VIEW PDF (57.79 KB)
In accordance with part 11 of the Oil and Gas Conservation Act, the Alberta Energy Regulator (AER) is, by regulation, prescribing an orphan fund levy in the amount of $15 million pending approval from the Alberta Treasury Board. This levy is based on the revenue requirements identified by the Alberta Orphan Oil and Gas Abandonment and Reclamation Association (Orphan Well Association) in their 2014/15 budget.
The AER will allocate the orphan fund levy amongst licensees and approval holders included within the Licensee Liability Rating (LLR) and Oilfield Waste Liability (OWL) programs based on the February 2014 monthly assessment. Information on these programs is contained in Directive 006: Licensee Liability Rating (LLR) Program and Licence Transfer Process, Directive 011: Licensee Liability Rating (LLR) Program – Updated Industry Parameters and Liability Costs,and Directive 075: Oilfield Waste Liability (OWL) Program.
The increase in the orphan levy is supported by the Canadian Association of Petroleum Producers and the Explorers and Producers Association of Canada.
Levy = A⁄B × $15 000 000
A is the licensee’s or approval holder’s deemed liabilities on February 1, 2014, for all facilities, wells, and unreclaimed sites included within the LLR and OWL programs, as calculated in accordance with Directive 006, Directive 011,and Directive 075, and
B is the sum of the industry’s deemed liabilities on February 1, 2014, for all facilities, wells, and unreclaimed sites included within the LLR and OWL programs, as calculated in accordance with Directive 006, Directive 011,and Directive 075.
Each licensee’s or approval holder’s required orphan fund levy is based on its licensed and approved properties, according to AER records, as of February 1, 2014. Facilities included under the Large Facility Liability Management Program are excluded.
A licensee or approval holder may review its deemed liabilities in the LLR and OWL programs at any time through the Digital Data Submission (DDS) system on the AER website at www.aer.ca.
An orphan fund levy invoice will be sent to the attention of each licensee or approval holder’s chief financial officer by mail to the address on file with the AER at the time of issuance. Orphan fund levy invoices will be mailed out no later than February 6, 2014. If a licensee or approval holder does not receive its orphan fund levy invoice by February 13, 2014, they must contact the AER to request a copy.
All orphan fund levy invoices must be paid by the licensee or approval holder and received by the AER no later than March 10, 2014. Payment must be made payable in Canadian currency using an acceptable negotiable financial instrument, including a cheque, money order, bank draft, or cash.
All payments must be made payable to “Alberta Energy Regulator”; failure to pay the full invoiced amount by March 10, 2014, will result in a penalty of 20 per cent of the original invoiced amount being assessed to the licensee or approval holder along with the issuance of a Notice of Low Risk Noncompliance in accordance with Directive 019: Compliance Assurance.
Subsequently, where a licensee or approval holder fails to comply with a Notice of Low Risk Noncompliance, the licensee or approval holder will be issued a Low Risk Enforcement Action and be subject to any of the enforcement consequences provided for in Directive 019.
Liability Management Group
Alberta Energy Regulator
Suite 1000, 250 – 5th Street
Calgary, Alberta T2P 0R4
or submitted electronically to the attention of Anu Nandiwada at LiabilityManagement@aer.ca.
Even if an appeal is filed, payment in full of the original invoiced amount is required by March 10, 2014, to avoid the assessment of the 20 per cent penalty and the issuance of a noncompliance response in accordance with Directive 019. The AER will refund any overpayment resulting from a successful appeal to a licensee or approval holder within 30 days of the result of its appeal.
Questions regarding this bulletin should be directed to the Liability Management help line at 403‑297‑3113 or LiabilityManagement@aer.ca.
Executive Vice President, Operations
Alberta Energy Regulator