Saskatchewan’s government has introduced a plan to increase exploration and development activity by lowering oil and gas royalty and tax structures, implementing a system of volume incentives and reducing corporate capital tax surcharges.
The plan also provides tax breaks for new wells that are drilled, and benefits horizontal and deep wells. The changes are retroactive to Oct. 1 for all new wells and projects.
The Canadian province now holds title to being the country’s third largest natural gas producer and second largest crude oil producer, but wants to encourage more development and more jobs through the new incentive package. Last year, the province’s oil and gas industry invested C$1.4 billion in new activity, which accounted for 22,000 direct and indirect jobs, and the industry generated C$684 million in revenues.
Under the new regime, the changes are expected to attract C$4.3 billion in investment, create 40,000 person-years of new employment, and generate an additional C$650 million in gross revenue for the province over a 10-year period.
“New investment by the oil and gas industry will generate new jobs for Saskatchewan people, many of which will be in rural Saskatchewan,” said Premier Lorne Calvert, in announcing the program. “We are committed to fiscal changes which will grow the Saskatchewan economy and make us the most competitive jurisdiction in Canada,” Calvert said.
To encourage additional exploration and development, Saskatchewan’s incentive program includes the following:
Saskatchewan officials estimate that over a 10-year period, the changes will add 7,500 new oil wells; 1,900 new gas wells; C$4.3 billion of new investment; 360 million bbl; 190 Bcf; 40,000 person-years of direct and indirect employment; and C$650 million in government oil and gas gross revenue. To learn more about the program, contact Bob Ellis in the Industry and Resources Regina office at (306) 787-1691.
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