The area-based closure (ABC) program encourages oil and gas licensees to work together to decommission, remediate, and reclaim their energy infrastructure and sites. The voluntary program benefits industry by reducing the cost of closure activity—pilot programs have shown cost savings of up to 40 per cent—and it benefits operators and Albertans by reducing the liabilities associated with inactive sites.
The ABC program was developed by the Alberta Energy Regulator, the Canadian Association of Petroleum Producers, the Explorers and Producers Association of Canada, and the Petroleum Services Association of Canada.
For more information on the ABC program, watch the industry information session that we held in August 2018.
How to Participate in the Program
All companies—both licensees and service providers—can participate in the ABC program. The regulatory requirements for closure are the same regardless of participation.
Licensees and service providers can submit closure plans via a mapping tool in OneStop. From there, licensees can participate in the ABC program in two ways:
- Licensees seeking the program incentives must commit to an inactive liability reduction target. These licensees will need to upload their closure activity and expense data to OneStop when the closure work has been completed.
- Licensees not seeking the incentives do not need to commit to the inactive liability reduction target and can use the OneStop mapping tool for collaboration purposes. Licensees are encouraged to report on additional closure activity and expense data. Service providers can use OneStop to identify the areas in which they will be working.
A licensee must meet their inactive liability reduction target in the given calendar year through closure work of inactive assets. The licensee must report their closure expenses and activity annually.
How to Sign Up
Licensees and service providers that choose to participate in ABC must submit their annual proposed and confirmed plans through OneStop. Reporting closure activities and expenses is required only for those licensees that have committed to their inactive liability reduction target. However, all licensees are encouraged to report through OneStop to maximize the benefits and impact of the ABC program.
To obtain the program's incentives, a licensee must submit a confirmed project and select "Yes" to meeting the "Inactive Liability Reduction Target."
Once a plan is submitted, we will review and approve it through OneStop. A licensee can submit as many or as few plans as it would like. Multiyear closure plans will need to be resubmitted annually through OneStop to show and confirm the most current activity.
Licensees and service providers will be able to show, for collaboration purposes, the type of closure work they will be completing in a particular area. The Onestop mapping function and collaboration tools are easy to access and user friendly.
How It Works
Click on a section of the ABC program to learn more about it.
Licensees looking to use all incentives the ABC program has to offer will be required to meet an inactive liability reduction target. This is the amount of money the participant must commit to spend on closure activities in a given calendar year. The target is a percentage of the licensee's deemed inactive liability under Directive 011: Licensee Liability Rating (LLR) Program: Updated Industry Parameters and Liability Costs. The percentage will be determined annually by an ABC steering committee, made up of representatives from the AER and industry associations.
Licensees will need to submit their activity and expense data to OneStop. The amount of reporting is minimal and only requires information about key stage gates (i.e., project stages separated by a decision point), dates, and cost.
Current and Upcoming Targets
The 2019 target is 4 per cent, which is the historical average that industry spends on closure activities plus the initial program incentives. The target is expected to increase in the future, and the incentives the program offers will be expanded.
The 2020 target is 4.33 per cent. The target for the upcoming year will be available each October in OneStop. Licensees that would like to receive their target early must contact ABC.firstname.lastname@example.org.
All closure expenses reported by a licensee for the abandonment, remediation, and reclamation of inactive infrastructure will contribute toward meeting its inactive liability reduction target. The following can also be contributed to the target:
- Closure work done in Alberta, whether within a licensee's ABC program or not
- Abandonment of active infrastructure (i.e., it has not yet attained inactive status)
The following cannot be contributed to the target:
- Suspension and discontinuation costs
- Work on active infrastructure (e.g. remediation)
Licensees that have committed to the target will be required to report their closure activities and the cost of each. We may audit a licensee's expense information to determine performance within the program and may require additional information to be submitted to confirm closure spends.
Working-Interest Participant Credit
Working-interest participant (WIP) closure expenses will be recognized manually when requested by a licensee that is a WIP. These requests should only be submitted in situations where WIP expenditures will result in a licensee meeting its target, or where WIP expenditures make up most of a licensee's closure expenses.
We are evaluating ways to incorporate WIP reporting on all closure activities for future years of the program.
For licensees that have committed to their inactive liability reduction target but do not meet it, the AER may
- revoke the licensee's approval, including any direction given by the AER under section 3.202 of the Oil and Gas Conservation Rules for alternative suspension activities;
- limit the licensee's ability to participate in the program; and
- require security.
