The Government of Saskatchewan has announced plans to incentivize waterflooding.
Energy and Resources Minister Bronwyn Eyre announced the Waterflood Development Program, which at it’s max, supports $375 million in new investment over the next five years and about $245 million in new royalties over the next 10 years.
The initiative will support $375 million in new investment at full uptake.
Energy & Resources Minister Bronwyn Eyre says 500 new, long-term jobs will be created, at the least.#skpoli pic.twitter.com/cbOmzloUvB
— David Boles (@DavidJBoles) December 5, 2018
This is the alternative measure to action taken in Alberta, where Premier Rachel Notley announced Sunday a 8.7% cut in oil production in an effort to close the ever-widening oil differential. On Monday after Question Period, Premier Scott Moe announced Saskatchewan wouldn’t be pursuing that course of action.
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“It’s a secondary oil extraction method that basically takes water that’s been used in the primary process and re-injects into the wells to create or maintain the pressure that’s necessary to extract,” said Eyre, describing the process.
On the whole, Eyre described the incentive part of the program as a royalty deferral, paid with interest, allowing companies to make capital investments in order for it flow through in an optimal period of time.
“The average conversion cost usually for these well is about $500,000 and then defer royalties on those for three years.”