This page answers commonly asked questions about our liability management programs and processes.
If your question is not answered here, please contact our Customer Contact Centre or email LiabilityManagement@aer.ca.
Question: What are the conditions and benefits of filing a multiwell pad notification?
Answer: A licensee may establish a multiwell pad on an individual surface lease that the licensee has more than one well on. Both the well licences and the surface lease must be held by the same licensee. Establishing a multiwell pad reduces the reclamation liability of the wells located on the pad.
Question: I am the licensee of a well, and there has been a change to one of the working interest participants (WIPs). Can I update this information?
Answer: Yes. However, we only require WIP information during four stages in the life of a well: when it is licensed, transferred, suspended, and abandoned.
To update the WIP information outside of these four stages, the licensee of record may submit the following on company letterhead:
- licence number
- surface location
- new WIPs with the full corporate/individual names identified and their working interest percentages (percentages of all WIPs must add up to 100 per cent)
- any supporting documentation with the removal of any confidential information
The above information will be included in the well file, but our database will not be updated.
Question: How do I create a licence transfer application?
Answer: Access the DDS system and select Applications > Licence Transfer > Submit Licence Transfer Application. Enter all required information and when completed, click the Submit button. The applicant is responsible for contacting the other party to notify that the application has been submitted, as the application requires the second party’s acceptance before it is electronically submitted to the AER. Before a licence transfer application will be accepted by the licence transfer subsystem, both parties must confirm that the information contained within the application is correct and accept a declaration stating they have complied with a list of specified AER requirements (refer to Directive 006 for further information). An online demonstration to create a licence transfer is currently available. Select either link:
Question: How do I accept a licence transfer application as the second party?
Answer: Access the DDS system and select Applications > Licence Transfer > Submit Licence Transfer Application. Retrieve the existing application from the drop-down menu and review the application information. If the application is acceptable, click the Approve button for the application to be submitted to the AER. An online demonstration is currently available. Select either link:
Question: Can I re-enter an abandoned well after it has been transferred?
Answer: In order to re-enter any abandoned well, including one that has just been transferred to you, you must first re-establish your licence eligibility by applying under Directive 056: Energy Development Applications and Schedules. Contact D56Helpline@aer.ca for assistance.
Question: How long does a licence transfer application take to process?
Answer: Licence transfer applications require a minimum of 30 days to move through the standard review process and are subject to longer timelines depending on the complexity of the transfer. Refer to Bulletin 2017-13: Changes to Process for Transfer Application Decisions and our Approval Transfers page for additional information about the licence transfer application process.
Question: Will I receive a notice of approval when my licence transfer application is approved?
Answer: An electronic copy of the approval notification letter will be emailed to both the transferor and transferee contacts listed in the application.
Question: How do I cancel a transfer application that has been submitted to the AER?
Answer: A licence transfer application can be cancelled by submitting a request to withdraw the application. This can be submitted in one of two ways:
- By email: Requests must be received from both applicants listed on the transfer application, specifically from the email addresses listed on the application. These requests for withdrawal can be emailed to LiabilityManagement@aer.ca.
- By physical mail: Both the transferor and transferee company must mail their requests on corporate letterhead. Each letter should be signed. Letters from sister companies, subsidiaries, or parent companies will not be accepted. Letters should be mailed to
Alberta Energy Regulator
Suite 1000, 250 – 5 Street SW
Calgary, Alberta T2P 0R4
Upon receipt of the application withdrawal requests from both parties involved in the transfer, we will process the application as withdrawn and will notify the licensees.
Question: How do I obtain copies of AER licence transfer decisions or a list of all AER licences?
Answer: Please contact our Information Distribution Services by phone (toll-free) at 1-855-297-8311 or by email at InformationRequest@aer.ca.
Question: After an amalgamation, how are the licences transferred to the surviving entity?
Answer: Once we receive notification of an amalgamation, we review and prompt our system to transfer licences from the nonsurviving to the surviving entity. We complete the process by forwarding a corporate profile update request to the surviving entity to be completed for our records.
Question: Why does my company have to pay a security deposit with the AER?
Answer: A licensee must pay a security deposit when its deemed liabilities exceed its deemed assets. Security deposits can be made either in cash or through a letter of credit.
Question: What must my company do to have our security deposit returned?
