applicant must pay a fee of$10,000 to theminister for deposit into the orphan fund."

"Eligibility requirements to be issued a licence10.4(1) No person is eligible to be issued a licence for a well orupstream facility unless:

(a) that person:(i) is a working interest participant; or(ii) in the case of a well mentioned in subclause 2(1l)(i)

is a working interest participant and is entitled to theright to produce the oil or gas from the well or to theright to drill or operate the well; and

(b) if that person is carrying on a business, that person'sbusiness is registered to lawfully carry on business inSaskatchewan.

(2) No licence shall be issued to, or transferred to or from, aperson if:

(a) that person:(i) has not paid the required fee pursuant to section

10.3 if the person is a first-time applicant;(ii) has not paid the required annual orphan fund levy

pursuant to section 18.6; or

October 2008

~SK'l'E'S'1

)

)

5

(iii) owes any money to the Crown in right ofSaskatchewan; or

(b) that person's business is not registered to lawfully carryon business in Saskatchewan

New provisions. "Licensee or working interest participant is liable10.5(1) Costs of abandonment and reclamation ofa well,upstream facility, associated flowline and the respective sitementioned in subsection 18.3(2) are the responsibility of:

(a) the licensee; or(b) if the licensee is insolvent, bankrupt or cannot belocated or is incapable of operating the well or upstreamfacility as required by the Act or these regulations, theworking interest participants.

(2) Abandonment and reclamation of a well, upstream facility,associated flowline and the respective site does not relieve thelicensee or the working interest participants of the responsibilityto undertake further abandonment or reclamation work or fromthe responsibility for the costs of doing that work".

New provision. The following subsection is added after subsection 15(6):

"(7) If a licence is suspended or cancelled pursuant to section 12of the Act:

(a) all rights and privileges conveyed by the licence aresuspended or cancelled, as the case may be; and(b) the responsibility of the licensee and any workinginterest participant for the well, upstream facility orassociated flowline, and the well site or upstream facilitysite, continues after the suspension or cancellation of thelicence with respect to any obligations of the licenseepursuant to:

(i) the Act;(ii) these regulations(iii) any orders made pursuant to the Act; or(iv)any terms or conditions of the licence".

MINING, OIL AND GAS

~SK,t'E'S,1

October 2008

6

18 Where: 13 Section 18 is repealed and the following substituted:(a) the minister hasprovided a written consent "Transfer of licence:pursuant to section 12 of 18 The department shall transfer a licence if:the Act for the transfer or (a) the minister has provided written consent pursuant toassignment of a licence; section 10 of the Act for the transfer of the licence;and (b) the transferor submits to the department:(b) the transferor or (i) two copies of a completed transfer application in atransferee or assignor or form specified by the minister;assignee, as the case may (ii) a security deposit pursuant to subsection 18.2(2);be, submits to the (iii) any other information required by the minister; anddepartment: (iv) a fee as set out in Appendix 1; and

(i) a copy of the duly (c) the transferee meets the eligibility criteria pursuantexecuted transfer or section 10.4".assignment in a formthat is satisfactory tothe department; and(ii) a fee as set forthin Appendix 1;

the department shall transfer orassign the licence, as the casemay be.

"PART IV.1 Part IV.1 is repealed and the following substituted:"Oil and Gas Environmental

Fund" "PART IV.1"Oil and Gas Orphan Fund"

New provision. "Interpretation18.1 In this Part:

(a) 'depositor' means a person who, as a licensee or onbehalf of a licensee, has deposited an amount with theminister pursuant to section 18.2, and includes the heirs,successors and administrators of that person;(b) 'fiscal year' means the fiscal year of the orphan fund setout in section 18.8;(c) 'orphan' means a well, upstream facility or associatedflowline, or the respective site, if, in the opinion of theminister, a person responsible for the well, upstream facility,associated flowline, well site or upstream facility site:

(i) does not exist;(ii) cannot be located; or(iii) does not have the financial means to contribute tothe costs ofmeeting the obligations pursuant to the Act,these regulations, any orders made pursuant to the Act or

MINING, OIL AND GAS

~SK·l·E·S·1

October 2008

)

)

MINING, OIL AND GAS

7

any terms and conditions of a licence;(d) 'orphan fund levy' means the fee to be levied on wellsand upstream facilities pursuant to Part III.2 of the Act andcalculated and administered in accordance with section 18.6;(e) 'site', when used in reference to a well site, upstreamfacility site or associated flowline, does not include any partof a site that:

(i) has been designated or re-designated as acontaminated site pursuant to sections 11 or 13 of TheEnvironmental Management and Protection Act, 2002;or(ii) is the subject of an order that is made pursuant tosection 46 or 47 of The Environmental Management andProtection Act, 2002.

