How Multi-Lateral Oil Well Royalty Incentives Reduce Costs and Improve Recovery in Saskatchewan

Drilling costs are rising in Saskatchewan’s mature oil fields. Many producers want to improve recovery without drilling more surface wells. The Multi-Lateral Oil Well Program (MLWP) helps by lowering Crown royalty costs for qualifying multi-lateral wells, making advanced drilling designs more affordable for Saskatchewan operators.

While these incentives are often called “grants,” the MLWP is actually a provincial royalty incentive. It reduces the royalties you owe to the province after production begins. This royalty relief can save producers hundreds of thousands of dollars over a well’s life.

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What Is the Multi-Lateral Oil Well Program (MLWP)?

The Multi-Lateral Oil Well Program is a Saskatchewan government incentive that encourages oil producers to drill multi-lateral wells instead of multiple single-leg wells. A multi-lateral well uses one main bore with several horizontal branches to access more of the reservoir.

According to the Government of Saskatchewan, the MLWP provides Crown royalty relief for qualifying multi-lateral oil wells drilled in the province.

Key points to know:

• The MLWP is not a cash grant
• The benefit comes through reduced Crown royalties
• It applies only to eligible oil wells in Saskatchewan
• The program is currently open

This structure lowers operating costs once the well is producing, increasing profits and helping you recover your investment faster.

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How Multi-Lateral Oil Well Royalty Incentives Reduce Costs

Multi-lateral wells cost more upfront than single-leg horizontals. The MLWP helps offset this by reducing long-term royalty expenses.

Here’s how the cost reduction works in practice:

• Fewer surface locations
  One multi-lateral well can replace two or more single wells, cutting land, road, and lease construction costs.

• Lower drilling and completion costs per barrel
  While the initial well may cost more, the cost per producing zone is often lower.

• Royalty relief improves cash flow
  MLWP royalty incentives reduce Crown royalties payable on qualifying production, increasing revenue after royalties.

• Better project finances can make more drilling projects possible
  When royalty costs are lower, more projects can meet internal financial targets.

Tools like GrantHub’s eligibility matcher can help you quickly check whether your drilling program aligns with Saskatchewan incentive programs like the MLWP.

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How the MLWP Improves Oil Recovery

Beyond cost savings, the MLWP supports better reservoir recovery.

Multi-lateral well designs allow producers to:

• Access multiple reservoir compartments from one wellbore
• Increase reservoir contact without additional surface disturbance
• Drain thinner or discontinuous formations more effectively
• Extend field life in mature pools

By encouraging these designs, the MLWP supports higher recovery factors while limiting surface impact. This aligns with Saskatchewan’s goal of maximizing value from existing resources.

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Eligibility and Application Basics

While the province does not publish a single checklist, MLWP eligibility generally includes:

• Oil and gas producers operating in Saskatchewan
• Wells drilled as true multi-lateral designs, not simple re-entries
• Compliance with Saskatchewan Energy and Resources regulations
• Proper registration and approval through provincial systems

Applications are usually tied to drilling and licensing timelines. Producers need to ensure the well is correctly classified as multi-lateral before or during development, not after production begins.

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Common Mistakes to Avoid

Assuming the MLWP is a cash grant
This program reduces royalties. It does not provide upfront funding.

Applying too late
If the well is not properly designated as multi-lateral during licensing, you may lose eligibility.

Overlooking stacking rules
Some Saskatchewan oil incentives can be combined, others cannot. Always confirm before assuming full stacking.

Ignoring tax implications
Royalty relief affects revenue, not taxable grant income. Your accounting treatment will differ from cash incentives.

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Frequently Asked Questions

Q: What is the Multi-Lateral Oil Well Program in Saskatchewan?
It is a provincial royalty incentive that reduces Crown royalties for qualifying multi-lateral oil wells. It is designed to encourage advanced drilling techniques.

Q: Who can apply for the MLWP?
Oil and gas producers operating in Saskatchewan can apply, provided their wells meet the program’s technical and regulatory requirements.

Q: Does the MLWP reduce Crown royalties?
Yes. Eligible wells receive royalty relief, increasing revenue after royalties over the life of the well.

Q: Is there a deadline to apply for the MLWP?
There is no fixed public deadline, but applications are tied to drilling and licensing timing. Late submissions may not be accepted.

Q: Can the MLWP be combined with other Saskatchewan oil incentives?
In some cases, yes. Stacking depends on the specific programs involved and provincial rules at the time of application.

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GrantHub tracks hundreds of active grant and incentive programs across Canada, including provincial oil and gas incentives. You can check which ones match your business profile.

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Next Steps

If you are planning a multi-lateral drilling program in Saskatchewan, the MLWP can play a major role in improving project finances. Understanding eligibility early can prevent missed savings. GrantHub helps Saskatchewan producers identify relevant incentives, compare programs, and stay current as provincial rules change.

See also:

• How to stack grants and loans without violating funding rules
• What Business Expenses Are Eligible Across Canadian Grants and Loans?