Government announces new incentive program for the oil and gas industry

The Government of Saskatchewan has introduced the Oil and Gas Processing Investment Incentive (OGPII), a versatile new incentive program designed to enhance Saskatchewan’s competitiveness in oil and gas development by enabling increased value-added processing and infrastructure capacity.

Gibson Energy Inc. (Gibson Energy), which operates a facility in Moose Jaw, is the first successful applicant for the OGPII.

The incentive will support oil and gas producers and value-added companies to grow and generate more value from their operations in the province. OGPII can also be used to support improved greenhouse gas (GHG) emissions management projects in the sector.

“Establishing functional, practical incentives through collaboration with our stakeholders is how we attract investment, create jobs and support long-term sustainable growth in Saskatchewan’s oil and gas industry,” Premier Scott Moe said. “This incentive will help the sector increase throughput capacity and grow value-added processing, while overcoming operational challenges associated with effectively managing emissions.”

“Today’s announcement highlights the importance of partnerships between the public and private sectors to help drive investment and growth across the province,” Gibson Energy chief administrative officer Sean Wilson said. “As a proud member of the Moose Jaw community for nearly 20 years, we would like to recognize the Government of Saskatchewan for offering programs such as the OGPII to help businesses strengthen their ties to the province and to continue to create jobs throughout Saskatchewan.”

“Being a part of Gibson Energy’s debottlenecking project was very impactful for us at Right Choice,” said Trevor Hagerman of Right Choice Energy Services Inc. “It allowed us to provide new opportunities for over 40 local employees and subcontractors, who came together as a team and completed this project with zero incidents. We are all proud to have been part of such a successful project.”

Gibson Energy’s existing Moose Jaw operation consists of a heavy crude oil processing facility that produces a variety of refined products including distillate and asphalt.

The expansion, completed on June 29, 2019, will increase throughput capacity by approximately 30 per cent—from 17,000 barrels per day to 22,000 barrels per day—with no increase in GHG emissions, ultimately reducing the facility’s emissions per barrel of oil processed by approximately 20-25 per cent. The incentive provides successful applicants with a 15 per cent transferrable royalty credit, applied to eligible costs directly related to an eligible greenfield or brownfield project.

In order to be eligible, a project must be a refinery, an upgrading facility, a gas commercialization project or other value-added facilities, including helium processing, petrochemicals and carbon capture, storage, and utilization for enhanced oil recovery, or a value-added project.

It must result in a significant increase in processing capacity, and have a minimum of $10 million in eligible costs. This incentive has a royalty credit cap of $75 million per project and a total program credit cap of $300 million in royalty credits.

OGPII aligns with the goals of the Government of Saskatchewan’s Methane Action Plan, which is part of Prairie Resilience: A Made-in-Saskatchewan Climate Change Strategy.

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