Types of Projects
Participants can identify two types of projects through the ABC program.
Proposed projects: Participants can identify a proposed project when considering doing certain closure work in a specified area. When submitting a project proposal, licensees and service providers will be able to identify the type of closure work they are considering. The polygons that appear on the map are to encourage collaboration between licensees and service providers working in the same areas. Project proposals can be submitted up to five years in advance.
Confirmed projects: A participant can identify a confirmed project to show other licensees and service providers that it will be completing certain closure work in the area. Confirmed projects can only be submitted in the current year or in Q4 preceding the given year. Confirming a project is required for those signing up to meet the inactive liability reduction target.
Licensees may opt out of the program at any time. Should a licensee that has committed to its target choose to opt out of the program, it will receive a letter saying that its incentives have been rescinded. Licensees will be required to comply with all standard directives and guidelines within specified periods.
Closure activity to-date must be reported in accordance with AER requirements. Additional ABC program reporting of closure activity and expenses can be submitted any time after the completion of the closure activity within the same calendar year.
If a licensee opts out of the program and its target is not met, the licensee will be required to comply with Directive 013: Suspension Requirements for Wells and the Inactive Well Compliance Program for medium-risk type 6 wells, in addition to all other AER regulatory requirements.
Click on an association to see the list of licensees and service providers that are participating in the ABC program with confirmed project areas.
- Athabasca Oil Corporation
- Bonavista Energy Corporation
- Canadian Natural Resources Limited
- Cenovus Energy Inc.
- Crescent Point Energy Corp.
- Devon Canada Corporation
- ExxonMobil Canada Ltd.
- ExxonMobil Canada Resources Company
- Husky Oil Operations Limited
- Imperial Oil Resources Limited
- Longshore Resources Ltd.
- MEG Energy Corp.
- NuVista Energy Ltd.
- Perpetual Energy Inc.
- Perpetual Operating Corp.
- Peyto Exploration & Development Corp.
- Strategic Oil & Gas Ltd.
- Tangle Creek Energy Ltd.
- Zargon Oil & Gas Ltd.
- Bellatrix Exploration Ltd.
- Bonavista Energy Corporation
- Canlin Energy Corporation
- Cardinal Energy Ltd.
- Crescent Point Energy Corp.
- Harvest Operations Corp.
- IPC Alberta Ltd.
- Ish Energy Ltd.
- Longshore Resources Ltd.
- Obsidian Energy Ltd.
- Paramount Resources Ltd.
- Pine Cliff Energy Ltd.
- Sifton Petroleum Inc.
- Spur Petroleum Ltd.
- Steelhead Petroleum Ltd.
- Surge Energy Inc.
- Tangle Creek Energy Ltd.
- TAQA North Ltd.
- Torxen Energy Ltd.
- Vesta Energy Ltd.
- West Lake Energy Corp.
- AlphaBow Energy Ltd.
- Canamax Energy Ltd.
- Clearview Resources Ltd.
- Ember Resources Inc.
- Enercapita Energy Ltd.
- Firenze Energy Ltd.
- GEX Resources Ltd.
- Highwood Oil Company Ltd.
- Journey Energy Inc.
- Outlier Resources Ltd.
- Prairie Provident Resources Canada Ltd.
- Sinopec Daylight Energy Ltd.
- Sun Century Petroleum Corp.
- Tamarack Acquisition Corp.
- Tidewater Midstream and Infrastructure Ltd.
- Orphan Well Association
Updated as of September 1, 2019
To help us measure a licensee's performance toward its inactive liability reduction target under the ABC program, the licensee must report both its closure activities and the associated expenses in OneStop. The ABC reporting requirements are available to download.
All 2019 reporting must be completed by March 31, 2020. For subsequent years, reporting must be completed by January 31 of the year after the work was completed.
For ease of reporting, licensees can collect their information in bulk spreadsheets—available on OneStop—and upload information for multiple licences at one time. When a bulk upload is submitted, information saved in draft within OneStop will be deleted.
Depending on the type of reporting, some bulk uploads will overwrite all historical information in a given year for that licence while others will create multiple records.
