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Bulletin 2007-27
August 8, 2007
Special Well Spacing Applications: Guidance on Determining Appropriate Buffer Zones for Holdings and Units
The purpose of this bulletin is to assist operators in evaluating and determining the appropriate buffer provisions to request when making applications for special well spacing within units or for establishing holdings with special well spacing. Specifically, information is provided on how the EUB would determine standard buffer zones for holdings and units in the province and the implications of requests for nonstandard buffers. This information will also be useful when reviewing holding applications from a competitor that have been provided in accordance with the notification requirements of Directive 065: Resources Applications for Conventional Oil and Gas Reservoirs.
Background
Part 4 of the Oil and Gas Conservation Regulations (OGCR) sets out the normal drilling spacing units (DSUs) for the province of Alberta. The target areas associated with these DSUs are set out in Section 4.030 of the OGCR.
In the majority of the province where the lands are owned by the Crown or not extensively settled or developed for agricultural purposes (defined as Area 1 on Schedule 13 of the OGCR [Figure 1]), target areas have been established as the central portion of a DSU (Figure 2).
In those areas of the province where agricultural development is common (defined as Area 2 on Schedule 13 of the OGCR [Figure 1]), DSUs of one section have a central target area, but corner target areas have been established as the standard for DSUs of a half section or smaller (Figure 3). The concept of corner target areas was adopted as a means to minimize the impact of oil and gas development on agricultural operations while continuing to preserve equity between competing mineral owners. It is noteworthy that the adoption of this standard was the result of extensive public proceedings conducted in the late 1970s and early 1980s. Since that time, development has proceeded on the basis of corner target areas in agricultural regions in the province.
Part 4 of the OGCR also addresses the EUB's authority and process to establish special DSUs that differ from a normal DSU in size, shape, or target area. In the last decade, operators have increasingly been using "holdings" to achieve the changes in well spacing that are required to support development plans. Industry typically favours the use of holding, as it affords the greatest flexibility for well placement, thereby reducing surface land conflicts and maximizing resource conservation. Under the terms and conditions of a holding, the EUB will suspend the current DSUs and target areas within the boundaries of the holding and replace them with buffer zones, interwell distances, and/or well density restrictions. The provisions of a holding may also identify wells that are exempt from any buffer and interwell distance restrictions. The size of a holding may be greater than a single DSU, provided the lessor and lessee ownership is common on all the lands included in the holding.
Any application for special spacing must be made in accordance with Directive 065 and must be supported with proper reservoir engineering arguments and associated production, geological, and/or other reservoir engineering data. The absence of surface owner and offsetting lessor/lessee objections is not sufficient or appropriate justification for special spacing.
Wells that do not conform to approved spacing (DSU/target area or holding conditions) may be shut in or subject to a production penalty. The EUB will handle off-target matters on a complaint basis in accordance with normal off-target policies.
Standard Buffer Zones for Special Well Spacing in Holdings and Units
The EUB believes that the consistent application of standard buffer zones in a region greatly enhances equity, supports orderly and efficient development, and maximizes resource conservation. In this regard, the EUB has defined standard buffer areas for holdings and units that are consistent with the central target area concept used in Area 1 and with the corner target area concept used in Area 2 of the province (as defined in Schedule 13 of the OGCR [Figure 1]).
The standard buffers adopted by the EUB are noted below and further illustrated in the examples shown in Figures 2, 3, and 4. As noted, the standard buffers are for holdings and units with well densities of 2 to 4 wells per pool per normal DSU. The EUB will consider applications for well densities greater than 4 wells per pool per normal DSU as nonroutine. For such nonroutine applications, the EUB may approve buffers less than the standard if the requested buffer is adequately supported by a technical evaluation in an application and represents an appropriate balance between conservation and equity. However, for these cases, the orientation of the buffer would remain the same as the standard
- for Area 1 on all boundaries of the holding or unit, and
- for Area 2, on the south and west boundaries of the holding or unit for gas production and on the south and east boundaries of the holding or unit for oil production.
| Area | Type of holding | Well density | Standard buffer |
| 1 | Gas | 2 to 4 wells/section/pool | 200 metres (m) around all boundaries of holding |
| 1 | Oil | 2 to 4 wells/quarter section/pool | 100 m around all boundaries of holding |
| 2 | Gas | 2 Gas 2 to 4 wells/section/pool | 300 m on south and west boundaries of holding |
| 2 | Oil | 2 to 4 wells/quarter section/pool | 200 m on south and east boundaries of holding |
Applications to establish special spacing in units and holdings that propose buffering consistent with the above standards will normally be considered a routine matter as long as the proposed well density is technically supported in the application. Should an existing or a proposed well not conform to the standard buffer, a well exemption from a buffer zone may be requested, provided such exemption is technically supported in the application. For units or proposed holdings containing lands within both Area 1 and Area 2, the standard buffer requested should have regard for the land use in the area. For example, if the land use is predominantly agricultural, the standard buffers for Area 2 would normally apply.
Applications that request buffers that differ from the above standards will be considered nonroutine and must include substantive reasons with supporting technical arguments to justify the nonstandard buffers. Applicants should be aware that failure to provide such technical justification will significantly delay the processing of an application and may result in the denial of the application. Applicants should also be aware that requesting an amendment to the proposed buffer after an application is submitted will normally require renotification. Under Directive 065, notification for special spacing applications is required before the filing of an application; therefore, the EUB may close the application, thereby requiring refiling following expiry of the required notice period.
Effective Date for Standard Buffers
The standard buffers noted above are currently in effect. As they are based on target areas for the equivalent reduced well DSUs that have prescribed target areas and have been in place for some time, the standard buffers are not a new practice. Rather, the EUB believes that the standards should be used on a more consistent basis.
Current Applications Requesting Nonstandard Buffers
The EUB is in the process of contacting applicants that currently have applications filed with the EUB requesting nonstandard buffers. Applicants are requested to either provide technical justification for nonstandard buffers or to amend the buffers to standard. If a nonstandard buffer has been requested to address particular wells, the EUB would prefer that a standard buffer be established and that the applicant request that specified wells be exempt from the buffer.
If an applicant chooses to amend the buffer, renotification of the affected mineral owners is required. The EUB is not requesting that surface owners be renotified about the amended buffers, as the buffer is intended to address equity issues rather than surface matters. If renotification is occurring, the application will be held in abeyance and will not lose its place in the processing queue. The EUB will work with any party that files an objection to the standard buffer. The onus will be on the objector to provide a technical justification to support the objection, rather than on the applicant to support the standard buffer.
Questions regarding this bulletin may be directed to the EUB Customer Contact Centre at (403) 297-8311 or by e-mail to EUB.Spacing@gov.ab.ca.
<original signed by>
Michael J. Bruni, Q.C.
Executive Manager
Energy Team
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