Multi-lateral Oil Well Program Regulations, C-50.2 Reg 37

1 MULTI-LATERAL OIL WELL PROGRAM C-50.2 REG 37 The Multi-lateral Oil Well Program Regulations being Chapter C-50.2 Reg 37 (effective April 1, 2024). NOTE: This consolidation is not official. Amendments have been incorporated for convenience of reference and the original statutes and regulations should be consulted for all purposes of interpretation and application of the law. In order to preserve the integrity of the original statutes and regulations, errors that may have appeared are reproduced in this consolidation. 2 C-50.2 REG 37 MULTI-LATERAL OIL WELL PROGRAM Table of Contents 1 Title 6 Approval of multi-lateral oil well incentive 2 Definitions 7 Calculation of royalties and production tax 3 Program established 8 Reduction of multi-lateral oil well incentive volume 4 Application for multi-lateral oil well incentive 9 Publication of policies 5 Application for appraisal multi-lateral oil well 10 Coming into force APPENDIX Table 1 Multi-lateral Oil Well Incentive Volume Table 2 Deep Multi-lateral Oil Well Incentive Volume 3 MULTI-LATERAL OIL WELL PROGRAM C-50.2 REG 37 CHAPTER C‑50.2 REG 37 The Crown Minerals Act Title 1 These regulations may be cited as The Multi‑lateral Oil Well Program Regulations. Definitions 2(1) In these regulations: “applicant” means: (a) a person who is a licensee, as defined in section 2 of The Oil and Gas Conservation Act, of a multi-lateral oil well; or (b) any other person approved by the minister; “appraisal multi‑lateral oil well” means a multi-lateral oil well approved by the minister in accordance with section 5 as an appraisal multi-lateral oil well; “approved” means approved by the minister for the purposes of these regulations; “kick‑off point” means the point at which the drilling string has been pulled back on a horizontal well to begin the drilling of a subsequent horizontal wellbore; “lateral” means a horizontal section with a lateral length greater than 200 metres; “lateral length” means the lesser of: (a) the length from the kick-off point to the termination point of the lateral; and (b) the length from the initial point of penetration into the productive zone to the termination point of the lateral; “multi‑lateral oil well” means a horizontal oil well: (a) that has more than 2 laterals; and (b) that is not part of an EOR project; “program” means the Multi-lateral Oil Well Program established pursuant to section 3. (2) For the purposes of these regulations, unless otherwise defined in these regulations, the definitions in sections 2 and 12 of The Crown Oil and Gas Royalty Regulations, 2012 and sections 2, 6 and 11 of The Freehold Oil and Gas Production Tax Regulations, 2012 apply, with any necessary modification. 3 May 2024 cC-50.2 Reg 37 s2. 4 C-50.2 REG 37 MULTI-LATERAL OIL WELL PROGRAM Program established 3(1) The Multi-lateral Oil Well Program is established. (2) The minister shall administer the program in accordance with these regulations. 3 May 2024 cC-50.2 Reg 37 s3. Application for multi‑lateral oil well incentive 4(1) An applicant may apply for an incentive volume pursuant to the program by submitting an application to the minister that is in a form acceptable to the minister and that contains any information that the minister may require. (2) A multi-lateral oil well with respect to which an application is being made must have a finished drilling date on or after April 1, 2024 and before April 1, 2028. (3) On receipt of an application made pursuant to subsection (1), the minister: (a) may approve the application if the minister is satisfied that the applicant meets the requirements of these regulations and that it is in the public interest to do so; or (b) may refuse the application. (4) If the minister makes a decision pursuant to subsection (3), the minister shall notify the applicant of the minister’s decision and, in the case of a decision pursuant to clause (3)(b), provide written reasons for the decision. (5) The minister may impose any terms and conditions on an approval pursuant to clause (3)(a) that the minister considers reasonable. (6) The minister may waive the requirement for an application. 