Established in 2001, the Orphan Well Association (OWA) manages the closure of orphaned oil and gas wells, pipelines, and facilities and the reclamation of associated sites across Alberta. Every year, we issue an orphan fund levy to energy companies in our Licensee Liability Rating (LLR) and Oilfield Waste Liability (OWL) programs and transfer the funds to the OWA’s operating budget.
The levy is used to pay for closure costs, including abandonment, remediation, and reclamation, if an energy company cannot meet its obligations to safely and responsibly close its sites . The funds help prevent closure costs from being passed onto Albertans.
Who are Working Interest Participants and What Does “Orphan” Mean?
When an energy company becomes insolvent, defunct, or cannot meet its obligations to close its site safely and responsibly, we will order anyone with a legal or beneficial interest in that infrastructure site to close it. These companies are known as working interest participants.
If there are no working interest participants, we may designate the well, facility, or pipeline as an orphan to the OWA’s care to be abandoned, remediated, and reclaimed.
How the Orphan Levy Is Calculated
The Government of Alberta approves the annual orphan levy amount. The AER sets the levy in consultation with the OWA, the Canadian Association of Petroleum Producers (CAPP), and the Explorers and Producers Association of Canada (EPAC). The amount is based on
- estimated costs of closure activities for the fiscal year,
- reimbursing working interest participant (WIP) claims, and
- payment of any debts.
Each year, a company receives an invoice from the AER for its share of the total levy. A company’s annual levy is based on its share of the industry’s estimated liability, as determined by our Licensee Liability Rating Program and the Oilfield Waste Liability Program.
Our formula for calculating the orphan fund levy is provided in Bulletin 2023-16: 2023/24 Orphan Fund Levy - LLR and OWL Programs.
Orphan Fund Levy for Large Facilities
In years when there are costs to close facilities under the Large Facility Liability Management Program (LFP) that are licensed to a defunct company, we can issue a separate levy to cover these costs. Examples of large facilities under the LFP include sour gas plants, straddle plants, and in situ oil sands plants.
We issued an orphan fund levy for large facilities for the first time in the fiscal year 2021/22. The amount invoiced to a company was based on its share of the total liabilities in the LFP.
Bulletin 2021-032: 2021/22 Orphan Fund Levy for Large Facilities provides the formula we used to calculate the levy, similar to that used for calculating the annual levy for the OWL and LLR programs.
Any company that does not pay the orphan levy may face consequences. Learn about our compliance and enforcement tools.
Expanding the mandate of the OWA
Bill 12: The Liabilities Management Statutes Amendment Act, became effective on June 15, 2020. The bill enables the OWA to manage better and accelerate the clean-up of sites that do not have a responsible owner. The most notable changes include the following:
- The OWA may provide care for sites when a licensee cannot to provide ongoing reasonable care and implement measures to prevent impairment or damage to their assets.
- The OWA may manage, maintain, operate (for a limited time), and sell assets for potential transition to a new responsible party. A list of OWA-managed assets is available on the OWA website.
- Where a licensee has ceased operations or cannot meet its obligations to close its sites safely and responsibly, the OWA may apply to appoint a receiver to assist in transitioning assets to new responsible parties, who will assume the associated regulatory and liability obligations. This will reduce the remaining end-of-life obligations for the insolvent licensee.
- The OWA may now enter into agreements to conduct work on behalf of the remaining working interest participants when directed by the AER.
Please visit the OWA website for more information.
Additional Information
Where can I find previous levy amounts?
Historical levy assessments, including which wells and facilities were assessed, are available on our Digital Data Submission (DDS) system.
When are orphan levies collected?
Dates for when the orphan levies are collected can vary based on timelines for provincial budget approvals.
Can a third party pay the levy invoice on behalf of another company?
Yes, we will accept third-party payment; however, it must be submitted with a copy of the invoice and not combined with other payments.