Answer: Licensees that have a liability management rating (LMR) (which considers deemed assets to deemed liabilities) above 1.0 are eligible for a refund of their security deposit.
Question: How do I request a refund of our security deposit?
Answer: A written refund request must be submitted on company letterhead and contain appropriate contact information. The request must be sent to the attention of the security deposit administrator of our Liability Management Group.
Question: How long does it take to refund a security deposit?
Answer: You should receive your security deposit refund from us within two to three weeks.
Question: How do I know the total amount of security that is held in our name?
Answer: The Royal Bank of Canada provides a monthly account statement to each licensee that has paid a security deposit to us.
Question: We have not received an account statement for a number of months. Who should we notify to correct this?
Answer: Your company will need to call our Finance Branch at 403-297-8790. Licensees may not make changes directly with the bank.
Question: Which financial institutions are eligible to issue letters of credit?
Answer: The Alberta Treasury Board and Finance has developed guidelines for the acceptance of letters of credit (LCs). Under the guidelines, the Treasury Board highly recommends (but does not require) that the financial institution have a physical branch in Alberta. Under AER requirements, the bank issuing the LC must appear in schedule 1, 2, or 3 of the Bank Act of Canada. We will not accept LCs from credit unions in amounts greater than two million dollars.
LCs that do not conform to these requirements will not be accepted.
Question: How can I view our monthly licensee liability rating (LLR) and liability management rating (LMR) assessment?
Answer: LLR and LMR assessments can be viewed by accessing the Digital Data Submission (DDS) system and selecting Subsystem Reports > Liability Rating > View Liability Rating. These assessments can be downloaded.
Question: What conditions do I need to meet in order to receive a 50 per cent reduction in the reclamation liability determined for my abandoned well or facility?
Answer: A licensee may request a 50 per cent reduction in the reclamation liability determined for an abandoned well or facility by the LLR formula if all of the work required to obtain a reclamation certificate has been completed and if the delay in obtaining a reclamation certificate is solely related to the re-establishment of vegetative cover.
Question: What is the formula for calculating the LLR?
Answer: The LLR calculation is provided in appendix 4 of Directive 006: Licensee Liability Rating (LLR) Program and Licence Transfer Process.
Question: Can I view the detailed monthly assessment of another company?
Answer: No. The monthly assessment is only accessible to the licensee.
Question: How often do I need to update the site-specific liability assessment (SSLA) cost estimate?
Answer: An SSLA must be updated every five years (from the last assessment date) unless otherwise required by us (section 9 of Directive 001: Requirements for Site-Specific Liability Assessments in Support of the ERCB's Liability Management Programs). For a designated problem site, the SSLA must be updated at a minimum of every three years. A licensee may update its SSLA more frequently than every five years if conditions warrant an update.
Question: If I consider the liabilities for my sites to be different than those deemed by the AER, what can I do to ensure liabilities are accurately represented?
Answer: A licensee may request the use of site-specific abandonment or reclamation costs rather than the costs determined by us if it believes these more accurately reflect actual abandonment or reclamation costs. These requests are called a licensee liability rating (LLR) parameter variation (refer to appendix 7 of Directive 006: Licensee Liability Rating (LLR) Program and Licence Transfer Process).
We will only consider a variation request when a licensee’s liability management rating (LMR) is less than 1.0.
A licensee is required to provide licence-specific data for all parameters, including both deemed asset and deemed liability parameters for all wells and facilities; thus, we require a company to submit an SSLA cost estimate for all of its licensed wells and facilities. The requirements of Directive 001 must be met. Directive 001 explains how to complete an SSLA.
A netback submission is requested for the asset allocation within the LLR variation request. A licensee requesting a variation of its netback must submit a letter requesting the variation, a completed Licensee Netback Calculation Form, and financial information acceptable to the AER supporting its three-year historical netback, shrinkage, or conversion values. If a licensee does not have three years of history, its netback must include the industry average for those years required to make up the three-year period.
Question: My site is almost reclaimed and I am almost ready to apply for a reclamation certificate. How can I reduce the liability for this site?
Answer: A licensee may apply for a 50 per cent reduction in reclamation liability if all of the required work to obtain a reclamation certificate has been completed and the delay in obtaining the reclamation certificate is solely to re-establish vegetative cover (appendix 7, Directive 006). We will consider a request for 50 per cent reclamation reduction by a licensee only when its LMR is below 1.0.