3 May 2024 cC-50.2 Reg 37 s4. Application for appraisal multi‑lateral oil well 5(1) An applicant may apply for an appraisal multi-lateral oil well approval and related incentive volume pursuant to the program by submitting an application to the minister that is in a form acceptable to the minister and that contains any information that the minister may require. (2) On receipt of an application pursuant to subsection (1), the minister: (a) may approve the application if the minister is satisfied that the applicant meets the requirements of these regulations and that it is in the public interest to do so; or (b) may refuse the application. (3) If the minister makes a decision pursuant to subsection (2), the minister shall notify the applicant of the minister’s decision and, in the case of a decision pursuant to clause (2)(b), provide written reasons for the decision. (4) The minister may impose any terms and conditions on an approval pursuant to clause (2)(a) that the minister considers reasonable. (5) An applicant for an appraisal multi-lateral oil well must provide to the minister: (a) the location of the multi-lateral oil well that is to be considered as the appraisal multi-lateral oil well; and 5 MULTI-LATERAL OIL WELL PROGRAM C-50.2 REG 37 (b) the locations of at least 10 multi-lateral oil wells that are to be drilled in addition to the appraisal multi-lateral oil well. (6) For the purposes of subsection (5), the multi-lateral oil wells are to be located on contiguous tracts of mineral lands in the same zone. (7) An applicant must not include more than 1 appraisal multi-lateral well in an application. (8) The appraisal multi‑lateral oil well must be the first multi‑lateral oil well drilled within the mineral lands included in the application. (9) The applicant must not start drilling the appraisal multi-lateral oil well that is the subject of the application mentioned in subsection (1) until the minister approves that application. (10) An appraisal multi‑lateral oil well must have a finished drilling date on or after April 1, 2024 and before April 1, 2028. (11) For the purposes of subsection (5), the multi-lateral oil wells that are not considered to be appraisal multi‑lateral oil wells are to have a finished drilling date within 48 months after the finished drilling date of the appraisal multi‑lateral oil well. (12) If an applicant fails to comply with the conditions of the approval, the minister may revoke the multi-lateral oil well incentive assigned to the appraisal multi-lateral oil well. (13) Notwithstanding subsections (1) to (12), the minister may approve any multi-lateral oil well as an appraisal multi-lateral oil well. 3 May 2024 cC-50.2 Reg 37 s5. Approval of multi‑lateral oil well incentive 6(1) If the minister approves an application pursuant to section 4 or 5, the minister shall, with respect to a multi-lateral oil well or an appraisal multi-lateral oil well drilled on or after April 1, 2024 and before April 1, 2028, provide a successful applicant one multi-lateral oil well incentive. (2) The multi‑lateral oil well incentive is to be based on the configuration of the subject oil well as of the date on which the oil well is placed on production, as follows: (a) in the case of a multi-lateral oil well, according to Table 1 of the Appendix; (b) in the case of an appraisal multi-lateral oil well, according to Table 2 of the Appendix. 3 May 2024 cC-50.2 Reg 37 s6. Calculation of royalties and production tax 7(1) With respect to oil produced from a multi-lateral oil well or appraisal multi-lateral oil well allocated to any Crown lands for which the minister has approved a multi-lateral oil well incentive pursuant to section 6: (a) the royalties are to be determined and paid in accordance with The Crown Oil and Gas Royalty Regulations, 2012; (b) the oil is deemed to be fourth tier oil; and 6 C-50.2 REG 37 MULTI-LATERAL OIL WELL PROGRAM (c) the Crown royalty rate is the lesser of the fourth tier oil Crown royalty rate calculated pursuant to clause 10(a) of The Crown Oil and Gas Royalty Regulations, 2012 and 2.5%, with respect to the portion of oil produced from or allocated to Crown lands that is included in the incentive volume approved under the program and that is not incremental waterflood oil. (2) With respect to oil produced from a multi-lateral oil well or appraisal multi-lateral oil well allocated to any freehold lands for which the minister has approved a multi-lateral oil well incentive pursuant to section 6: (a) the taxes are to be determined and paid in accordance with The Freehold Oil and Gas Production Tax Regulations, 2012; (b) the oil is deemed to be fourth tier oil; and (c) the tax rate is the lesser of the fourth tier oil tax rate calculated pursuant to clause 9(a) of The Freehold Oil and Gas Production Tax Regulations, 2012 and the amount, if