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Bulletin 2008-44

December 10, 2008

Surveillance and Enforcement of Fluid Analysis Requirements – Existing Requirements and the New Royalty Framework

Effective March 16, 2009, the Energy Resources Conservation Board (ERCB) will increase its focus on fluid analysis submissions to ensure compliance with the existing submission requirements. These requirements are described in Sections 11.070 of the Oil and Gas Conservation Regulations and in Directive 040: Pressure and Deliverability Testing Oil and Gas Wells, sections 3.5 and 4.8.

Compliance with gas analysis requirements will also support the calculation of the Acid Gas Content (AGC) factor used to calculate potential royalty reductions for the New Royalty Framework (NRF).

Fluid Analysis Requirements

Operators are reminded that the ERCB requires samples of all produced fluids (gas, oil, and water) to be collected and analyzed and the results to be submitted in accordance with Section 11.070 of the Oil and Gas Conservation Regulations and the fluid analyses requirements stated in Directive 040, Sections 3.5 and 4.8 and Appendix A, Section 6. Enforcement of these requirements will be enhanced.

New Royalty Framework Gas Analyses Requirements

The AGC of gas producing wells is a component of the NRF used by the Department of Energy for royalty calculation purposes. If available, the AGC will be used to determine a possible reduction on royalty payments. The ERCB will determine the AGC for each well on the behalf of the Alberta Department of Energy if sufficient gas analysis data are present. The following are important considerations with respect to the submission of gas analysis data for NRF purposes:

1. The AGC value for a well is determined by using good-quality gas analysis information retrieved from well tests, as required by Section 11.070 of the Oil and Gas Conservation Regulations and Directive 040. As such, it is in the interest of well operators to ensure that their wells comply with ERCB fluid analysis requirements. Without gas analysis data, a reasonable estimate of AGC cannot be determined.
    
2. Due to the variable nature of certain reservoirs (e.g., coals), where gas composition not only changes but may also differ significantly within the reservoir, more frequent gas analysis testing may be required at the individual well event level.

Noncompliance with Well Testing Requirements

Noncompliance with well testing requirements will continue to be handled in accordance with Directive 019: ERCB Compliance Assurance—Enforcement when data have not been supplied as specified under Sections 11.005, 11.102, 11.120(1), and 11.145 of the Oil and Gas Conservation Regulations.

In accordance with Directive 019, Directive 040, and Section 17.010 of the Oil and Gas Conservation Regulations, a fee will be assessed if any of the submission requirements have not been submitted by the required due date. Notice of the required submissions is provided in the Annual Oil and Gas Pressure Survey Schedule and the Outstanding Initial Pressure and Deliverability Testing Requirements found on the ERCB Web site www.ercb.ca .

For additional information pertaining to the ERCB’s efforts in support of the NRF during this project’s implementation, visit the ERCB’s New Royalty Framework Project page in the Current Projects section of the ERCB Web site.

Inquiries regarding well or pool testing invoices and/or enforcement action reviews should be directed by e-mail to WellTest-Helpline@ercb.ca or to the Well Test telephone line at 403-355-5742.


Forrest Kvemshagen
Executive Manager and CIO
Information and Systems Services Branch