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Bulletin 2006-24

July 7, 2006

Bulletin 2006-24 announces the implementation of a well spacing amendment regulation regarding higher baseline well densities for one section and one quarter section drilling spacing units in that part of the province south of Township 53 and east of the 5th Meridian as shown on Schedule 13A of the Oil and Gas Conservation Regulations. Specifically, baseline densities have been increased as follows:

• Gas pool—2 wells per pool per section in the Mannville Formation, 4 wells per pool per section in formations above the Mannville. Below the Mannville group, the well density of one well per pool per section is maintained.
• Oil pool—2 wells per pool per quarter section in the Mannville Formation. For all other formations, the well density remains as one well per quarter section.

Target areas for the one section and one quarter section drilling spacing units have been revised as follows:

• in the case of an oil well, 200 metres (m) from the south and east boundaries of the quarter section;
• in the case of a gas well, 300 m from the south and west boundaries of the section.

The well spacing amendment regulation, which is attached, is effective immediately and is now the standard for the area of Alberta shown on Schedule 13A.

Also attached are questions and answers providing information pertaining to the well spacing amendment regulation.

Background information on the well spacing initiative may be found in Bulletin 2005-08: Consultation Regarding Proposed Changes to Reservoir-Related Well Spacing Regulations, Application Requirements, and Application Review Process and Bulletin 2006-05. Both are available on the EUB Web site at www.ercb.ca.

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.

The EUB will continue to maintain its Well Spacing Initiative Web page as new information becomes available.

[Original signed by]

Michael J. Bruni, Q.C.
Executive Manager
Energy Team

Attachments

Attachment 1

APPENDIX
Oil and Gas Conservation Act
OIL AND GAS CONSERVATION
AMENDMENT REGULATION

1   The Oil and Gas Conservation Regulations (AR 151/71) are amended by this Regulation.

2   The following is added after section 4.020:

4.021(1)  Notwithstanding sections 4.020 and 5.005,

(a) in the area outlined in the map set out in Schedule 13A that is above the Mannville Formation, 4 wells may be produced from each gas pool in a section, and

(b) in the area outlined in the map set out in Schedule 13A that is in the Mannville Formation,

(i) 2 wells may be produced from each oil pool in a quarter section, and

(ii) 2 wells may be produced from each gas pool in a section.

(2)  Subsection (1) does not apply in respect of a pool or part of a pool that

(a) is in a special drilling spacing unit prescribed by the Board under section 4.040,

(b) is in a holding established under section 5.190, or

(c) is the subject of an order of the Board under section 79(4) of the Act.

3   Section 4.030 is amended by adding the following after subsection (2):

(2.1)  The target areas for those wells drilled or to be drilled in the area of the Province outlined in Schedule 13A shall be located

(a) at least 200 metres from the south and east boundaries of the quarter section, in the case of an oil well, and

(b) at least 300 metres from the south and west boundaries of the section, in the case of a gas well.

4   The heading preceding section 4.070 is struck out.

5   Schedule 13A attached to this Regulation is added after Schedule 13.

6   Schedule 14 is amended

(a) by adding Figure 1A attached to this Regulation after Figure 1;

(b) by adding Figure 3A attached to this Regulation after Figure 3.

Schedule 13A  [View PDF file for these schedules and figures]
Referred to in section 4.021

Schedule 14
Figure 1A
Off target Penalty Factors
One Section Spacing, section 4.030(2.1)(b)

Figure 3A
Off target Penalty Factors
One Quarter Section Spacing, section 4.030(2.1)(a)

Attachment 2: Oil and Gas Conservation Regulations, Well Spacing Amendment Regulation
(Higher Baseline Well Densities)—Questions and Answers

Question: Where does the well spacing amendment regulation apply?

Answer: The well spacing amendment regulation applies to the region of Alberta east of the 5th Meridian and south of Township 53, as shown on Schedule 13A of the Oil and Gas Conservation Regulations (OGCR).

Active Applications

Question: What will happen to active spacing applications currently registered with the EUB that are in the area of higher baseline density and request the same or more restrictive provisions?

Answer: Spacing requirements are set out in the provisions of the OCGR as amended by the well spacing amendment regulation. Therefore, EUB staff, in consultation with the applicant, will review active applications that fall within the area of higher baseline well densities and expect that some applications will be closed. Requests to continue with applications proposing to deviate from the well spacing amendment regulation will be subject to strict scrutiny.

Question: What will happen to active spacing applications currently registered with the EUB that are in the area of higher baseline density and are requesting the same or more restrictive provisions but have outstanding objections?

Answer: For those applications that will be closed, surface owner objections will be reviewed and where appropriate the objection will be referred to the Facilities Applications Group for future consideration in applications filed under Directive 056: Energy Development Applications and Schedules. The applicant and the surface owner will be advised of the referral, as well as any additional Directive 056 notification requirements.

An objection from a mineral rights owner will be considered to be resolved upon the closure or withdrawal of the application.

Existing Special Well Spacing

Question: Will the well spacing amendment regulation supersede previously approved well spacing?

Answer: No. Existing well spacing approved pursuant to Section 4.040 and Section 5.190 of the OGCR and Section 79(4) of the Oil and Gas Conservation Act is not subject to the well spacing amendment regulation.

An operator may continue development under the current spacing order or may request to remove the current spacing in favour of the higher baseline well density.

Question: What information do I have to provide if I wish to change an area of previously approved spacing to the higher baseline well density?

Answer: This type of request will be processed as an administrative matter without the requirement of notification. Such a request must include

• a completed Schedule 1,
• identification of the area currently specified in the spacing order to be rescinded,
• identification of wells to be considered for exemption from the target area, and
• a statement confirming the basis for the requested exemption.

The EUB prefers that these requests be filed on a field basis. Additional information may be requested if necessary.

Off-Target Wells

Question: If I convert an area of previously approved spacing to the area of higher baseline well density and a well that was on target under the previously approved spacing is now off target, will I be subject to an off-target penalty?

Answer: No. A well drilled on target in accordance with the established spacing at the time will not be subject to an off-target penalty.

Question: If I have an off-target well that is subject to a gas allowable under the current well spacing and I convert to the area of higher baseline well density, will I continue to have an off-target penalty?

Answer: A request to have the off-target penalty removed must be filed with the EUB. The EUB will review the request and remove the off-target penalty as long as the well does not have an overproduced status.

Requests for the removal of the off-target penalty for wells having an overproduction status will not be entertained until the retirement of the overproduction.

Future Applications

Question: May I still apply for a change in well spacing in the area of higher baseline well density?

Answer: The well spacing specified in the well spacing amendment regulation is now the standard for the subject area, and development should proceed under the provisions of the amendment. Applications requesting changes in well spacing must be filed in accordance with Directive 065. Requests proposing to deviate from the provisions of the well spacing amendment regulation will be subject to strict scrutiny. In keeping with current practice, this may include enhanced technical information over and above current Directive 065 application requirements.

Interwell Distance/Clustering

Question: In the absence of an interwell distance, I’m concerned about the potential for “clustering” of wells or inappropriate fenceline development. How will this be addressed?

Answer: For conservation purposes, the subsurface clustering of wellbores is inappropriate. Therefore the EUB expects operators to place their wells in a manner that will efficiently drain the reservoir. Historically this has not been an issue, and the EUB does not expect “clustering” to become a concern under the well spacing amendment regulation. However, any incidence of inappropriate development should be brought to the EUB’s attention. The EUB will examine each case with the operator, which could result in the matter being addressed in a “show cause” hearing. Should a trend develop, the EUB may impose site-specific interwell distance requirements or further amend the regulation as warranted.