Question: What do I need to submit if my company qualifies for a 50 per cent reduction in reclamation liability?
Answer: To apply for a 50 per cent reduction in reclamation liability, the following documents are required:
- cover letter describing the nature of the request
- Phase I Environmental Site Assessment (ESA)
- Phase II ESA, if applicable
- remediation reports, if required
- reclamation assessment (soil, landscape, and vegetation; the vegetation assessment will show that re-establishment of vegetative cover is required)
- signed professional declaration forms
If approved, the changes in liabilities are valid for one year after the reclamation assessment, after which the licensee must resubmit a request. The licensee must have an LMR below 1.0 to resubmit.
Question: When completing an SSLA cost estimate, can my company include a credit for salvageable equipment?
Answer: Credit for salvageable equipment is not permitted under any of our liability management programs. However, companies can include a credit for shredded metal that will be used as scrap. Please note that we do not accept credit issued by recyclers for reprocessing metal tanks.
Question: What are the transfer requirements for facilities that require SSLAs?
Answer: An SSLA must be submitted to us at the time of a transfer application. The SSLA must be less than three years old and be accompanied by an evaluation of cost changes since the SSLA was last completed. Factors to be considered when updating an existing SSLA include changes in site conditions, unit rates used in estimating costs, and regulatory requirements.
Question: Is an SSLA required for a facility under the Large Facility Liability Management Program (LFP)?
Answer: An SSLA that fully meets Directive 001 is required for facilities in this program. Directive 001 explains how to complete an SSLA.
Question: I just received a licence that has a SSLA obligation under Directive 024: Large Facility Liability Management Program. When is my SSLA cost estimate required?
Answer: Once the licence is issued, the SSLA-deemed liability values are to be entered into our Digital Data Submission (DDS) system.
Please note that a newly licensed facility in the LFP will not have its deemed site liability included in its LMR calculation until the earlier of
- 60 calendar months from its facility licence approval date,
- first throughput reported to Petrinex,
- a transfer of the facility licence to another party, or
- facility abandonment.
Question: How often do I need to update the SSLA cost estimate for a licence in the LFP?
Answer: For licences held under the LFP, there is a requirement under appendix 5 of Directive 024 to update the SSLA cost estimate within 60 days of a licensee becoming aware of a cumulative increase in estimated liability equal to or in excess of either $2 million or 20 per cent of a facility’s current liability. The licensee must provide us with either
- an updated liability cost estimate, or
- a report indicating the nature and timing of an assessment to determine the increase in a facility’s estimated liability.
Please note that at any time we may require a licensee to provide an updated liability cost estimate based on an SSLA, per Directive 001 requirements, if we consider it appropriate.
Question: What are the SSLA transfer requirements for facilities in the LFP?
Answer: SSLAs must be submitted to us at the time of a transfer application and must have been completed within the last calendar year.
Question: What are the SSLA requirements for a new oilfield waste management facility?
Answer: Companies applying for a new oilfield waste management facility approval must meet financial security requirements before the approval is issued. Under the Oilfield Waste Liability (OWL) Program, a new oilfield waste management facility (that is not a landfill) must meet the requirements of Directive 075: Oilfield Waste Liability (OWL) Program and Directive 001. Directive 001 explains how to complete an SSLA.
Question: What are the SSLA requirements for a new oilfield waste management facility that is a landfill?
Answer: Companies applying for a new oilfield waste management facility approval for a landfill must pay financial security before the approval is issued. Appendix 1, section 2, of Directive 075 states that landfills held by waste management approval holders that are approved remain subject to our full security requirements. Directive 001 explains how to complete an SSLA.
Question: Can I prepare my own SSLA cost estimate?
Answer: An SSLA cost estimate must be created by appropriately trained and experienced personnel. The assessment must be supervised and then signed and stamped or sealed by the lead assessor who has completed postsecondary education in a directly related discipline; has prior experience estimating site-specific costs for suspension, abandonment, or reclamation; and is a member in good standing of an association regulated by a professions or societies act of Alberta or be certified in Canada to conduct environmental site assessments by an agency that provides a comparable degree of professional accountability. See Directive 001, sections 6.3 and 6.4, for further information.