The following bulk-upload templates can be downloaded in OneStop:
|Bulk upload template||Reporting mechanism|
|Well abandonment||One record per licence per submission.|
|Well suspension||One record per licence per submission. Each submission will update the record.|
|Well inspection||One record per licence per submission. Each submission will update/add to the record.|
|Working interest participants||Multiple records per licence is optional. Submissions will overwrite previous submissions for the same licence.|
|Progressive reclamation (all licence types)||Submissions will overwrite previous submissions for the same licence within the same reporting year.|
|Expenses||Submissions will overwrite previous submissions for the same licence within the same reporting year.|
ABC Map Viewer
OneStop shows each participant's planned areas of closure work for an area in a given year and contact information.
See the participating licensees and service providers proposed and confirmed project locations in the OneStop map viewer.
The AER has developed several incentives for licensees that participate in the ABC program.
New Suspension Option: Medium-Risk Type 6 Wells
Section 3.2 of Directive 013: Suspension Requirements for Wells has been updated with new suspension incentives that align with the ABC program and relax requirements for certain medium-risk wells. This incentive will allow licensees to focus resources on more closure activity based on geographic proximity rather than suspension activity for medium-risk type 6 wells in a geographically scattered fashion.
The new option for medium-risk type 6 wells will allow licensees committing to an inactive liability reduction target to record shut-in casing and tubing pressures annually, rather than requiring downhole suspension or a pressure test at defined frequencies.
This new option is also available for medium-risk type 6 wells in the Inactive Well Compliance Program.
Crown Mineral Lease Expiries
Licensees can defer abandonment orders for an expiring mineral lease on Crown land for a maximum of three years. This allows licensees to manage their closure obligations more efficiently. To receive this incentive, a licensee must
- be an ABC program participant that is working to meet the inactive liability reduction target;
- submit a declaration document electing to abandon the well, and request an extension under the ABC program (for up to three years) by email to LeaseExpiries@aer.ca; and
- abandon the well and submit downhole and surface abandonment records to OneStop in accordance with Directive 020: Well Abandonment within three years—further extensions will not be provided.
If a licensee does not meet the above criteria or no longer participates in the ABC program, the licensee must
- abandon any remaining Crown mineral-lease-expired wells within 60 days in accordance with the current standard process, and
- be aware that not complying with the above requirement may result in the issuance of a closure/abandonment order.
If Alberta Energy identifies a mineral-lease-expired well as requiring urgent abandonment, the licensee will be notified and must abandon the well within 60 days in accordance with the current standard process.
Commingled Abandonment of Wells
We started a pilot project in April 2019 to allow certain lower-risk zones that were produced together to be abandoned together if there is no risk to the public or the environment. Under Directive 020, all completed zones in a well must be segregated at the time of abandonment, even if the production was through a common wellbore. Licensees are not required to commit to the area-based closure inactive liability reduction target in order to participate in this pilot.
We monitor the effectiveness of risk-based requirements for zonal abandonments and the impact on liability reduction. Wells in the southeast Alberta region that were a part of the Alberta Geological Survey's Milk River-Alderson study will also be included in this pilot.
We are accepting and reviewing commingled abandonment applications for previously approved commingled produced zones, as long as licensees can prove that the zones may have been approved for commingled production using the decision tree (figure 3.1) in section 3.1.4 of Directive 065: Resources Applications for Oil and Gas Reservoirs. The zones must be located below the base of groundwater protection (BGWPD) depth.
- Licensees must submit an ABC confirmed project and plot the area/well location in which multiple zones in the wellbore(s) are being proposed to be abandoned in a commingled manner on the ABC submission page that is available on OneStop.
- Fill out and submit the appropriate commingled abandonment request forms:
- Please use the Commingle Abandonment Pilot – Request Form for a single well, and multi-well projects that involve the commingle abandonment of zones below the BGWP across the province.
- Please use the Commingle Abandonment Pilot – Request Form SE AB for the commingled abandonment of the Milk River, First White Specks, Medicine Hat, and Second White Specks zones only.
- In support of the above request form, explain how the virgin reservoir pressure and formation fracture pressures have been determined. For example, if the average initial reservoir pressure of each interval to be abandoned was determined from offsetting well data, please indicate which data and method were used.
- Submit a non-routine abandonment submission on the Digital Data Submission (DDS) system for each well in the commingled abandonment pilot project application.
Please submit the required information to WellOperations@aer.ca. Please indicate in the subject line of the email 'Licensee Name – Project Name - Commingled Abandonment Pilot Project Application.' The request processing time will be dependent on the complexity of the zones being commingled abandoned, the number of wells included in the request, the completeness of the information submitted, and the volume of industry requests that are received.