Orphan Fund Levy
In this bulletin, the AER announced that, in accordance with Part 11 of the Oil and Gas Conservation Act, the AER was prescribing an orphan fund levy in the amount of $60 million.
The Orphan Well Association (“OWA”), Canadian Association of Petroleum Producers (“CAPP”), and Explorers and Producers Association of Canada (“EPAC”) approved a $60 million orphan fund levy to fund the OWA’s budget for fiscal year 2019/20. The AER explained that the total levy would be collected through one levy of $60 million in May 2019. The AER will allocate the year’s orphan fund levy among licensees and approval holders included within the Licensee Liability Rating (“LLR”) and Oilfield Waste Liability (“OWL”) programs based on the April 2019 monthly assessment.
Each licensee or approval holder included within the LLR and OWL programs will be invoiced for its proportionate share of the orphan fund levy in accordance with the following formula:
Levy = A/B x $60,000,000
A is the licensee’s, or approval holder’s deemed liabilities on April 6, 2019, for all facilities, wells, and unreclaimed sites included within the LLR and OWL programs; and
B is the sum of the industry’s deemed liabilities on April 6, 2019, for all facilities, wells, and unreclaimed sites included within the LLR and OWL programs.
Each licensee or approval holder’s required orphan fund levy was based on its licensed and approved properties, according to AER records, as of April 6, 2019. Facilities included under the Large Facility Liability Management Program were excluded.
A licensee or approval holder may review its deemed liabilities in the LLR and OWL programs at any time through the Digital Data Submission system on the AER website.
Failure to pay the full invoiced amount by June 3, 2019, will result in a penalty of 20 percent of the original invoiced amount being assessed to the licensee or approval holder pursuant to section 74(2) of the Oil and Gas Conservation Act. Additional compliance measures may apply in accordance with the AER’s compliance assurance program.