Question: How do I notify the AER of an update to a site-specific cost estimate for an oilfield waste management facility?
Answer: Please do both of the following:
- Update the site-specific cost estimates in the DDS system. Ensure that separate costs are provided for suspension, abandonment, decontamination, and surface land reclamation.
- Submit a copy of the Directive 075 Facility Liability Declaration Form by email to LiabilityManagement@aer.ca.
Question: When is an SSLA required for an oilfield waste management facility?
Answer: SSLA cost estimates are required for oilfield waste management facilities approved under Directive 058: Oilfield Waste Management Requirements for the Upstream Petroleum Industry.
Question: How often do I need to update the SSLA cost estimate for an oilfield waste management facility?
Answer: Licensees must provide us with an updated SSLA every five years from the date of the last SSLA unless otherwise directed (section 9 of Directive 001).For a designated problem site, the SSLA update is required at a minimum of every three years.
For licences held under the OWL program, a licensee must provide us with an updated SSLA within 60 days of the licensee becoming aware of a cumulative increase in a facility’s estimated liability equal to or in excess of either $1 million or 10 per cent of the facility’s current liability.
Question: What is required to transfer an oilfield waste management facility with respect to the SSLA and financial security?
Answer: SSLA transfer requirements for waste management facilities are found in Directive 001. They include
- Phase I ESA;
- Phase II ESA, if applicable;
- Directive 075, appendix 7, Facility Liability Declaration Form; and
- SSLA cost estimate completed within the past calendar year, including documentation that clearly itemizes and shows the subtotal for all major tasks, as required under section 5 of Directive 001.
Question: Are deemed assets calculated differently in the OWL program than in the LLR program?
Answer: Yes. A multiplier of 0.5 is used in the facility deemed asset calculation to establish a minimum asset-to-liability ratio of 2.0. An oilfield waste management facility’s deemed assets is the sum of the previous 12 months of nonproducer licensee (NPL) volumes multiplied by the AER-approved netback for these volumes, multiplied by 3 years, multiplied by 0.5.
Question: One of my waste management approvals is for a facility that does not have any Petrinex reporting requirements. How will assets for this approval be calculated?
Answer: The asset calculation for a licensee not required to report volumetric data to Petrinex is the same as for a licensee reporting volumes to Petrinex. The only difference is that the licensee reports the volumes directly to us. If you have any further questions, please contact our Customer Contact Centre.
Question: If a Phase I ESA finds evidence of contamination, can we estimate liability based upon the Phase I investigation?
Answer: No. Observation alone cannot be used to evaluate the significance of contaminant issues or quantify the effects. A phase II ESA is required.
Question: We recently submitted an SSLA and are now modifying that facility. Do we need to redo the liability assessment?
Answer: A significant change to the facility, such as the addition of a new process unit or a new landfill cell, requires that the SSLA be updated if those changes materially affect the associated liability. When the assessment report is very recent (typically less than one year old), a supplement to that report is sufficient rather than rewriting the report. Modifying the facility typically would require a reassessment of the suspension and abandonment liabilities or, for landfills, the cell closure and long-term monitoring costs.
The need to reassess the liability for decontamination and reclamation after facility modification depends on the effect of construction on the outstanding decontamination and reclamation obligations. If the construction does materially affect (10 per cent or greater of the facility’s current liability) the cost of the outstanding decontamination and reclamation obligation, then the liability attributed to those tasks needs to be updated.
Question: Where do I find facility SSLA cost estimates in the DDS system, and where is the expiry date?
Answer: Search in the DDS system under the company BA code and go to AER > Reports > Liability Rating > View Liability Rating. Views and searches of all properties licensed to the company can be accessed. Click on the facilities tab; there will be a list of facilities with licence numbers. For each facility, cost estimates can be viewed by clicking on the view button at the far right-hand side of the screen, which will indicate expiry date and other relevant data.
Question: How is the large facility orphan levy calculated?
Answer: A licensee in the Large Facility Liability Management Program (LFP) is responsible for its percentage of any LFP orphan levy. A facility’s share of the levy is calculated as the sum of the deemed liability of facilities in the program (for which it is the licensee to the total liability of all facilities in the LFP), less the liability of any facilities licensed to a defunct licensee as of the date the levy is calculated, in accordance with the following formula:
Facility's share of levy = A/B × required levy amount, where
- A is the facility’s deemed liability on the date the levy is calculated, and
- B is the deemed liability of all facilities in the LFP, less the liability of any facilities licensed to a defunct licensee on the date the levy is calculated.
