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Bulletin 2007-02
January 26, 2007
Revisions and Additions to Directive 065: Resources Applications for Conventional Oil and Gas Reservoirs—January 2007 Edition Issued
1 Introduction
The Alberta Energy and Utilities Board (EUB) announces revisions and additions to Directive 065: Applications for Conventional Oil and Gas Reservoirs respecting applications for common carrier, common purchaser, and common processor declarations and for short- and long-term gas removal and short-term ethane removal permits.
2 Common Carrier, Common Purchaser, and Common Processor Applications
One of the purposes of the Oil and Gas Conservation Act (OGCA) is to afford each owner the opportunity of obtaining its share of the production of oil or gas from any pool. The common purchaser, common carrier, and common processor portions of the OGCA allow the EUB to address this mandate.
Section 48(1) of the OGCA provides for the declaration of a common carrier of oil, gas, or synthetic crude oil. A common carrier order issued by the EUB allows an applicant to share in the capacity of another party’s pipeline.
Sections 50(1) and 51(1) of the OGCA provide for the declaration of a common purchaser of oil and gas. A common purchaser order issued by the EUB would allow an applicant to share in the gas or oil market(s) obtained by other producers in the pool and thereby obtain its share of production from the pool.
Section 53 of the OGCA provides for the declaration of a common processor of gas. A common processor order issued by the EUB allows an applicant to share in the capacity of a gas processing plant.
Section 55 of the OGCA provides the EUB with the authority to set the price to be paid to the common purchaser for gas, the fee to be paid to the common carrier for the transportation of gas or oil, and the fee to be paid to the common processor for the processing of gas.
The sections respecting common purchaser, common carrier, and common processor applications in the August 2006 edition of Directive 065 did not deal with the application requirements if an applicant wishes to request the EUB to set prices or fees under Section 55 of the OGCA. At the time these Directive 065 sections were initially issued in 2000, there was limited interest in the setting of fees under Section 55 of the OGCA, and therefore no directions were provided to industry on what to provide in an application to support a request for the EUB to set prices or fees.
Since 2000, there has been more interest by industry to set transportation and processing fees under Section 55 of the OGCA, and the EUB has issued one decision, Decision 2006-021, in which such fees were set. In that decision, the EUB confirmed its support for setting fees under Section 55 of the OGCA using the formula and principles set out in JP-05: A Recommended Practice for the Negotiation of Processing Fees (JP-05).1
The additions to the common carrier and common processor portions of Directive 065 reflect the EUB’s support for JP-05 and include requirements for applications requesting that the EUB set transportation and processing fees. The common purchaser portion of Directive 065 has also been updated with respect to the setting of the price to be paid to the common purchaser for consistency and completeness.
3 Short- and Long-Term Gas Removal and Short-Term Ethane Removal
The Gas Resources Preservation Act (GRPA) allows for issuance of two types of permits for the removal of gas from Alberta:
- Short-term gas removal permits involve the removal of not more than 3 billion cubic metres (m3) of gas over a period of not more than two years. These permits may be used for any market.
- Long-term gas removal permits involve the removal of gas in volumes greater than 3 billion m3 of gas or permit terms longer than two years. These permits are market specific and may be used only to serve the market(s) described in the applications that resulted in the permits.
Unit 6 has been added to Directive 065 to assist industry in filing applications for gas and ethane removal from Alberta. The unit replaces Informational Letter (IL) 96-5: Requirements for Applications for Permits to Remove Gas from Alberta but does not introduce any changes in gas removal policy or new requirements for applications for the removal of gas.
[Original signed by]
Michael J. Bruni, Q.C.
Executive Manager
Energy Team
1 JP-05 resulted from a joint review by the Canadian Association of Petroleum Producers, Gas Processing Association Canada, Petroleum Joint Venture Association, and Small Explorers and Producers Association of Canada.