any, by which 2.5% exceeds the PTF, with respect to the portion of oil produced from or allocated to freehold lands that is included in the incentive volume approved under the program and that is not incremental waterflood oil. 3 May 2024 cC-50.2 Reg 37 s7. Reduction of multi‑lateral oil well incentive volume 8 If a multi-lateral oil well or appraisal multi-lateral oil well becomes part of an EOR project, the volume of oil that is applicable to the multi-lateral oil well for the purposes of section 6, and any other volume of oil that has already been assigned to the well as an incentive, are to be reduced by the minister in the same proportion as the total investment, as the case may be, within the meaning of: (a) clauses 30(2)(j) and (3)(f) of The Crown Oil and Gas Royalty Regulations, 2012 related to the drilling of the multi-lateral oil well or appraisal multi-lateral oil well that is included in calculating the royalty rate pursuant to clause 32(a) of those regulations; and (b) clauses 29(2)(j) and (3)(f) of The Freehold Production Tax Regulations, 2012 related to the drilling of the multi-lateral oil well or appraisal multi-lateral oil well that is included in calculating the freehold production tax rate pursuant to clause 31(a) of those regulations. 3 May 2024 cC-50.2 Reg 37 s8. Publication of policies 9 If the minister establishes policies for the purposes of these regulations, the minister shall cause those policies to be made public in any manner that the minister considers appropriate, including by publishing them on the ministry’s website. 3 May 2024 cC-50.2 Reg 37 s9. Coming into force 10 These regulations come into force on the day on which they are filed with the Registrar of Regulations, but are retroactive and are deemed to have been in force on and from April 1, 2024. 3 May 2024 cC-50.2 Reg 37 s10. 7 MULTI-LATERAL OIL WELL PROGRAM C-50.2 REG 37 Appendix Table 1 Multi‑lateral Oil Well Incentives [Clause 6(2)(a)] NON‑DEEP MULTI‑LATERAL OIL WELL INCENTIVE VOLUME (CUBIC METRES) Number of Laterals Number of Laterals With a Length Greater than 500 Metres With a Length 0 1 2 3 4 5 or more Greater than 200 Metres 1 0 0 – – – – 2 0 0 0 – – – 3 0 0 0 2,000 – – 4 0 0 0 2,000 6,000 – 5 0 0 0 2,000 6,000 10,000 6 0 0 0 2,000 6,000 10,000 7 0 0 0 2,000 6,000 10,000 8 0 0 0 2,000 6,000 10,000 9 0 0 0 2,000 6,000 10,000 10 or more 10,000 10,000 10,000 10,000 10,000 10,000 DEEP MULTI‑LATERAL OIL WELL INCENTIVE VOLUME (CUBIC METRES) Number of Laterals Number of Laterals With a Length Greater than 500 Metres With a Length 0 1 2 3 4 5 or more Greater than 200 Metres 1 0 0 – – – – 2 0 0 0 – – – 3 0 0 0 1,000 – – 4 0 0 0 1,000 3,000 – 5 0 0 0 1,000 3,000 5,000 6 0 0 0 1,000 3,000 5,000 7 0 0 0 1,000 3,000 5,000 8 0 0 0 1,000 3,000 5,000 9 0 0 0 1,000 3,000 5,000 10 or more 5,000 5,000 5,000 5,000 5,000 5,000 NOTE: The incentive volume is determined by cross-referencing the number of laterals with a length greater than 200 metres with the number of laterals with a length greater than 500 metres. The “–” represents combinations that cannot exist. 3 May 2024 cC-50.2 Reg 37. 8 C-50.2 REG 37 MULTI-LATERAL OIL WELL PROGRAM Table 2 Appraisal Multi‑lateral Oil Well Incentives [Clause 6(2)(b)] NON‑DEEP APPRAISAL MULTI‑LATERAL OIL WELL INCENTIVE VOLUME (CUBIC METRES) Number of Laterals Number of Laterals With a Length Greater than 500 Metres With a Length 0 1 2 3 4 5 or more Greater than 200 Metres 1 0 0 – – – – 2 0 0 0 – – – 3 0 0 0 6,000 – – 4 0 0 0 6,000 12,000 – 5 0 0 0 6,000 12,000 18,000 6 0 0 0 6,000 12,000 18,000 7 0 0 0 6,000 12,000 18,000 8 0 0 0 6,000 12,000 18,000 9 0 0 0 6,000 12,000 18,000 10 or more 18,000 18,000 18,000 18,000 18,000 18,000 DEEP APPRAISAL MULTI‑LATERAL OIL WELL INCENTIVE VOLUME (CUBIC METRES) Number of Laterals Number of Laterals With a Length Greater than 500 Metres With a Length 0 1 2 3 4 5 or more Greater than 200 Metres 1 0 0 – – – – 2 0 0 0 – – – 3 0 0 0 5,250 – – 4 0 0 0 5,250 7,750 – 5 0 0 0 5,250 7,750 10,250 6 0 0 0 5,250 7,750 10,250 7 0 0 0 5,250 7,750 10,250 8 0 0 0 5,250 7,750 10,250 9 0 0 0 5,250 7,750 10,250 10 or more 10,250 10,250 10,250 10,250 10,250 10,250 NOTE: The incentive volume is determined by cross-referencing the number of laterals with a length greater than 200 metres with the number of laterals with a length greater than 500 metres. The “–” represents combinations that cannot exist. 3 May 2024 cC-50.2 Reg 37. REGINA, SASKATCHEWAN Printed by the authority of THE KING’S PRINTER Copyright©2024