Question: When does the SSLA cost estimate for a facility in the LFP need to be submitted?
Answer: The SSLA cost estimate is submitted at the same time as a licence application. As well, within 60 days of a licensee becoming aware of an increase in estimated liability of either $2 million or greater or 20 per cent of a facility’s current liability, the licensee must provide us with
- an updated liability cost estimate, or
- an assessment determining the increase in the estimated liability.
Question: How do I become a nonproducer licensee (NPL)?
Answer: Pursuant to Directive 006: Licensee Liability Rating (LLR) Program and Licence Transfer Process, an NPL is a licensee whose deemed assets from midstream activities in the LLR Program, Large Facility Liability Management Program (LFP), and Oilfield Waste Liability (OWL) Program exceed its deemed assets from production volumes reported to Petrinex or a licensee having only facilities included in the LFP or the OWL program.
Question: What is a netback? What items should be included or excluded?
Answer: Netback is net revenue generated from midstream activities per a unit of third-party volume processed. For the purposes of a netback submission, net revenue is earnings before interest, taxes, depreciation, and amortization, and is equal to gross margin (midstream revenue less cost of goods sold), less direct operating costs and applicable general and administrative expenses.
Net revenue is that which a similar midstream licensee could achieve if it operated the same midstream facility. Net revenue is generated from conducting the day-to-day midstream operations. Therefore, revenue and expense items that would not be typical of facility operations should be excluded from the netback calculations.
Production volumes refer to the 12 months of total received inlet volumes reported to Petrinex against the reporting facility ID codes attached to a facility’s licence. Report only third-party volumes from which revenue is generated. Volumes from a licensee’s own production are not to be included. The 12-month reported volumes must correspond to the same accounting period as the licensee’s most recent fiscal year.
Question: How do I submit an application to transfer a licence in the Oilfield Waste Liability (OWL) Program?
Answer: Waste management approval holders seeking to transfer a facility included in the OWL program apply to our waste and storage section. The transferor can submit a transfer application via our Digital Data Submission (DDS) system for any licences associated with waste management approvals. The approval of the transfer of these licences will coincide with the transfer of the waste management approval.
Question: What is the AER order enforcement process?
Answer: Below is a list of AER orders in order of escalating consequences. AER orders are public documents.
- These orders are used primarily for financial noncompliances (e.g., failure to pay a security deposit in accordance with the Orphan Fund Levy or the administration fees).
- Consequence: A demand for payment can be accompanied by the licensee being placed on “global refer” status.
- Duration: 10 days are given for compliance to be achieved.
- Consequence: Licences are ordered suspended and closed; no production is allowed while a closure order is in effect; and AER suspension signs are placed at properties, and equipment is locked and chained.
- Duration: Order is in effect until noncompliance is addressed; 30 days are given before enforcement is escalated.
- Working interest participants (WIPs): Any WIPs in the properties that are subject to a closure order will be given notice of the noncompliance and informed that if abandonment orders are issued, the WIPs will be named as parties responsible for the abandonment.
- Consequence: Properties are ordered to be abandoned.
- Duration: 30 days are given to abandon properties or to address initial noncompliance.
- WIPs: Any WIPs are named as parties responsible for ensuring the abandonment of the properties by the deadline provided in the order.
Question :Is there a process to appeal an AER order?
Answer: Appeals of orders, decisions, and directions of the AER may be made in accordance with either Part 2 of the Responsible Energy Development Act or Part 4 of the Alberta Energy Regulator Rules of Practice. Details of the information which is to be submitted within the application are included in Part 4 of the AER's Rules of Practice.
Question: What is a regulator-directed transfer (RDT)?
Answer: Under section 24(6) of the Oil and Gas Conservation Act (OGCA), we can direct the transfer of a licence to a person who agrees to accept it and who, in the opinion of the AER, has a right to receive it. For instance, this may occur when a party would like to acquire a well that is licensed to an inactive company or that is under the care and custody of the Orphan Well Association (OWA).
