Well Drilling Licence Fee

Res #: 15-08M
Number: 15
Year: 2008
Midterm: Yes
Expired: Yes
Responses Received: No
Departments: Saskatchewan Ministry of Municipal Affairs

Whereas the prescribed fee in The Municipalities Act Regulations, for the drilling of an oil well or gas well is $450; and

Whereas with horizontal drilling, the volume of heavy traffic is much greater than with conventional drilling; and

Whereas the prescribed fee does not cover the cost of maintaining infrastructure during the exploration phase;

Be it Resolved that SARM lobby the Government of Saskatchewan to increase the prescribed fee for a license to drill an oil or gas well to $1500.   

Response from Honourable Jeremy Harrison, Minister of Municipal Affairs:

This resolution asks government to increase the prescribed fee for a municipal licence to drill an oil or gas well from $450 to $1500 and makes reference to greater road traffic associated with horizontal drilling. 

Increasing the oil and gas well drilling fees would be seen by industry as another form of taxation. This increase would reduce the competitiveness of the province for oil and gas, resulting in reduced exploration and development. As horizontal well technology has improved, the number of horizontal wells being drilled has increased. A consensus needs to be developed between the petroleum industry and municipalities to determine a suitable definition of an oil or gas well for municipal licensing purposes. This was not achieved in a 2003 review, when changes to the municipal licence fee were considered previously. It was not possible to reach a consensus at that time.

Government has significantly increased its funding for municipalities. This year’s provincial budget announced the Ready for Growth Initiative, including the
Municipal Resource Roads Program. The province invested heavily in RM roads through the Municipal Primary Weight Corridor Program and the Rural Road
Strategy. RMs have received an increase in unconditional funding from the
Municipal Operating Grants that replaced revenue sharing. This should offset some of the costs referred to in the resolution.