ID 99-01

ID 99-01: Gas/Bitumen Production in Oil Sands Areas – Application, Notification and Drilling Requirements [includes all 4 amendments]

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Gas/Bitumen Production in Oil Sands Areas – Application, Notification and Drilling Requirements [includes all 4 amendments]

Feb 03, 1999

The purpose of this interim directive is to outline the new Alberta Energy and Utilities Board (EUB) requirements regarding gas/bitumen production in Oil Sands Areas. These requirements are largely based on the conclusions of the March 1998 EUB Inquiry Report on Gas/Bitumen Production in Oil Sands Areas, the July 1998 Gas/Bitumen Committee's recommendations on Gas/Bitumen Issues, and the November 1998 Industry/EUB Committee's recommendations on Gas Production Application Areas.

For wells completed in the defined oil sands strata prior to 1 July 1998, an application for approval to produce gas will not be required. These wells will be allowed to continue to produce, subject to the resolution of any concerns that may be raised by oil sands leaseholders or by the Board on its own initiative.

For all wells drilled and/or completed in the defined oil sands strata after 1 July 1998, an operator must submit an application and obtain approval from the Board before any gas, other than solution gas, can be produced. Also, all wells drilled in the oil sands strata after 1 July 1998 must be drilled deep enough to be able to log over the base of the oil sands deposit containing the zone from which gas and/or bitumen is to be produced. These requirements do not apply to wells that are drilled for mining projects or for wells that are exempt by the Board.

The requirement for an application for approval to produce gas and the drilling requirement are being incorporated into the Oil and Gas Conservation Regulation and/or the Oil Sands Conservation Regulation, and compliance with the regulations is being made a condition of all well licenses. These requirements are discussed in more detail in the following sections.

Notification of applications for approval to produce gas and for in situ oil sands schemes is to be given by the applicants to potentially affected parties, as detailed in the following sections.

The Board will periodically review these requirements, as new information becomes available, and make revisions as necessary.

Questions regarding this interim directive should be directed to the Reservoir Development Group at (403) 297-3561.

<original signed by>

Frank J. Mink, P.Eng
Board Member


1st Amendment

Mar 31, 1999

On 3 February 1999, the Board issued Interim Directive (ID) 99-01 regarding Gas/Bitumen Production in Oil Sands Areas. ID 99-01 included six Application Area maps for the Athabasca Oil Sands Area. The purpose of this amendment is to make a correction to the Application Area Map for the Wabiskaw Deposit. The correction involves the addition of an application area covering Townships 94–97, West half of Range 5 and Range 6, West of the 5th Meridian. The amended Application Area Map is attached.

Questions regarding this amendment should be directed to the Board's Reservoir Development Group at (403) 297-3561.

<original signed by>

J. D. Dilay, P.Eng.
Board Member

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2nd Amendment

Nov 30, 1999

On 3 February 1999, the Board issued Interim Directive (ID) 99-01 regarding Gas/Bitumen Production in Oil Sands Areas. The ID included application areas and bitumen thickness criteria for the Athabasca Oil Sands Area. It also stated that the Board intends to specify application areas and bitumen thickness criteria for the Peace River and Cold Lake Oil Sands Areas once it has received and reviewed recommendations from the Industry/EUB Committee.

The Board has received and reviewed the recommendations from the Industry/EUB Committee for the Peace River Oil Sands Area and, by letter dated 4 October 1999, sent the committee report to a broader spectrum of industry for comments. No concerns were submitted to the Board regarding the committee report.

The Board has amended ID 99-01 by adding the attached Appendix A.

Questions regarding this amendment should be directed to the Board's Resources Applications Group at (403) 297-3561.

<original signed by>

J. D. Dilay, P.Eng.
Board Member

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3rd Amendment

Nov 29, 2000

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4th Amendment

Jul 22, 2003

On February 3, 1999, the Alberta Energy and Utilities Board (EUB) issued Interim Directive (ID) 99-01: Gas/Bitumen Production in Oil Sands Areas - Application, Notification, and Drilling Requirements. This amendment incorporates revisions to the EUB's requirements respecting gas production from the Wabiskaw-McMurray in the Athabasca Oil Sands Area, as announced in General Bulletin (GB) 2003-16 and GB 2003-28 .

