Informational Letters

This informational letter is intended to clarify and update industry on the Board's policy with regard to the responsibility of the applicant and other operators in a pool when dealing with applications for special Maximum Rate Limitations (MRLs), Good Production Practice (GPP), and gas-oil ratio (GOR) penalty relief. The attached appendix provides a brief overview of procedures and administrative practices related to MRLs and the GOR penalty base. The Board expects that the measures outlined herein will assist in more timely and orderly disposition of these types of applications.

When an operator files a technically supported application and successfully demonstrates to the Board's satisfaction that rate controls for the pool can be relaxed without adversely affecting conservation, the Board would be prepared to approve the application in the absence of an acceptable intervention. The Board currently requests that the applicant seek the concurrence of other operators in the pool with regard to the proposed depletion plan. The primary purpose of this contact is to provide other parties in the pool with an opportunity to identify any serious conservation or equity issues. Where a competitive operator has nothing to gain or less to gain than the applicant, experience has shown that concurrence is often difficult to obtain and that serious delays can result. A common example of this nature would be where the applicant has better wellbore deliverability and/or wells that are in a favourable structural position relative to other wells in the pool.

It is normally required that applications of this nature be submitted on a pool basis. Therefore, it is important that operators within a pool continue to discuss pool performance and seek general consensus as to the optimum depletion strategy for the pool. To provide potentially affected parties with the opportunity to address any serious conservation or equity concerns, it is requested that the applicant provide all operators in the pool with a copy of such applications and that the applicant attempt to initiate meaningful discussions with these operators.

The Board in turn expects that any concerned operator will file a thoroughly documented intervention in a timely fashion, generally within 30 days of receiving a copy of the application. In disposing of the application the Board will either approve the application based on the information presented or send formal notice or a letter with a response deadline to the other operator(s) in the pool. In determining the need for such notice, the Board would exercise considerable discretion having regard for the documented efforts taken by the applicant to establish the position of other operators in the pool and the Board's own knowledge of the pool. The Board emphasizes that an intervention based IL 90-03 Applications for Special MRL's, GPP, and GOR Penalty Relief Page 2 of 3 solely on the type of arguments noted in the second paragraph above would not be considered an acceptable equity objection and in such cases, the Board would likely rule on the application without further consultation. A successful intervention would require strong technical and/or equity reasons why the proposal should not be approved. Fully substantiated arguments are required to assist the Board in making the appropriate ruling.

Any questions with regard to this matter can be directed to the Oil Department at 297-8570.

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N. G. Berndtsson, P.Eng.
Manager, Oil Department