Oil and Gas Storage Tanks

Res #: 11-19M
Number: 11
Year: 2019
Midterm: Yes
Expired: No
Responses Received: Yes
Departments: Saskatchewan Ministry of Government Relations

WHEREAS oil and gas storage tanks have historically been treated by assessors as structures which is consistent and equitable with the treatment of storage tanks elsewhere in the province, such as underground tanks at service stations;

WHEREAS industry has appealed the assessment of storage tanks associated with oil and gas sites and facilities arguing that they should be considered resource production equipment (RPE) based on the existing definition of improvement and wording in legislation;

WHEREAS the Saskatchewan Court of Appeal’s decision that oil and gas tanks are RPE will result in the potential removal of all storage tanks at non-well facilities (batteries) and storage tanks at active well sites would qualify for a -10% “downtime” allowance which is an adjustment for routine maintenance that is normally only applied to oil and gas well equipment;

WHEREAS the total potential tank assessment loss would be over $600 million if oil and gas tanks are deemed RPE instead of structures;

BE IT RESOLVED that SARM lobby the Ministry of Government Relations to amend existing legislation so that storage tanks, regardless of location, are assessed as improvements and not resource production equipment to avoid future misinterpretation of the intent of the legislation.

Responses From: The Ministry of Government Relations

March 4, 2020

In October 2019, Government amended the regulations to explicitly state that, for the purposes of assessment, oil and gas storage facilities are considered structures rather than resource production equipment. This will maintain the status quo assessment on oil storage tanks for 2020.

Under SAMA’s leadership, a comprehensive “end to end” review of oil and gas assessment models will begin in 2020. This review will consider the massive changes in the oil and gas sector due to new technologies and extraction processes that have taken place over the last 20 years. This review will also ensure that Saskatchewan’s assessment processes remain current and equitable with other jurisdictions in Western Canada.

These conversations are expected to start in earnest in spring 2020 and will include industry, the provincial government and municipal stakeholders.

Any potential changes resulting from that review would be finalized well in advance of the 2025 revaluation so that industry and municipalities have adequate notice and time to prepare.

J. Greg Miller – Deputy Minister of Government Relations