1 Application Area

The gas production application areas for the Wabiskaw and McMurray are rescinded (Maps 4 and 5 of ID 99-1 ) and replaced by a single Wabiskaw-McMurray application area, as shown on Attachment 1. The description of the application criteria for the Wabiskaw and McMurray contained within the appendix of ID 99-1 is replaced with the following:

Wabiskaw-McMurray Deposit

Applications for approval to produce gas are required for wells drilled within the Wabiskaw-McMurray application area and for wells drilled outside this area that are within or extend a Wabiskaw or McMurray Pool Order that overlaps the application area.

Previously, when a Wabiskaw-McMurray gas well drilled outside the application area discovered bitumen meeting the criteria outlined in ID 99-1 , an application was required. With these changes, applications are no longer required outside of the new application area unless drilled into a Pool Order that overlaps the application area. Notwithstanding, oil sands leaseholders that have a local concern may request a gas shut-in review or the Board may conduct such a review on its own initiative. Drilling requirements specified in ID 99-1 continue to apply outside the new application area.

2 Application Information Requirements

The application information requirements specified in ID 99-1 are applicable to the Wabiskaw-McMurray application area. However, this information needs to be addressed within the context of a regional geological setting. Applicants must provide a regional geological study encompassing a minimum 15 kilometre (km) radius centered around the application well.

3 Interim Shut-in Order and Exemptions

Effective September 1, 2003, all Wabiskaw-McMurray gas production from wells within the new application area and within overlapping Pool Orders must be shut in on an interim basis unless exempted. Schedule A of Interim Shut-in Order 03-001 lists the wells subject to the interim shut-in order. In the event that Wabiskaw-McMurray gas production is occurring within the application area or within overlapping Pool Orders from wells not listed in Schedule A of the interim shut-in order, the licensee must immediately advise the EUB Resources Applications Group in writing.

Wabiskaw-McMurray gas production is exempt on an interim basis provided that

  1. a licensee states it has evidence to show that grandfathered gas (i.e., zones completed prior to July 1, 1998) is not associated with potentially recoverable bitumen or
  2. gas production was approved after July 1, 1998, pursuant to an application under ID 99-1 .

A licensee must notify the EUB of the wells and perforated intervals that it states are exempt. Notification of exemption must include a covering letter signed by an authorized company representative along with a list of the unique well ID, perforated interval(s), and the basis for exemption in the format shown in Attachment 2. Licensees intending to file an exemption should send a paper copy, along with an electronic version of the list (Excel format), to

Attention: Resources Applications Group
Alberta Energy and Utilities Board
640 - 5 Avenue SW
Calgary, Alberta T2P 3G4
E-mail: EUB.ExemptNotifications@gov.ab.ca

Temporary exemptions from the interim shut-in order are effective on the date of filing. Gas production for which temporary exemption notification has not been filed by September 1, 2003, must be shut in until such time as an exemption is filed. The EUB will publish a list of the exempt wells and perforated intervals on its Web site for access by all interested parties.

A licensee must have in its possession the supporting evidence it used to exempt gas production. The licensee must produce this supporting evidence within two working days, or as directed by the Board, if an exemption is contested or when audited by the EUB. If a licensee fails to produce the evidence as directed by the Board, the producing zone will be subject to immediate interim shut-in and the EUB may audit that licensee's remaining exempted gas production. Evidence of further noncompliance will result in the immediate shut in of those wells and will invoke the EUB's general enforcement process.

Decisions made respecting Wabiskaw-McMurray gas production from wells that were considered at the Surmont hearing (Decision 2000-022) and the Chard-Leismer hearing (Decision 2003-023) are unaffected by this interim shut-in order.

The interim shut-in order will supersede any existing commingling orders.

4 Pressure Data Requirements

Effective immediately, waivers previously granted regarding the collection of pressure data from EUB designated Wabiskaw-McMurray gas pools within or overlapping the application area are rescinded. For these pools the EUB requires that pressure surveys be conducted and submitted by November 1, 2003, from the greater of one well or 25 per cent of the wells in each pool. These must be bottomhole pressure surveys using the methodology described in Guide 40: Pressure and Deliverability Testing-Oil and Gas Wells for obtaining stabilized pressures. Variations from these requirements must be approved by the EUB.

After November 1, 2003, requirements revert back to Guide 40 or such other requirements as may be determined through consultation with industry.

Questions regarding this amendment should be directed to the EUB's Resources Applications Group at (403) 297-3561.

<original signed by>

Neil McCrank, Q.C.
Chairman

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