Bulletin – Subsurface Order
Pursuant to changes to the Oil and Gas Conservation Rules announced in AER Bulletin 2015-05, the AER released Subsurface Order No. 1 effective March 1, 2015 for the Montney-Lower Doig zone (the “SO1”).
Subsurface Order No. 1 establishes the following rules in the prescribed area:
(a) There are no well density restrictions for both oil and gas drilling and spacing unites (“DSUs”);
(b) The target area for wells drilled within the standard drilling spacing unit for a gas or oil well must be the central area within the drilling spacing unit having sides 100 metres (m) from the sides of the drilling spacing unit and parallel to them, and wells may be drilled across the boundaries of contiguous DSUs of common ownership;
(c) Defined pools within the SO1 area will be subject to good production practice as reflected in the AER’s current maximum rate limitation (MRL) order, provided that optimal depletion strategies are employed and wasteful operations are avoided;
(d) Initial pressure tests, in accordance with Directive 040: Pressure and Deliverability Testing Oil and Gas Wells (“Directive 040”), are required to be taken at a minimum of one well per three section by three section area (square nine section area) measured from the wellhead location;
(e) Annual pressure tests in accordance with Directive 040 are not required;
(f) Initial deliverability testing in accordance with Directive 040 is not required; and
(g) Drill cutting samples within the target zone may be taken every 10 m, beginning 30 m above the target zone in horizontal wells.
Bulletin 2015-06 notes that a Subsurface Order does not affect or alter mineral rights, tenure rules, or royalty matters. The bulletin further provides that where a Subsurface Order conflicts with a term or condition in a licence or approval, the terms and conditions found in the licence or approval will prevail.
In order to assess performance and monitor activity within the prescribed area, the AER may require the submission of resource management performance reports, including performance presentations and meetings with participating operators.