October 2008

~SK-l-E-S-I

8

New provision. "Security deposit for a well or upstream facility18.2(1) The minister may specify any relevant factors at any timeto calculate the amount of a security deposit required to besubmitted by the depositor:

(a) at the minister's initiative; or(b) on application by the depositor.

(2) For the purposes of section 15 of the Act, the minister mayrequire a licensee or a transferor or transferee of a licence tosubmit a security deposit to the department:

(a) before approving, issuing or transferring a licence;(b) at any time the licensee fails a licensee liability ratingassessment conducted by the minister pursuant to section18.4; or(c) at any time if, in the opinion of the minister, thedrilling, construction or operation of well or upstreamfacility poses a risk described in section 17.01 of the Actor a risk or menace described in subsection 81.

(3) If the minister determines that the security deposit amountheld by the minister is inadequate for the purposes provided for insubsection 15(1) of the Act, the minister may require the licenseeto provide any additional amounts that the minister considersnecessary to meet those purposes.(4) A security deposit must be in the form of an irrevocable letterof credit or in any other form satisfactory to the minister.(5) The minister may require that the security deposit besubmitted:

(a) as a lump sum; or(b) in portions in the amounts and at the times specifiedby the minister.

(6) On the written request of a depositor, the minister may returnthe security deposit if the minister is satisfied that the licensee orits agent has met all of the obligations and corrected anyinfractions, non-compliance, deficiencies, threats or problemsspecified in subsection 18.3(1) and carried out all of the activitieswith respect to which the security deposit was provided.(7) On written request of a depositor, the minister may returnpart of a security deposit if the minister is satisfied that thelicensee or its agent has met all of the obligations and correctedany infractions, non-compliance, deficiencies, threats or problemsspecified in subsection 18.3(1) and partially carried out all of theactivities with respect to which the security deposit was provided.

New provision. "Forfeiture of security deposit for a well or upstream facility18.3(1) The minister may declare any or all of the security

MINING, OIL AND GAS

~SK·l·E·S·'

October 2008

MINING, OIL AND GAS

9

deposit to be forfeited to the Crown in right of Saskatchewan if,in the opinion of the minister:

(a) the licensee with respect to the construction, drilling,operation, abandonment or reclamation of a well or aupstream facility has failed to comply with:

(i) the Act;(ii) any regulations made pursuant to the Act;(iii) any order issued pursuant to the Act;(iv) any term or condition of a licence; or(v) any term or condition of a ministerial approval;

(b) the drilling, construction or operation of a well,upstream facility, associated flowline or the respective siteposes a risk described in section 17.01 of the Act or amenace described in section 81;(c) the licensee:

(i) cannot be located;(ii) is insolvent, bankrupt or defunct; or(iii) is incapable of operating the well or upstreamfacility;

(d) the licensee has failed to submit the security deposit asrequired by subsection 18.2(2); or(e) the licensee has failed to submit the specified amountof orphan fund levy within a period specified insubsection 18.6(2).

