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Industry-Wide Closure Spend Requirement for 2024, AER Bulletin 2023-31

Link to Bulletin Summarized

Oil and Gas – Facilities

The AER implemented an inventory reduction program described in Directive 088: Licensee Life-Cycle Management under the Government of Alberta’s Liability Management Framework, which involves setting an industry-wide closure spend requirement annually.

The AER uses inactive liability to determine the industry-wide closure spend requirement, which liability is estimated pursuant to Directive 011: Licensee Liability Rating (LLR) Program: Updated Industry Parameters and Liability Costs and Directive 001: Requirements for Site-Specific Liability Assessments. The AER set an industry-wide closure spend requirement for 2024 in the amount of $700 million.

The AER announced that each oil and gas licensee with inactive wells and facilities was required to meet an individual annual mandatory closure spend quota. In setting licensee-specific mandatory closure spend,  the AER considers the licensee’s proportion of the total industry inactive liability and the licensee’s financial health, determined under Directive 067: Eligibility Requirements for Acquiring and Holding Energy Licences and Approvals (“Directive 067”). The AER reminded licensees that financial submissions under Directive 067 (Schedule 3) must be submitted within 180 days after fiscal year end.

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