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Bulletin 2006-44

December 15, 2006

Implementation of Self-Declared Process for the Management of Commingled Production from Two or More Pools in the Wellbore

1 Introduction

On August 8, 2006, the Alberta Energy and Utilities Board (EUB) issued Bulletin 2006-28: Changes to the Management of Commingling of Production from Two or More Pools in the Wellbore. That bulletin announced the EUB’s decision to provide new processes for the management of commingled production from two or more pools in the wellbore. On October 31, 2006, the EUB issued Bulletin 2006-38: Implementation of Development Entities for Management of Commingled Production from Two or More Pools in the Wellbore, announcing the implementation of development entities (DEs) as one of the new commingling processes.

This bulletin announces the implementation of the self-declared (SD) commingling process effective December 15, 2006.

In addition, this bulletin summarizes the three processes for the management of commingled production in the wellbore. These processes have been incorporated in the Oil and Gas Conservation Regulations (OGCR), Directive 065: Resources Applications for Conventional Oil and Gas Reservoirs, and Directive 040: Pressure and Deliverability Testing Oil and Gas Wells—Minimum Requirements and Recommended Practices.

Further information on the commingling of production in the wellbore is available on the EUB Web site www.ercb.ca: select “Industry Zone,” then “Rules, Regulations, Requirements,” and go to “Management of Commingling in the Wellbore.”

2 Process for the Management of Commingled Production

There are three processes for managing the commingling of production in the wellbore:

• development entity (DE),
• self-declared (SD) commingling, and
• approval of an application submitted in accordance with Section 3.1 of Directive 065.

Well licensees should consult Directive 065 to determine the appropriate process to follow prior to proceeding with commingled production.

3 Criteria for Development Entity and Self-Declared Commingling Processes

The criteria for commingling within a DE are set out in Section 3.051 of the OGCR and within Order No. DE 2006-1 and Order No. DE 2006-2. Directive 065 has been amended to incorporate the DE process.

The criteria for commingling through the SD process are set out in Section 3.051 of the OGCR, and Directive 065 has been amended to incorporate the SD process.

The use of the DE or SD process for the commingling of production is on a well-by-well basis. The well licensee must determine that each well to be commingled under either the DE or SD process meets all criteria associated with the process prior to commencing commingled production.

If a well does not meet the criteria for commingling production through the DE or SD process and does not have a prior approval from the EUB that covers the anticipated commingling, the well licensee must obtain approval for the commingling through a Directive 065 application prior to proceeding with commingled production.

4 Reporting and Administration of Commingled Production

The production from each well commingled in the wellbore in accordance with the DE or SD criteria must initially be reported through the Petroleum Registry of Alberta (Registry) using the DE or SD (commingled pool) code available in the Registry.

Commingled production resulting from an approval of an application filed through Directive 065 must be reported using the commingled pool code that will be provided at the time of EUB approval of the application.

5 Data Collection

Data collection requirements associated with commingling under the various processes include those set out in the OGCR Sections 11.005, 11.070, 11.102, and 11.140 and in Directive 040.

The data collection requirements specific to gas production from coal and shale are set out in the OGCR Sections 11.005, 11.040, 11.070, 11.102, 11.140, and 11.145 and in Directive 040. Section 7.025 of the OGCR requires control wells for the production of coalbed methane and shale gas. These control well requirements must be met by all well licensees that have gas production from coal or shale.

All coalbed methane and shale gas wells are now required to meet these new minimum data collection requirements, regardless of whether an EUB Miscellaneous Order is in place approving commingled production. Well licensees with gas production from coal and/or shale must assess their developments to determine if the new data requirements, including control well requirements, are being met and must immediately begin the process of bringing all wells into compliance. In particular, licensees should disclose any instances of noncompliance with control well requirements in accordance with the provisions of Section 6 of Directive 019: EUB Compliance Assurance—Enforcement. Self-disclosure of noncompliance with the control well requirements must be directed to the Enforcement and Surveillance Section of the Resource Applications Group in writing (e-mail: eub.resourcecompliance@eub.ca; fax: 403-297-8122).

6 Surveillance and Compliance

With the implementation of the new DE and SD processes, the EUB has substantially strengthened its surveillance, audit, and enforcement processes to ensure that it is more effective in identifying and dealing with potential unauthorized commingling and other related noncompliant situations. The EUB believes that it is prudent for licensees to proactively review all of their wells to ensure all commingling is in compliance with the regulations. Licensees should disclose any instances of unauthorized commingling in accordance with the requirements of Section 6 in Directive 019 and immediately begin the process of bringing all wells into compliance. Self-disclosure of unauthorized commingling must be directed to the Enforcement and Surveillance Section of the Resources Applications Group in writing (e-mail: eub.resourcecompliance@eub.ca; fax: (403) 297-8122).

7 Commingling Notification Process

The commingling notification process is discontinued and the Notification Form for Commingling Gas/Oil Production from Two or More Pools in the Wellbore has been rescinded effective December 15, 2006. Commingling notification forms filed with the EUB prior to December 15, 2006, will be processed. Effective December 15, 2006, the EUB will not accept any new commingling application forms in either electronic or paper format.

Clarification information for area based commingling applications formerly in Appendix H of Directive 065 is now in Section 3.1.7 of the directive.

[Original signed by]

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