(2) The minister may apply any or all of the security depositforfeited pursuant to subsection (1), and any moneys recoveredfrom sales of machinery, equipment or materials pursuant tosubsection (5), towards the cost required to:

(a) suspend the operations of and secure a well, upstreamfacility or the respective sites;(b) take control of, operate, maintain, monitor, repair orcare for a well, upstream facility or the respective sites;(c) investigate, audit or inspect a well, upstream facility,the respective sites or any area on and off the sites that hasbeen affected as a result of the operation;(d) conduct environmental site assessment, installmonitoring equipment and systems, acquire water, soiland air samples or analyse the samples at a well, upstreamfacility, the respective sites or any other area on and offthe sites that has been contaminated as a result of theoperation;(e) contain, manage, secure, stabilize, excavate, treat,process, handle, transport and dispose of materials,

October 2008

MINING, OIL AND GAS

10

contaminated materials and wastes generated, used orstored at the well, upstream facility, associated flowline orthe respective sites;(f) abandon, decommission, remediate, restore or reclaima well, upstream facility or the respective sites or anyother affected area outside the well upstream facility siteor the respective sites;(g) account, make an inventory of, advertise, sell,transfer, donate or dispose of machinery, equipment ormaterials on the well, upstream facility or the respectivesites;(h) acquire legal, administrative, engineering, scientific,professional and technical advice, services or work; or(i) undertake any other activities deemed necessary in theopinion of the minister.

(3) If a person, other than the licensee or the depositor, isauthorized by the minister to carry out any of the activitiesdescribed in subsection (2), the minister may pay any or all of thesecurity deposit to that person for that purpose.(4) If the security deposit provided by the licensee does notcover the cost or the expense of carrying out the activitiesspecified in subsection (2), the licensee shall pay the difference tothe minister on the written demand of the minister and within theperiod specified by the minister in the written demand.(5) If the licensee fails to pay the difference within the periodspecified by the minister in the written demand made pursuant tosubsection (4), the minister may do all or any of the following:

(a) use any amount of money in the orphan fund to makeup the shortfall if the situation is one to which section 18.5applies;(b) recover any portion of the difference from the workinginterest participants based on their percentage of interest;(c) in accordance with section 17.06 of the Act, sell anymachinery, equipment or materials that are in or on anywell, well site, upstream facility or upstream facility site tomake up the shortfall.

(6) The minister may deposit any amount of money from thesecurity deposit that has been forfeited pursuant to subsection (1)in the orphan fund at any time.(7) The minister may deposit any amount of any proceedsrecovered or acquired pursuant to subsection (5) in the orphanfund at any time.(8) Notwithstanding section 18.5, the minister may withdraw anyamount less than or equal to the amount of money that was

October 2008

~SK·l-E·S·1

)

New provision.

MINING, OIL AND GAS

11

deposited in the orphan fund pursuant to subsections (6) and (7)at any time for the purpose of covering the cost of activitiesspecified in subsection (2).(9) On completion of the activities described in subsection (2)and on the written request of a depositor, the minister may returnthe balance of the forfeited security deposit to the depositor."Licensee Liability Rating

18.4(1) In this section 'LLR' means the Licensee LiabilityRating for a licensee rounded to the nearest hundredth asdetermined by the minister for a month in accordance with thefollowing formula:

LLR =_---= ~A:...:.O-:-E_x _In_du--::stTy-,,--:Nc-:-etb_a_ck:-x_R..:..et....,..um-=-Pe,-rio:...:.d_-:-:-::-::-:--:----:=L [(Deemed Abandonment Liability + Deemed Reclamation Liability) x PVSj

all wellsand facilitieslicensed toa licensee

where:AOE is the amount determined in accordance with subsection(3);Deemed Abandonment Liability is the deemed liabilityassociated with the abandonment of a well or upstreamfacility;Deemed Reclamation Liability is the deemed cost associatedwith the reclamation of a well site or upstream facility site;Industry Netback is the three-year industry average netback asdetermined by the minister, expressed in dollars per cubicmetre and rounded to the nearest penny;PVS is the present value salvage factor assigned to a well orupstream facility and the site of a well or upstream facility toreflect the timing of abandonment and reclamation and thefuture value of equipment salvage;Return Period is, subsection to subsection (2), the averagepayback period for a licensee's well taking into considerationthe expected rate of return on the licensee's investment andthe production decline rate of the well.

