Orphan Licence Transfer

Overview

When a well or facility licence is deemed an orphan, it will stay in the defunct licensee's name. However, the Ministry of Energy and Resources has the authority to abandon and reclaim the orphan site or transfer the licence to another eligible party.

Note: The ministry will review the requests on a first-come first-served basis and reserves the right to approve/deny any licence transfer application. Where there is more than one interested party regarding the acquisition of orphan licence(s), the ministry reserves the right to carry out a competitive bid process.

Guidance

Parties interested in acquiring well or facility licences that have been deemed orphan, under the Orphan Fund Procurement Program, should refer to the Orphan Inventory to view the list of orphan licences and the associated Orphan Abandonment and/or Reclamation Status. An orphan status of 'Required' indicates the applicable abandonment and/or reclamation work has not been completed under the Orphan Program and 'No Longer Required' indicates the licence has already been transferred out of the Orphan Program.

Before applying to transfer an orphaned licence, the interested party may wish to assess the economic potential by obtaining the production history of a well through IRIS or by contacting ER.ServiceDesk@gov.sk.ca.

NOTE: Once a licence is transferred the applicant (now licensee) is responsible for the liability associated with the future abandonment and reclamation of the licensed site. This includes environmental liability that existed prior to acquiring the licence. Therefore, applicants are encouraged to ensure they are aware of potential liabilities that may exist before applying to transfer the licences.

Eligibility

• Be eligible to hold a licence under Section 12 of The Oil and Gas Conservation Regulations, 2012;
• Have an IRIS account and the appropriate permissions assigned by your IRIS Security Administrator to submit a well or facility transfer application.
• Be registered with Information Services Corporation (ISC) as a corporation to do business in Saskatchewan.

Note: The ministry will not process an orphaned licence transfer until:

• Any security deposit(s) required for the transfer has been received and processed;
• Confirmation the surface lease for the proposed site(s) of interest has been obtained; and
• Confirmation the mineral rights agreement for the proposed licence(s) zone of interest has been obtained.

NOTE: Licensees that solely hold well/facility licences for purposes other than oil and gas production (such as potash mining, storage facilities, waste facilities, helium, lithium, etc.) may be eligible for an exemption from the Security Deposit requirements under the LLR Program and/or annual Orphan Fund Levy. If a licensee is acquiring licences for the first time and would like to be considered for the exemption, please contact the ER.Servicedesk@gov.sk.ca with subject “Attn: Liability Regulations – non oil and gas producer” and provide supporting evidence for the ministry to review.

How to Apply

1. Express Interest to the Ministry

Parties interested in acquiring an orphaned licence(s) should notify the ministry of their intent to ensure the licence(s) of interest are not scheduled for abandonment and/or reclamation work prior to the licence transfer being processed.

The notification should be submitted to ERLiabilityRegulation@gov.sk.ca and include the following details:

• licensee name and BA ID (where applicable) of the party wishing to acquire the orphan licence(s) along with contact information (name, phone number and email);
• the orphan licence number(s) interested in acquiring along with the current orphaned licensee name and BA ID; and
• the intended use/operation of the licence(s), if acquired.

A ministry representative will respond via email whether a transfer would be considered and if so, the next steps to be taken by the interested party.

2. Determine Potential Security Deposit Requirements

To estimate the security deposit required to acquire orphaned well or facility licences utilize the Security Deposit Estimator within the licence transfer application:

1. Complete the applicable schedules, using the templates below, for the licences to be transferred, as shown in the example:
   
   
   • Schedule A - Wells
   • Schedule B - Facilities
     

     Note: Please be advised when completing Schedules A and B that the working interest participant (WIP) information is mandatory and must reflect the transferee's intentions assuming the transfer is authorized. This WIP information must include the WIP's full legal name and must be accurate as it cannot be edited when using the pre-transfer assessment process to create the licence transfer application.

   • Schedule C - Pipelines and Flowlines.
     

     Note: Please be advised when completing Schedules C that all segments under a given licence will be transferred upon approval. If you do not want all segments under a given licence to be transferred, perform a segment split prior to initiating a Licence Transfer application.

     For more information on licence splitting please see Pipeline Reporting Processes at the User Learning Centre.

     Please refer to Pipeline Licensing User Manual "Section 21" for more information regarding Pipeline/Flowline Licence Transfers.

2. Log in to IRIS and start the Licence Transfer Application. For more information, refer to the Licence Transfer module at the User Learning Centre for step-by-step details of how to complete the Licence Transfer application in IRIS.
   
