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Question
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Do any of the changes announced in Bulletin 2011-29 affect the Alberta Energy tenure and royalty rules?
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Answer:
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The ERCB, through dialogue with Alberta Energy, understands that Alberta Energy’s rules for royalty calculations or tenure administration will not change as a result of the spacing changes announced in
Bulletin 2011-29
.
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Question
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In an area where baseline well densities have increased or well density restrictions have not been put in place, do I still need to apply for a holding if the area has common ownership?
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Answer:
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No. Multiple, contiguous drilling spacing units (DSUs) of common ownership may be developed, limited only by the target area specified in the regulations. The target area would apply to the external boundaries of the block of land where common ownership exists. Common ownership is defined in Section 7.3.1.6 of
Directive 065: Resources Applications for Oil and Gas Reservoirs
.
Note: This applies to any oil or gas DSU that is not subject to a holding and where the development does not exceed the baseline well densities as defined in Section 4.021 of the
Oil and Gas Conservation Regulations (OGCR)
.
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Question
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Will the changes supersede previously approved special well spacing?
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Answer:
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No. The changes to Part 4 of the
OGCR
do not apply if existing special well spacing has been approved.
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Question
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What information needs to be filed to change previously approved areas of special well spacing to higher baseline well densities?
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Answer:
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Special well spacing that is in place may be rescinded in favor of the new regulations. To rescind an area of special well spacing, a spacing application must be filed.
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Question
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I have drilled a well in accordance with the DSU and target area prior to the new regulated target area. Is my well now off target?
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Answer:
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No. Wells drilled on target in accordance with the DSU and target area prior to the effective date of the newly implemented target area legislation will be deemed on target and will not be subject to an off-target penalty.
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Question
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I have drilled a well in accordance with an existing holding and I wish to revise the buffer zone to be consistent with the new standards. This will place my well in the revised buffer zone. Will my well be exempt from the buffer zone so that I won’t be found in noncompliance?
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Answer:
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A well producing from a buffer zone of a holding will not be subject to enforcement if the well was drilled or spud on target on or before October 6, 2011, in accordance with the buffer zone provisions of a valid holding. In this situation, a request for a well exemption is not required in an application.
A well that was drilled in accordance with the conditions of a holding but subsequently produces from the buffer zone due to changes in the area of a holding may be subject to enforcement for producing from within the buffer zone. This occurs when an operator has an approved holding that includes multiple DSUs and drills a well along the boundary between the DSUs within the holding. If the operator does not retain the mineral lease for the approved zone in the DSU adjacent to the well, the holding would be realigned to reflect common ownership. Realignment of the holding boundaries would place the well within the buffer zone, causing the well to be in noncompliance. The well licensee is responsible for maintaining common ownership within each holding to ensure that no buffer issues occur.
It is advised that licensees keep records to demonstrate that they were in compliance with the buffer zone provisions at the time of drilling and completing a well on or before October 6, 2011.
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Question
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Would a well drilled in accordance with holding provisions be subject to an off-target penalty if the holding is rescinded in favor of the new spacing regulations?
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Answer:
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A well drilled on or before the effective date of the amended regulation and in accordance with a valid holding would be deemed on target. A well drilled within a holding after the effective date of the amended regulations runs the risk of an off-target penalty being applied should the holding be rescinded.
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Question:
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If I rescind an area in which well spacing was previously approved, would recompletion of an existing well be grandfathered so that I won’t be subject to an off-target penalty?
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Answer:
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No. Recompletion of a well within a zone that is not on target with its target area would be deemed to be off target.
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Question
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Can I file a spacing application to change the well density provision of an existing holding where baseline well density controls have been removed in the regulations?
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Answer:
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No. Spacing applications that propose a well density less than or equal to what’s allowed for by the
OGCR
are unnecessary and will be closed.
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Question
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Where a fractional tract of land is at least half the size of a standard DSU, can I produce the new standard well density of two wells per DSU for gas?
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Answer:
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Yes.
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Question
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Why was the central target area for gas, as proposed in
Bulletin 2010-39: Invitation for Feedback on Province-Wide Framework for Well Spacing for Conventional and Unconventional Oil and Gas Reservoirs
, not implemented within the area defined by Schedule 13A?
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Answer:
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The ERCB received a significant amount of feedback indicating that a change from the current corner target area concept in the Schedule 13A area could, particularly with respect to shallow gas development, negatively impact conservation and effective reservoir drainage by
- negatively impacting reservoir drainage when infill drilling in a gas DSU,
- negatively impacting conservation if directional drilling does not allow for completion of shallow gas zones that fall outside a central target area, and
- restricting the use of existing wellbores for recompletion potential.
Within the Schedule 13A area, corner target areas have been in place since the late 1970s and early 1980s, and to date, a significant amount of shallow gas and CBM has been developed in the area. With respect to the gas reservoirs in the area, they are known to have
- very low productivity, with gas typically produced from coals, sands, and shale to the base of the Colorado Group and commingled to allow for economic production;
- low sustained productivity; and
- limited drainage areas.
For these reasons and those noted above, retaining the corner target area concept for shallow gas development is not a significant impact on equity and the conservation gains outweigh the rationale for central target areas.
The corner target area concept has been extended to all gas reservoirs in the Schedule 13A area as, overall, deeper conventional gas pools are in a depleted state or tight with low drainage areas and not geologically expansive. Harmonization of the target area within Schedule 13A also simplifies the spacing framework.
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