(2) Unless determined by the minister to be another period, thereturn period for the purposes of subsection (I) is deemed to bethree years.(3) For the purposes of the formula set out in subsection (1),AOE is the annual oil equivalent production volume attributed toa licensee in cubic metres as determined by the minister inaccordance with the following formula rounded to the nearesttenth:

October 2008

~SK-l-E,S'I

12

AOE ' AOP + [(AGPlCr) x (1-Sr)]where:

AOP is the sum of the most recent 12 months of oilproduction in cubic metres rounded to the nearest tenth that isattributable to the licensee's wells;AGP is the sum of the most recent 12 months of gasproduction in thousand cubic metres rounded to the nearesttenth that is attributable to the licensee's well;Cds a conversion factor that, when divided into a gasproduction volume in thousand cubic metres, provides theeconomic equivalent volume of oil in cubic metres and is arolling three-year industry average expressed to the nearestten-thousandth;Sr is a shrinkage factor that expresses the percentage of totalprovincial gas production that is not sales gas and is a rollingthree-year industry average expressed to the nearesthundredth.

(4) The minister shall determine the Industry Netback, Cr, Sr,Deemed Abandonment Liability, Deemed Reclamation Liabilityand PVS values mentioned in this section on an annual basis assoon as possible after the beginning of each fiscal year.(5) Notwithstanding subsection (4), the minister may make anychanges to values pursuant to subsection (4) at any time theminister considers it necessary to do so.(6) Notwithstanding subsection (4), if site specific assessmentshave been conducted, the minister may use the results of thoseassessments to determine the reclamation liability for a site ratherthan the Deemed Reclamation Liability mentioned in this section.(7) If a licensee has an LLR of less than 1.00, the licensee:

(a) is to be considered as having failed the licensee liabilityrating conducted pursuant to this section; and(b) shall submit any amount of security deposit reasonablyrequired by the minister pursuant subsection 18.2(2).

(8) Notwithstanding subsection (4), a licensee may apply to theminister to have other values used in place of those determinedpursuant to subsection (4) and (5) for the calculation of thelicensee's monthly licensee liability ratings.(9) The minister mayor may not approve an application pursuantto subsection (8).

New provision. "Use of the orphan fund18.5(1) The minister is authorized to use the money in theorphan fund for the following purposes:

MINING, OIL AND GAS October 2008

MINING, OIL AND GAS

13

(a) to reimburse the department or a person authorized by theminister:

(i) for undertaking the abandonment,decommissioning or reclamation of an orphan well, anorphan upstream facility and the respective site; or(ii) for undertaking any other activities that theminister considers necessary and that are associatedwith the orphan well, the orphan upstream facility andthe respective sites mentioned in subclause (i);

(b) to pay the costs to carry out the following activities:(i) the abandonment or decommissioning of all or partof the flowline associated with the orphan well andorphan upstream facility and the reclamation of thearea around the flowline or any other associatedactivities that the minister considers necessary withrespect to them;(ii) any work specified in section 17.04 of the Act;(iii) the undertaking of any steps to contain and securea menace if the licensee or operator is missing or notreadily identifiable and if, in the opinion of theminister a well, flowline or facility has an impact onor off the site that is a menace to an oil, gas or fresh­water-bearing formation or to life or property;

(c) to pay for technical, administrative, legal or othercosts related to acquiring professional services that areincurred in pursuing reimbursement for the costsmentioned in clauses (a) and (b) from the personresponsible for paying them;(d) to pay for a defunct working interest participant'sshare of suspension, decommissioning, abandonment andrelated reclamation costs if those costs:

(i) in the opinion of the minister are reasonable andnecessary to do the work; and

(ii) have been incurred by a working interestparticipant;

(e) to pay for any other costs directly related to theadministration and operations of the orphan fund; and(f) to pay for any expense related to fund advisorycommittee thatis approved by the minister, including anyexpense incurred pursuant to subsection 18.7(6).

(2) The minister may determine when money in the orphan fundmay be used for the purposes mentioned in subsection (1).(3) The minister shall consult with the fund advisory committee

October 2008

~SK·l·E·S·1

14

with respect to the manner generally in which the purposes of theorphan fund are carried out.(4) Nothing in this Part requires the minister to consult with thefund advisory committee respecting the use of a security depositor equipment and materials forfeited pursuant to subsection18.3(2) or (5).