Question: What are the requirements for an RDT?
Answer: The transferee must
- meet our requirements, including eligibility to hold AER licences in accordance with Directive 067: Applying for Approval to Hold EUB [AER] Licences;
- provide information regarding their right to hold surface and mineral rights;
- include any pipelines associated with the well that they wish to transfer because associated pipeline licences are not transferred automatically; and
- be prepared to pay security or meet other conditions we set.
Question: What happens to properties upon the breaching of an abandonment order?
Answer: If a licensee does not comply with an abandonment order, our staff will review the licensee and any WIPs to determine whether we or the OWA will address the properties.
If there are no responsible parties for a property, then it will be designated as an orphan and referred to the OWA to be abandoned and reclaimed.
If some or all of the responsible parties are available, we will oversee the abandonment and pursue the responsible parties for the costs it incurs.
Question: As a WIP, how am I affected by enforcement processes?
Answer: WIPs will receive notice of a closure order if they are a responsible party according our records.
If an abandonment order is issued, any WIP will be named as a party responsible for the abandonment of the properties. WIPs are expected to comply with any order in which they are named. Failure to do so may result in the WIP being placed on “global refer” status. If we complete the abandonment because a WIP fails to comply with the abandonment order, the WIP will be responsible for the costs.
Question: What is the AER's section 106 process?
Answer: When a licensee, approval holder, or WIP has failed to comply with an AER order or has an outstanding debt to the AER/OWA for suspension, abandonment, or reclamation costs, and when the AER considers it in the public interest to do so, the AER can make a declaration against the person(s) in control of the licensee, approval holder, or WIP. This could result in sanctions in accordance with section 106(3) of the OGCA against any oil and gas company that person controls, or prevent that company from doing business routinely with the AER. The sanctions could include suspending operations, refusing to grant a BA code to a licensee, refusing to approve applications, or requiring security deposits for abandonment and reclamation of licensed properties.
Question: What is the AER's receivership (also monitor, manager, and trustee) process?
Answer: The receiver assigned to a licensee that holds AER licences or approvals should contact the Liability Management Group at LiabilityManagement@aer.ca. We will work with the receiver to dispose of all oil and gas properties (assets and liabilities) to the extent possible. Remaining oil and gas properties will be subject to requirements under section 70 of the OGCA and, if no WIPs are found, the remaining oil and gas properties will be transferred to the OWA for abandonment and reclamation.
Question: When should the records for a pipeline segment be transferred from the seller (transferor) to the purchaser (transferee)?
Answer: The seller must transfer the records for the pipeline segment being sold before the application is made to the AER to transfer the applicable pipeline licence. Both the seller and the purchaser must confirm on the licence transfer application that the applicable records have been maintained and transferred.
Records transfer should be a matter of discussion between the seller and the purchaser before finalizing the sale; consideration should be given to including records-related matters in the contractual agreement.
Question: Who is responsible for ensuring that all required records are transferred?
Answer: Both parties are responsible. Sellers are responsible for transferring these records, and purchasers are responsible for ensuring that any records transferred meet the applicable requirements (e.g., have been properly maintained) because these records are what show that the pipeline is safe to operate for the intended purpose. The purchaser should use professional judgement to determine if the records are adequate.
If required records are incomplete, they must be re-established and the pipeline must be proven to be fit for service through an engineering assessment. The purchaser’s pipeline expert should use professional judgement to determine the scale of the assessment based on the risk associated with the pipeline. (Clauses 3 and 10 of CSA Z662: Oil and Gas Pipeline Systems should be used as a reference.) We recognize that some records cannot easily be replaced; the engineering assessment should provide confidence that the pipeline can be operated safely.
The new licensee is responsible for producing the records required by CSA Z662 and the Pipeline Rules on request by the AER. Any licensee who fails to do so will be in noncompliance with our requirements.
Question: Does the purchaser need to review all required records before agreeing to the licence transfer on the AER’s system?
Answer: The seller and purchaser must agree on the records to be transferred as part of the sales arrangement. This is likely to involve technical experts before the licence is transferred. The purchaser’s pipeline expert must use professional judgement in determining that the pipeline can be operated safely based on the records.
Question: Does the pipeline licence transfer process announced in Bulletin 2015-34: Confirmation of the Transfer of Pipeline Records to Be Added to the Licence Transfer Application apply to discontinued and abandoned pipelines?
