Regulatory Law Chambers logo

Mandatory Closure Spend Targets, AER Bulletin 2021-23

Link to Bulletin Summarized

Oil and Gas

In accordance with the requirements of the Government of Alberta’s new Liability Management Framework and its authority under section 3.014 of the Oil and Gas Conservation Rules (“OGCR”), as part of the Inventory Reduction Program, the AER set industry-wide closure spend targets. Closure spend targets will help increase the amount of closure work that is occurring in the province as licensees will be required to spend a minimum amount on closure annually.

Annually by July 31, the AER will release targets for a five-year period on the AER website. The first two years will be set, and the final three years forecasted.

Starting January 1, 2022, each oil and gas licensee with liability associated with inactive infrastructure will be required to meet an individual annual mandatory closure spend target determined by the AER. Targets are based on the above liability and historical closure spending and take into consideration financial information as required through the AER’s updated Directive 067: Eligibility Requirements for Acquiring and Holding Energy Licences and Approvals.

Licensees may still commit to a voluntary closure spend target that is more than their mandatory target to qualify for incentives. Further information about the inventory reduction program, closure targets, and associated incentives for an increased spend will be available in the fall.

To assist industry in preparing, the AER included examples of closure work and whether it will count towards the licensee’s target.

Related Posts

Judd v Alberta Energy Regulator, 2024 ABCA 154

Judd v Alberta Energy Regulator, 2024 ABCA 154

Link to Decision Summarized Download Summary in PDF Appeal – Production of Records Application Michael Judd ("Appellant") appealed a decision by the Alberta Energy Regulator (“AER”) that denied his...