New provision. "Orphan fund levy18.6(1) A licensee shall pay an orphan fund levy for eachfiscal year, as required by clause 20.98(c) of the Act,calculated in accordance with the following formula:

Orphan fund levy = NB x Annual Budgetwhere:

A is the licensee's deemed liability on March 31 of eachyear for all upstream facilities, wells and unreclaimedsites licensed to the licensee as calculated in mannerspecified by the minister; andB is the sum of the upstream oil and gas industry'sliability on March 31 of each year for all licensedupstream facilities, wells and unreclaimed sites ascalculated in a manner specified by the minister; andAnnual Budget is the amount that is required to conductwork specified in subsection 18.5(1) for a fiscal year asdetermined by the minister after any consultation with thefund advisory committee that the minister considersnecessary.

(2) A licensee shall pay the amount of the orphan fund levynot later than the 30th day following the mailing date shownon the notice sent by the department.(3) If a licensee does not pay the levy within the periodprescribed in subsection (2), the amount of the levy is a debtdue to the Crown in right of Saskatchewan and may berecovered by the minister in any manner authorized by TheFinancial Administration Act, 1993 or in any other mannerauthorized by law.(4) The minister may recover all or part of the moneyexpended from the orphan fund for the purpose of carryingout any of the activities mentioned in clauses 18.5(1)(a) to(d):

(a) from the licensee;(b) from the working interest participants based on theirpercentage of interest;(c) from any other person whom the minister considersresponsible for the well, well site, facility or facility site;

MINING, OIL AND GAS

~SK·t-E·S·1

October 2008

MINING, OIL AND GAS

15

or(d) from the proceeds of the sale of any machinery,equipment or materials that were forfeited pursuant tosection 17.06 of the Act.

(5) Pursuant to subsection (4), the minister shall deposit anyamount of money or proceeds recovered pursuant tosubsection (4) in the orphan fund.(6) The minimum amount to be retained in reserve in theorphan fund is $2,000,000.(7) In determining the Annual Budget mentioned insubsection (1), the minister shall provide for a total levy thatwill be sufficient, in the minister's opinion, to cover:

(a) the anticipated costs mentioned in subsection 18.5(1)for the fiscal year; and(b) any surplus for emergency or contingencies and non­budgeted expenditures.

(8) After any consultation with the fund advisory committeethat the minister considers necessary, the minister may adjustthe Annual Budget mentioned in subsection (1) in order tomaintain the minimum amount specified in subsection (5).

October 2008

~SK-l-E·S·I

16

New provision. "Fund advisory committee18.7(1) The minister may appoint as members of the fundadvisory committee:

(a) four persons nominated by the oil and gasindustry associations that, in the opinion of theminister, represent the general and diverse interests ofthe oil and gas industry in Saskatchewan; and(b) two other persons.

(2) Each member of the fund advisory committee holdsoffice for a term of two years and until a successor isappointed.(3) Ifa member of the fund advisory committee nominatedby an oil and gas industry association resigns or is no longerable to serve, that oil and gas industry association may:

(a) nominate another person to be a member for theremainder of the term of the former member; or(b) choose to have the former member's position remainvacant until the end of the term of the former member.

(4) A member of the fund advisory committee is eligible tobe reappointed as a member.(5) The members of the fund advisory committee shall:

(a) assist the minister in the development of an annualprogram to abandon orphan wells and upstream facilitiesand the respective sites by advising on the determinationand selection of orphan wells and upstream facilities forthat program;(b) provide the minister with advice and expertise in thedevelopment of the Annual Budget described insubsection 18.6(1), for the payment of the costsassociated with the annual abandonment programmentioned in clause (a); and(c) make recommendations to the minister respecting theamount of the Annual Budget described in subsection18.6(1) for a fiscal year.

(6) Members of the fund advisory committee are entitled toreimbursement for their expenses incurred in the performanceof their responsibilities in accordance with rates paid tomembers of the public service of Saskatchewan.

New provision. "Fiscal year18.8 For the purposes of clause 20.98(k) of the Act, the fiscalyear of the fund is April 1 of one year to March 31 of thefollowing year.

