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On February 10, 2015, the Alberta Energy Regulator (AER) released AER Bulletin 2015-05: Oil and Gas Conservation Rules Change Introducing Subsurface Orders announcing changes to the Oil and Gas Conservation Rules (OGCR) and the creation of the new subsurface orders regulatory instrument. Subsurface orders allow the AER to adapt subsurface regulatory requirements for specific geological zones over specified areas to better suit the resource development practices being employed.
The AER has completed an internal review of the Duvernay zone and has issued Subsurface Order No. 3, effective April 1, 2015. The order sets out specific AER subsurface rules and regulatory processes for well spacing, production rate limitation, well testing and deliverability, drill-cutting controls, and control well requirements for designated areas of the Duvernay zone.
Where a conflict arises between the order and a term or condition of an approval or licence, the term or condition of an approval or licence prevails. For example, the order’s spacing provisions will only apply to lands that are not subject to other previously issued special well spacing approvals. Licensees may apply to vary or rescind related approvals if they wish to take advantage of the order terms. The applications must be filed in accordance with Directive 065: Resources Applications for Oil and Gas Reservoirs.Overview of Subsurface Order No. 3
The order establishes the following subsurface rules in the area defined by the order for wells producing from the Duvernay zone:
Existing rules and requirements that are not specified in the order continue in effect as prescribed in the OGCR and other AER directives. The above variances apply only when operators avoid wasteful operations as defined in section 1(1)(ddd) of the Oil and Gas Conservation Act.
Licensees subject to this order may be required at any time to conduct and provide data, reports, tests, interpretations, or other information, including performance reports, to enable sufficient review of the licensee’s activity, resource characterization, and reservoir management pursuant to sections 11.005 and 11.006 of the OGCR.Scope of Subsurface Orders
The order only addresses regulatory matters that are under the AER’s jurisdiction. The order does not in any way predetermine regulatory approval of wells, pipelines, other production facilities, access roads, and other surface disturbances that may be associated with energy resource development of the strata defined in the order. Surface energy resource activities and related land access are regulated separately under Alberta legislation administered by the AER and other provincial departments and municipal governments and must comply with the Alberta Land Stewardship Act and regional plans.
Similarly, the order does not vary or alter mineral rights, tenure rules, or royalty matters under the authority of Alberta Energy.Assessment of Performance
The AER will assess performance and monitor activity within the zone defined in the order. Submission of resource management performance reports, including performance presentations and meetings with participating operators, may be required at the discretion of the AER.
This assessment is required in order to
The AER may call upon operators affected by the order at any time to provide data and interpretations in accordance with OGCR section 11.005. If necessary, the AER may, under OGCR section 11.006, require an operator to conduct additional tests or analyses.
The order is available on the AER order system at http://mapview.aer.ca/bos. The order and FAQs are available at http://www.aer.ca/data-and-publications/orders/subsurface-orders.
Questions about this bulletin may be directed to the Industry Relations Group of the Oil and Gas Branch by phone, at 403-662-3981, or by e-mail, to IndustryRelations@aer.ca.
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Executive Vice President
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