High Water-Cut Oil Well Program
1. Guidance
The high water-cut oil well program is administered under The High Water-Cut Oil Well Program Regulations.
Through the program, oil wells producing large volumes of water will receive a royalty status re-assignment based on their finished drilling date after qualifying investment has been executed:
- Oil wells drilled prior to October 1, 2002, will receive Fourth-Tier Royalties on their incremental high water-cut oil; and
- Oil wells drilled on or after October 1, 2002, will receive a 2% royalty rate deduction on all oil produced.
Note: Qualifying high water-cut oil wells will receive a royalty status re-assignment on oil produced after the eligible investment has been executed.
2. Eligibility
- Eligible oil wells (vertical and horizontal) include individual oil wells or a group of oil wells that produced oil at an average water cut of 90% or greater for the most recent three months reported with hours on production, before the qualifying applicant submits an application to the program;
- Qualifying Investments – the qualifying investment must be directly related a high water-cut oil well, or its associated facility, for the purpose of improving water handling capability and extending the production life of the well. Normal repair and maintenance activities are ineligible.
- Minimum Investment – the qualifying investment must be a minimum of $20,000 per qualifying high water-cut oil well.
- Qualifying investments made on or after April 1, 2021 will be recognized.
3. How to Apply
To apply for the HWCP:
- Complete the High Water-Cut Initial Application Form.
- Log into IRIS and complete a submission under the high-water cut oil well application by attaching the High Water-Cut Initial Application Form.
- The applicant must have an Integrated Resource Information System (IRIS) account and the appropriate permissions assigned by your IRIS Security Administrator.
- The applicant must have an Integrated Resource Information System (IRIS) account and the appropriate permissions assigned by your IRIS Security Administrator.
- The ministry reviews the detailed information, approves eligible applications and assigns an incremental high water-cut oil factor (if applicable).
- Companies are encouraged to start investments after the ministry has approved the Initial Application.
- Companies are encouraged to start investments after the ministry has approved the Initial Application.
- After completion of the eligible investment, complete the Investment Summary and submit it as an attachment within the High Water-Cut – Qualifying Investment Application in IRIS.
- Once the ministry has verified the investment and approved the High Water-Cut – Qualifying Investment Application in IRIS, the royalty status re-assignment, along with the approved incremental high water-cut oil factor will be implemented.
The ministry will be accepting applications until March 31, 2026.
5. Further Information
For additional information on the program, please review Information Circular (PR-IC12): High Water-Cut Oil Well Program or contact petroleumroyalties@gov.sk.ca.