MINING, OIL AND GAS

~SK'l-E,S'1

October 2008

44 The operator of a well siteand access road shall, on finalabandonment and completionof the plugging of a well orstructure test hole:

(a) remove all refusematerial from the well siteand access road;(b) drain and fill allexcavations;(c) remove concrete bases,machinery and materials;(d) level the surface andleave the area of the siteand access road inconditions which arereasonably near to thosethat existed at the timewhen operations werecommenced; and(e) submit to thedepartment:

(i) a copy of therelease from the surfaceowner indicating thatthe operator hasrestored the surface tothe satisfaction of thesurface owner; or(ii) a certificate fromthe Surface RightsCompensation Boardissued pursuant tosubsection 56(2) of TheSurface RightsAcquisition andCompensation Act.

MINING, OIL AND GAS

17

Section 44 is repealed and the following substituted:

"Decommissioning and reclamation of well and facility sites44(1) Unless otherwise approved in writing by the minister,on completion of abandonment of a well, the licensee shall:

(a) conduct an environmental site assessment in amanner specified by the minister;(b) decommission the well site to standards specified bythe minister;(c) reclaim the well site to standards specified by theminister; and(d) reclaim any area that is beyond the boundaries of thewell site and that, in the opinion of the minister, has beendamaged, contaminated or otherwise adversely affectedby the operations of the well.

(2) Unless otherwise approved in writing by the minister, ondecommissioning of a facility the licensee or the operatorshall:

(a) conduct an environmental site assessment in a mannerspecified by the minister;(b) decommission the facility site to standards specifiedby the minister;(c) reclaim the facility site to standards specified by theminister; and(d) reclaim any area that is beyond the boundaries of thefacility site and that, in the opinion of the minister, hasbeen damaged, contaminated or otherwise adverselyaffected by the operations of the facility.

(3) Within six months after the completion of the activitiesmentioned in subsection (1) and (2), as the case may be, thelicensee or the operator shall submit to the minister areclamation report and any other information required by theminister in a Jormat specified by the minister.(4) The minister shall issue an acknowledgement ofreclamation if the licensee or operator:

(a) has met the requirements of subsection (1) or (2) to thesatisfaction of the minister; and(b) submits the following to the minister;

(i) a written request for acknowledgment of reclamationon a form specified by the minister;(ii) a reclamation report specified in subsection (3), thatis satisfactory to the minister;

October 2008

49(1) If abandonment is notcarried out in accordance withthese regulations and thedirections contained in theminister's approval, the ministermay require the operator toremedy the default or defect.(2) If an operator does notcomply with a requirement of theminister pursuant tosubsection (1), the minister mayinstruct the department to takesteps necessary to carry outabandonment in accordance withthese regulations.(3) All costs and expensesincurred by the department incarrying out the abandonment areto be paid by the operator to theminister on demand.

MINING, OIL AND GAS

18

(iii) any other information reasonably required by theminister.

(5) The issuance of an acknowledgement of reclamation does notrelieve a licensee, operator or working interest participant of thelicencee's or operator's past, present or future environmentalliability associated with the well or facility site that is the subjectof the acknowledgement of reclamation.(6) The minister may:

(a) impose any conditions or terms in an acknowledgementof reclamation that the minister considers appropriate; or(b) cancel an acknowledgement of reclamation if the ministerconsiders it appropriate to do so".

Section 49 is repealed and the following substituted:

"Liability for improper abandonment and reclamation49(1) If abandonment of the well or facility and reclamationof the well site, facility site and associated flowline and anyoff-site contamination caused by the construction or operationofthe well or facility do not meet the standards set out inthese regulations or specified by the minister, the ministermay require the licensee or the operator to remedy the defaultor defect within the period specified by the minister.(2) If a licensee or the operator does not comply with arequirement of the minister pursuant to subsection (1), theminister may instruct the department to take steps necessaryto carry out abandonment and reclamatioIl in accordance withthese regulations.(3) All costs and expenses incurred by the department incarrying out the abandonment and reclamation are a debt dueto the Crown in right of Saskatchewan by the licensee oroperator and may be recovered in the manner authorized byThe Financial Administration Act, 1993 or in any othermanner authorized by law".

October 2008

~SK"l.-E"S"1