Orphan Well Association
Established in 2002, 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.
When an energy company becomes insolvent, defunct, or cannot meet its obligations to close its site safely and responsibly, we may designate the well, facility, or pipeline as an orphan to the Orphan Well Association’s OWA’s care to be abandoned, remediated, and reclaimed under the Oil and Gas Conservation Act.
For more information and a list of OWA-managed assets, see the OWA website.
Orphan Fund Levy
The OWA is funded by an industry levy (the Orphan Fund levy). Under section 73 of the Oil and Gas Conservation Act, the AER is authorized to prescribe the orphan fund levy for each fiscal year.
Each year, we recommend an orphan fund levy amount to the Government of Alberta for approval. The recommended amount supports a reduction of orphan liabilities over time. We use information about the current volume of the orphan inventory, the volume of potential orphan energy sites, and the OWA’s average site closure rate to inform our recommendation.
Once the government approves the recommended levy amount, we issue the levy to energy companies annually and transfer the funds received to the OWA’s operating budget. The levy helps prevent closure costs from being passed onto Albertans.
Information on the current orphan inventory and progress towards closing the orphan inventory is in our Liability Management Performance report.
Working Interest Participants
Anyone with a legal or beneficial interest in a site is known as a working interest participant. Working interest participants remain responsible for paying their proportionate share of costs incurred by the OWA to abandon, remediate, and reclaim a site.
How a Licensee’s Share of the Orphan Fund Levy Is Calculated
A licensee is responsible for its proportionate share of any orphan fund levy or orphan fund levy for large facilities. The levy is calculated as the sum of the licensee’s estimated liability of its licences to the total industry estimated liability of all eligible licences as of the date the levy is calculated, in accordance with the formulas in Part 16.5 of the Oil and Gas Conservation Rules AR 53-2025.
Levy invoices are issued annually, typically in April.
Orphan Fund Levy for Large Facilities
When there are costs to close large facilities licensed to a defunct company, we can issue a separate orphan fund levy for large facilities to cover these costs. The levy applies only to licensees with large facility licences . Examples of large facilities include sour gas plants, straddle plants, and in situ oil sands plants.
The first orphan fund levy for large facilities was issued in fiscal year 2021/22. The amount invoiced to a company was based on its share of the total estimated liabilities for large facilities.
Additional Information
When are orphan levies collected?
Generally, we collect the levy in April each year; however, the date 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.
What happens if a licensee does not pay the levy invoice?
The AER has compliance and enforcement tools that may be applied in the event of nonpayment. This includes the application of a penalty in an amount equal to 20 percent of the levy.
