Bulletin 2015-13

Bulletin 2015-13: Licensee Liability Rating (LLR) Program Changes – Phase 3

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Licensee Liability Rating (LLR) Program Changes – Phase 3

Mar 31, 2015

In Bulletin 2013-09, the Energy Resources Conservation Board (predecessor to the Alberta Energy Regulator [AER]) announced that it was implementing changes over a three-year period to the Licensee Liability Rating (LLR) program to increase the well abandonment liability costs and industry average netback to the 2012 values by May 1, 2015. This bulletin announces that the AER is implementing the third (and final) phase of changes to the LLR program effective August 1, 2015. The implementation date has been delayed from May 1 to August 1, 2015, to give licensees more time to understand the implications of, and prepare for, the phase-3 program changes in light of current market conditions.

Phase 3 of the changes consists of updating Directive 011: Licensee Liability Rating (LLR) Program: Updated Industry Parameters and Liability Costs as follows:

  • Increasing the deemed well abandonment liabilities by an additional one-third towards the 2012 values (after one-third increases in both 2013 and 2014), bringing them to the full 2012 values.
  • Increasing the deemed assets by an additional one-third towards the 2012 industry average netback values (after one-third increases in both 2013 and 2014), bringing them to the full 2012 industry average netback values.

After phase three, the liability costs and parameters will be updated in accordance with Directive 011.

On February 28, 2014, the AER introduced the LLR Program Management Plan (plan), as announced in Bulletin 2014-06. The plan, which complements the LLR program, allows licensees to pay the financial security they owe in increments, over a longer period of time, while improving their asset-to-liability ratio. The plan can be found on the AER website, www.aer.ca. If you have any questions, contact LiabilityManagement@aer.ca.

The latest edition of Directive 011, which is effective August 1, 2015, is also available on the AER website. Printed copies of the directive can be purchased from AER Order Fulfillment, Suite 1000,
250 – 5 Street SW, Calgary, Alberta T2P 0R4; telephone: 403-297-8311 or 1-855-297-8311 (toll free; option 2); fax: 403-297-7040; e-mail: InformationRequest@aer.ca.


<original signed by>

Kirk Bailey
Executive Vice President
Operations Division