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Bulletin 2010-39

November 25, 2010

Invitation for Feedback on Province-Wide Framework for Well Spacing for Conventional and Unconventional Oil and Gas Reservoirs

The Energy Resources Conservation Board (ERCB/Board) is seeking stakeholder input with respect to its province-wide framework for well spacing for conventional and unconventional oil and gas reservoirs. This bulletin describes four proposed changes to the current well spacing framework (see Attachment 1 for the rationale behind each change), provides related background information, and explains how interested parties can provide their comments.

These changes reflect an ongoing commitment to restructure and improve the ERCB’s regulatory framework respecting all oil and gas development.

Background
Existing well spacing regulations, designed for early basin development and assembled over a long period of time, are continually being amended to respond to the changing nature of oil and gas development in the province. As a result, today’s well spacing framework is complex and difficult to understand. The most recent amendment, effective as of April 1, 2010, was the harmonization of well spacing for the applicable zones subject to Development Entities No. 1 and 2.

The current well spacing framework is described in Attachment 2. At this time, there are no standard spacing provisions that specifically apply to production from lower-quality reservoirs, such as shallow gas, coal (coalbed methane [CBM]), or shale.

Changes to well spacing may be obtained by filing an application for a holding. A holding is an area of common ownership comprising one or more drilling spacing units (DSUs) subject to a prescribed buffer zone and well density. Currently, well licensees wishing to develop unconventional resources, such as CBM or shale oil and gas, need to apply for increased well density in the same manner as for conventional oil or gas.

Proposed Changes
The ERCB is proposing the following four changes to its province-wide well spacing framework.

1) Remove well density controls for CBM (including coal seams with interbedded thin sands) and shale gas reservoirs throughout the province and for all gas zones to the base of the Colorado Group in the area outlined in Schedule 13A of the Oil and Gas Conservation Regulations (OGCR) (for guidance on the designation of shale reservoirs for the purpose of well spacing, refer to Bulletin 2010-28: Zones Eligible for Shale Gas Fluid Codes).

2) Increase baseline well densities from one well per pool per standard DSU to two wells per pool per standard DSU province-wide for conventional gas reservoirs.

3) Standardize province-wide target areas for standard DSUs. All target areas will be centered 150 metres (m) from the boundaries of the DSU for gas and 100 m from the boundaries of the DSU for oil.

4) Streamline the regulations. This will include amendments to the legislation respecting fractional DSUs along meridian lines. It also includes eliminating legislation and related applications regarding change in target area and reducing the size of a DSU. Approval holder designation will also be removed from holdings established by well spacing applications.

Attachment 3 describes the areas and zones affected by these proposed change.

The ERCB is also exploring the possibility of increasing the baseline well density from one well per pool per standard DSU to two wells per pool per standard DSU for oil pools. At this time, the ERCB is not prepared to implement this change, but is seeking feedback related to conservation and equity from stakeholders.

The ERCB is aware of unconventional and shale oil and gas development in the province. The ERCB has initiated work on assessing the regulatory framework for this type of development.

Request for Comments
The ERCB invites your feedback on the proposed changes to the province-wide framework for well spacing for conventional and unconventional reservoirs by January 21, 2011. Any feedback or questions may be forwarded to the ERCB as follows:

E-mail: Spacing@ercb.ca

Mail: Energy Resources Conservation Board
 Resources Applications Group
 Spacing Framework Review
 Suite 1000, 250 – 5 Street SW
 Calgary, Alberta  T2P 0R4

All feedback received will be reviewed for the purposes noted in this bulletin and to finalize the changes noted above. All of the comments, feedback, and information collected, used, and disclosed through this consultation will form part of the public record and are subject to the Alberta Freedom of Information and Protection of Privacy Act. The ERCB may use the contact information you provide for follow-up communication related to your feedback.

Questions and answers, updates, and further details on the proposed changes will be posted on the ERCB Web site www.ercb.ca as they become available.

<original signed by>

Stephen Smith
Executive Manager
Applications Branch

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