   
3. Click Calculate Security Deposit, at the Preview Application screen, to estimate the security deposit requirements for the uploaded schedules. Do not click Submit at this time; the application should remain as a draft until further advised by the ministry.
   
   Note: The estimated security deposit may change at the discretion of the minister at the time of the transfer application. The minister may consider the following when making a decision regarding a change in the security deposit amount:
   
   1. Non-compliance with respect to ministry regulatory programs and/or outstanding field inspection items;
   2. Knowledge of any issues of contamination at problem sites that have not been properly assessed in terms of remediation costs;
   3. Outstanding debts owed to the ministry;
   4. Any other relevant factors.
      
      
4. Although the eligibility requirements (above) do not apply to the draft application, the applicant should review them to ensure there is no delay if the transfer were to proceed. Furthermore, if the security requirement is acceptable and the applicant wishes to move forward with the transfer, notify the ministry via ERLiabilityRegulation@gov.sk.ca and include the draft licence transfer application number.

   This ministry representative will respond via email of the next steps to be taken by the applicant. At this point the ministry will issue the defunct/deemed orphan licensee a notice of intent to transfer the licence(s) in 30 days under section 10.1 of The Oil and Gas Conservation Act.

   Note: This process will delay the licence transfer by at least 30 days and the ministry will reach out to the applicant after that point about submitting the licence transfer application.

   During this time, the applicant is expected to work towards acquiring the mineral and surface leases associated with the licences to be acquired.

3. Submit a Licence Transfer Application

To apply for authorization to transfer an orphaned well or facility licence:

1. Ensure you meet all eligibility requirements.
2. Log in to IRIS and open up the draft licence transfer application (created in step 2 above).
3. Modify the attached schedules, if necessary.
4. Click Calculate Security Deposit to re-estimate the security deposit requirements for the uploaded schedules. 
5. If you wish to proceed with the licence transfer application, click Submit. Please be advised that once you click Submit, the application is confidential to the applicant BA and the ministry.
6. Once the application has been submitted in IRIS, be sure to notify the ministry via email to ERLiabilityRegulation@gov.sk.ca. At this time the ministry will complete the Licence Transfer Concurrency Approval process in IRIS on behalf of the orphaned licensee to move the review of the application forward.
7. The applicant must sign up to receive notifications when a work item has been assigned in the licence transfer application process. Delay in completion of the work items will result in a longer approval turnaround.

Below are work items the Transferee (applicant) may be assigned within the transfer application:

• Pay Security Deposit Work Item - The Ministry conducts an evaluation to determine the amount of security deposit required for the transfer. If a security deposit is required, this work item will be created to the applicable licensee to submit payment within 30 days, and an OFT invoice will be issued through IRIS. Please do not submit payment until the invoice has been generated.
  NOTE: Once the payment has been made, the licensee must mark the work item as “Complete” to progress the application.
• Pay Outstanding Debt Work Item - The Ministry conducts an evaluation to determine if there are any outstanding invoices associated with the Transferee. If there are outstanding invoices this work item will be created for the applicable licensee to submit payment within 8 days.
  NOTE: Once the payment has been made, the licensee must mark the work item as “Complete” to progress the application.
8. Prior to approving the licence transfer application, the ministry will require confirmation from the Transferee via email to ERLiabilityRegulation@gov.sk.ca that the applicable surface and mineral leases have been acquired.

Licence Transfer application decisions are communicated as a notification in IRIS to the submitter and authorized transfers are reflected in IRIS within the next business day. Please see Licence Transfer at the User Learning Centre for step-by-step details on how to obtain the Transfer Authorization results.

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Further Information

Acquiring Crown Mineral Leases

Petroleum and natural gas dispositions in Saskatchewan are acquired through Crown Public Offerings. Companies request land to be posted in the Public Offering and bid on parcels within the Integrated Resource Information System (IRIS).

There are a number of scenarios where an oil and gas disposition may be eligible to be transferred. In these scenarios, acquisition through the Public Offering would not be required. These include:

• if the transferor(s) and the transferee(s) have agreed to and signed (executed) the transfer; or
• if a transfer is executed by or on behalf of a trustee, receiver, receiver-manager, liquidator, executor, administrator, property guardian or other person acting in a similar capacity and is accompanied by required documentation as set out in the Crown Minerals Act; or
• if the transfer is a redistribution of the interest among the remaining holders.

For more information on mineral lease transfers visit Transfer a Crown Oil and Gas Disposition Application.