Saskatchewan has introduced a new royalty regime for multi-lateral well drilling to encourage oil production and investment.In a press release, Energy and Resources Minister Jim Reiter announced the program which is designed to encourage the use of multi-lateral horizontal oil wells and increase investment in the province."This innovative technique will put more rigs and workers in the field and support the Growth Plan goal of increasing oil production by 25% to 600,000 barrels per day," Reiter said."Our new program will increase the province's revenue so we can continue to invest in classrooms, care and communities."Multi-lateral drilling configurations allow a single well to access more of the oil reservoir. The Ministry of Energy and Resources estimates between 100 to 200 additional wells will be drilled in the province per year as a result of this program.Cenovus Energy CEO Jon McKenzie said the incentives will make more drilling more worthwhile."The new incentive program for multi-lateral drilling opens up significant new drilling investment opportunities in Saskatchewan for Cenovus," McKenzie said. "It aligns with our focus to strategically build our integrated position in the Lloydminster region and we anticipate it will have positive impacts for provincial employment as well as new production growth. We are pleased to see government focus on creative ways to bring more investment to Saskatchewan."Lycos Energy specializes in multi-lateral drilling in the Lloydminster area. President and CEO Dave Burton welcomed the provincial announcement."Multi-Lateral drilling is the cornerstone of Lycos' business, which is focused in the Lloydminster region straddling the Saskatchewan Alberta border," Burton said."This announcement gives a competitive edge to Saskatchewan resulting in our company reallocating funds to the province and reaffirms the government's commitment to working with industry to attract substantial new investment in the local economies of Saskatchewan."The news was also welcome to the Canadian Association of Petroleum Producers (CAPP)."The competition for capital investment is fierce and Saskatchewan's plan to modernize the royalty regime to recognize the use of new drilling technologies provides the right policy environment to attract investment to the province," said CAPP President and CEO Lisa Baiton."A more competitive royalty framework will help unlock valuable oil resources in Saskatchewan and will, in turn, create more jobs and additional revenues for the government and municipalities."The oil sector is one of Saskatchewan's largest industries and supports more than 26,000 jobs. The province is the second-largest oil producing jurisdiction in Canada.Eligible oil wells include MLWs drilled on or after April 1, 2024, and on or before March 31, 2028.If the MLW is of a pitchfork configuration, or a variation of the pitchfork configuration, the well must contain a minimum of three laterals, including the initial wellbore, of 500 m or longer to qualify for additional volumetric incentive.If the MLW is of a fishbone configuration, or a variation of a fishbone configuration, the well must contain a minimum of ten additional laterals, off the main wellbore, of at least 200 m in length to qualify for an additional volumetric incentive.More details on the royalty structure are available here. Below, a post to Twitter ("X") illustrates multi-lateral drilling.
