Well Licensing

Res #: 12-01A
Number: 12
Year: 2001
Midterm: No
Expired: Yes
Responses Received: No
Departments: Saskatchewan Government Insurance (SGI)

Resolution No. 12-01A

WHEREAS, Clause 213(1)(b) of The Rural Municipality Act, 1989, establishes the authority to pass a bylaw to permit the collection of a license fee for oil and gas wells; and

WHEREAS, regulations to The Rural Municipality Act, 1989 establishes a fee of $450 for drilling an oil or gas well to be paid by the drilling contractor; and

WHEREAS, most municipalities invoice each new leg to the oil or gas well as a separate license irrespective of the Department of Energy and Mines license; and

WHEREAS, some oil companies interpret that all legs under an Energy and Mines license are not subject to municipal license as the vertical license has been issued previously;

THEREFORE BE IT RESOLVED, that we request an amendment to The Rural Municipality Act, 1989 giving municipalities the authority to license each vertical well, horizontal well and each leg of the well.

Response from Hon. Ron Osika:

The licensing of oil and gas well drilling equipment is a discretionary power of municipalities; however, the fees are regulated by the province to ensure consistency and reasonableness in the amount of fees levied across the province.

As horizontal well technology improves, the number of horizontal wells drilled will increase. 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 issue will be referred to the Oil and Gas Industry Committee for its consideration and recommendation. This committee includes representatives from the Petroleum Industry, Saskatchewan Association of Rural Municipalities and Municipal Affairs and Housing, and is chaired by Saskatchewan Energy and Mines.