Written by Authors: Brad Gilmour, Keely Cameron, Stephanie Ridge, and Kassandra Devolin
On June 26, 2020, the Saskatchewan Ministry of Energy and Resources (the Ministry) released new details regarding its Accelerated Site Closure Program (ASCP). As noted in our earlier blog on the subject, the ASCP will administer $400 million in funds from the federal government's COVID-19 Economic Response Plan for Canada's Energy Sector. The ASCP will distribute funds to Saskatchewan-based service companies completing abandonment and reclamation work in the province.
The June 26, 2020 update was included within the Ministry's ASCP Questions and Answers document, which is updated regularly and provides key instructions on the operation of the ASCP.
Phase 1 Funding Allocation Complete
As of May 29, 2020, the $100 million available in Phase 1 had been completely allocated. Licensees were notified of their allocated funding amount via email on June 1, 2020.
Licensee Nomination Process Opens
With funding allocation amounts in hand, licensees can now proceed to nominating wells and facilities through the Integrated Resource Information System (IRIS). On June 26, 2020, the Ministry provided further guidance regarding the nomination process, including a supplemental guide and online training module. The Ministry recommends these resources are reviewed prior to completing applications on IRIS.
Notably, the ASCP does not require licensees to nominate their projects on a first come, first serve basis. The funding allocated to licensees in Phase 1 will remain with the licensees until the amount is used or the program ends in December 2022.
The Ministry has also provided templates which can be uploaded into IRIS during this process, including a preferred vendor and site nomination template. The site nomination template is intended to be used on a project basis, allowing licensees to nominate specific stages of work within a project. Licensees can also substitute, remove or add wells during the nomination process. With regards to preferred vendors, licensees are able to select service companies on a project basis.
Eligible Service Company Pre-Qualification is Ongoing
Eligible service companies may pre-qualify to bid on area-based work packages once procurement contracts tendered to nominated sites have been released. The Ministry will issue a Business Associate (BA) code to all prequalified service companies. Licensees will be able select their preferred vendors within the system on the condition they have a BA code. Service company codes will be updated throughout the process, and a current listing is available on the ASCP website.
There are three additional updates of note with regard to eligible service companies.
- Contractors have not yet been selected for the ASCP. Contractors can apply through SaskTenders and their eligibility will be determined based on the program's criteria. The Ministry also clarified that companies and vendors listed on the Saskatchewan Industrial & Mining Suppliers Association Inc. website are not prequalified for the ASCP by virtue of being included on that list. Similarly, the vendor pre-qualification process for the orphan fund program is applicable only to the orphan fund program. Contractors will need to apply for the ASCP separately.
- Pre-qualification period opened on June 15, 2020. Service companies may now apply for ASCP eligibility by completing a Request for Service Qualifications (RFSQ) on SaskTenders.
- Generally, only bidders require pre-qualification. The Ministry has confirmed that businesses supporting ASCP activities, such as subcontractors or small, individually staffed companies that do not intend to bid on area-based work packages offered for bid, are not required to apply for pre-qualification or complete the RFSQ. However, companies must still be Saskatchewan based and otherwise eligible to receive ASCP funds.
Notwithstanding, the Ministry has identified that companies delivering services (as opposed to supporting their delivery) in the following major service areas are expected to prequalify for the RFSQ:
- well decommissioning activities, including service rig operations, wellsite supervision, coil tubing, wireline, fluid hauling and disposal, cut and cap, pressure testing, cementation and service maintenance, downhole tools; and
- remediation and reclamation activities, such as initial environmental assessment (i.e., Phase 1), detailed site assessment, environmental contracting (i.e., heavy equipment, transport and waste disposal).
Licensee Responsibilities Elaborated
The Ministry has also provided further information regarding the role of licensees in the ASCP. Notably, licensees are encouraged, to the greatest extent possible, to nominate routine wells. This is defined as projects which are routine from a regulatory perspective, with the overall intent being to decrease the time spent processing applications. Where non-routine projects are nominated, licensees are advised to submit infrastructure projects where there are no known or foreseeable issues which could increase costs or project duration. A general expectation of the ASCP is that nominated projects may be completed in a timely manner and in accordance with expected costs.
As part of the ASCP, licensees will also be expected to follow applicable regulations and directives with regard to abandonment and reclamation. Licensees will be responsible for updating IRIS with all relevant reporting requirements.
At this time, the Ministry has not announced its plans for next phases, including criteria for distribution or the funds available. The Questions and Answers indicates additional details will depend on the execution and initial results of Phase 1 of the ASCP.