Oil and Gas Drilling Incentives

Drilling new oil or gas wells in Saskatchewan comes with substantial upfront risk and capital costs, which is why the Oil and Gas Drilling Incentives are designed to make early-stage production more financially viable. This provincial initiative helps producers improve project economics by reducing royalties and production taxes on qualifying volumes from newly drilled wells, allowing companies to retain more revenue during the critical early life of a well.

The program applies to both oil and exploratory gas drilling, with incentives calculated on a volume basis rather than a fixed grant amount. For eligible oil wells, a portion of early production benefits from significantly reduced Crown royalty rates, while freehold production may be exempt from production taxes altogether. Exploratory gas wells can also qualify for a large incentive volume under similar favourable royalty and tax conditions, helping offset the higher uncertainty and cost associated with gas exploration. These measures are particularly relevant for operators investing in new vertical or horizontal drilling projects across Saskatchewan.

Because support is delivered through royalty and tax relief rather than direct payments, the value of the incentive varies by project and production performance. Businesses meeting certain requirements and planning new drilling activity may find this program especially impactful. Reviewing the full program details can help determine how these incentives could fit into your development plans.