Sask. says new program will use inactive, low producing oil wells to add production, revenue

WATCH: The Sask. government has launched a new program to improve oil production. Angela Stewart has the details.

A new program launched by the province aims to create new incremental oil production and revenue from inactive and low-producing wells.

Known as the Low Productivity and Reactivation Oil Well Program (LPRP), the province says it will promote industry investment through a royalty structure for wells that are eligible for the program.

“There are inactive wells and old wells around this province. Lots of them and like I said, it just depends on the economics for those companies as to whether or not they want to reactivate,” said Minster of Energy and Resources Colleen Young.

The province made the announcement Tuesday, in front of a crowd at the University of Regina.

According to the province, in the final year of the four year program, it is projected that 30,000 barrels of oil per day will be added to current production, which would generate $21 million in royalty revenue for Saskatchewan.

• Download the CTV News app for local breaking news alerts on your mobile device

“That’s more revenue for the province to be able to invest into schools, hospitals, health care facilities and roads and other. You know municipal revenue sharing comes out of that as well for our municipalities,” said Young.

Calgary based Saturn Oil & Gas Inc., is the first company taking part in the initiative.

“We wanted to create a win-win for the oil industry and the province. So by taking otherwise liabilities, which were inactive wells, by putting money into it and by turning them back on, it creates additional revenue for the province in terms of royalties,” Saturn Oil and Gas Inc. CEO John Jeffrey explained.

According to the province, the LPRP will contribute to the government’s goal of increasing oil production to 600,000 barrels per day.

Saturn Oil said a bulk of their work is expected to take place in southeast Saskatchewan with the interest of potentially expanding into the southwest.

Work has already been happening on an inactive well, according to Jeffrey.

“It’s producing over 100 barrels a day, which is twice what we’d hoped it come on at. You’re looking at re-completing an existing well, all your vertical pipe and everything, that’s in the ground. Your surface lease that’s tied in, that’s already built. You save all those funds from drilling a well next to it,” he added.

In 2024, the province says oil and gas production reached $13.5 billion in Saskatchewan, The sector employed more than 26,000 people.

Saskatchewan is the second-largest oil producer in Canada and sixth largest onshore oil producer in North America.