Answer: Yes. The purchaser must review available records to confirm that the pipeline has been properly discontinued or abandoned. If records are insufficient, the two parties must decide how that will be addressed. An appropriate engineering assessment may be required and further work completed. The pipeline expert should use professional judgement to determine the scale of the assessment based on the risk associated with the pipeline.
Question: Does the pipeline records transfer process announced in Bulletin 2015-34 apply to licensees that are bankrupt or otherwise unable to carry on with normal business?
Answer: Yes. Records transfer should be a matter of discussion between the seller and purchaser and part of the sales arrangement, even if the party responsible for a pipeline is a receiver. The purchaser still needs to evaluate the available records to determine if the pipeline can be operated safely. If records are missing and need to be re-established, the onus will fall on the purchaser to undertake an appropriate engineering assessment to re-establish any missing records and determine that the pipeline is fit for its intended purpose.
Question: If after the licence transfer is completed, the purchaser finds that the pipeline records are not in accordance with CSA Z662 and the Pipeline Rules, what should be done?
Answer: If after the licence is transferred, the purchaser finds that the records do not meet what is required or are missing, it is the purchaser’s responsibility as the current licensee to have the appropriate engineering assessment done to re-establish any missing records and demonstrate that the pipeline is fit for its intended use and safe to operate. The engineering assessment must be included in the purchaser’s integrity management program so that the records are re-established in a timely manner.
Question: What would the AER consider an appropriate engineering assessment?
Answer: The purchaser must use professional judgement to determine what constitutes an appropriate engineering assessment; the assessment must demonstrate that a pipeline is fit for its intended use and safe to operate. Assessments should be scaled according to the risk associated with the pipeline. Clauses 3 and 10 of CSA Z662 should be used as a reference on engineering assessments.
Question: Does the AER have a list of what kinds of records should be transferred, including what it may consider an adequate substitute if those records are missing?
Answer: No. The details of what records a pipeline licensee must maintain are set out in CSA Z662 and the Pipeline Rules and are based on a number of factors, including the pipeline specifications and product transported. The purchaser reviewing the records should use professional judgement to determine if the records are adequate.
Question: How will the AER choose a licence transfer application for compliance review?
Answer: We will choose an application to review at random or during a routine field inspection. We may also decide to review an application if a pipeline segment is considered high risk (e.g., there is a major water crossing). As we complete more reviews, licensee performance in complying with record transfers may become a factor in the selection process.
Question: What are the consequences of noncompliance if the AER determines that the records are inadequate?
Answer: The licensee of record is responsible for complying with our requirements. Noncompliances are addressed under our Compliance Assurance Program. The consequences vary with the circumstances. If records are missing, the licensee, at a minimum, will be required to obtain or generate adequate records. This may include having to do a risk-based engineering assessment to show that the pipeline is fit for its intended use and safe to operate. We may also shut in a pipeline segment until we are satisfied that the records are adequate.
Question: What is a working interest participant (WIP)?
Answer: A WIP is a person who owns a beneficial or legal undivided interest in a well or facility under agreements that pertain to the ownership of that well or facility. WIPs may be required to suspend, abandon, and reclaim a well or facility that they have a working interest in and are required to pay their share of suspension, abandonment, and reclamation costs.
Questions: Does the WIP have to incur all costs of suspension, abandonment, and reclamation if the other WIPs are defunct?
Answer: In the event that a WIP becomes defunct and defaults on the costs to suspend, abandon, or reclaim energy infrastructure, existing licensees may apply to the AER for cost reimbursement for that defunct WIP’s share of the costs. We work with the Orphan Well Association (OWA) to establish if costs should be paid. If approved, the OWA reimburses the applicant. Abandonment meeting our requirements must be completed before applying for reimbursement of abandonment costs. A reclamation certificate must have been issued before applying for reimbursement of reclamation costs.
Applications for reimbursement must be sent to our Liability Management Group by email at LiabilityManagement@aer.ca. The party who conducted the suspension, abandonment, or reclamation work initiates a cost-reimbursement application under section 70(1)(c) of the Oil and Gas Conservation Act (OGCR); section 16.541(1) of the OGCR lists the information that must be provided in a cost-reimbursement application