Fees for Drilling Oil Wells and Gas Wells
Res #: 12-23A
Responses Received: Yes
Departments: Saskatchewan Ministry of Government Relations
WHEREAS the Municipalities Act and The Municipalities Regulations authorize municipalities to charge a fee for drilling oil wells and gas wells.
WHEREAS the fee is set at $450 for drilling an oil or gas well, and $225 for exploratory drill holes.
WHEREAS the fees for drilling oil wells and gas wells were originally at their current prices in The Rural Municipality Oil Well and Gas Well Drilling Fees Schedule Regulations in 1991, and resolutions to review these fees were presented at the 2002 and 2008 SARM Midterm Conventions but resulted in no change.
WHEREAS the fees for drilling oil wells and gas wells do not adequately cover the expenses of the municipality in the review and administration of drilling applications.
BE IT RESOLVED that SARM lobby the Ministry of Government Relations to engage in consultations with all applicable stakeholders to review the fees for drilling oil wells and gas wells, and that the Ministry of Government Relations set the well fees in The Municipalities Regulations at a fair rate for both industry and municipalities.
Responses From: Saskatchewan Ministry of Government Relations
May 31, 2023
- The licensing of oil and gas well drilling activity is a discretionary authority of Municipalities may decide to charge oil and gas well drilling operators a licence fee.
- In the past, rural municipalities (RMs) have claimed that the licence fees are needed to pay for the maintenance, construction and repair of roads used by the oil and gas industry and to partially compensate for the delay in collecting property taxes on new wells. Recent enhancements to government programs, such as the Rural Integrated Roads for Growth program, Clearing the Path primary weight corridors program, road maintenance agreement rates, plus increased revenue sharing, have increased options for RMs to address those issues.
- The industry may see increasing the oil and gas well drilling fees as another form of This may reduce the province’s competitiveness for oil and gas, resulting in reduced exploration and development. The industry would likely argue for completely removing the fees due to increased government funding and road maintenance agreement rates.
- If the Ministry of Government Relations reviews this issue, industry (oil and gas), municipalities, and other provincial ministries would need to be Any proposed fees would need to reflect the costs of administration. RMs would need to provide documentation for actual costs and information on these costs to determine if they need to charge a fee. Any proposed change would need to be implemented on a provincial basis, not per individual municipality.
The Honourable Don McMorris – Minister of Government Relations, Government of Saskatchewan