Compulsory Pooling

Section 4.021 of the Oil and Gas Conservation Rules (OGCR) specifies that no well shall be produced unless there is common ownership throughout the drilling spacing unit (DSU). This means that if there are separate tracts within a DSU with different ownership, all owners within the DSU must have an arrangement to share in the costs and revenues associated with drilling and producing a well from that spacing unit. This type of arrangement is generally referred to as a pooling agreement. In most cases, mineral holders negotiate voluntary pooling arrangements. However, if an owner attempts but fails to negotiate a satisfactory pooling arrangement in a reasonable period of time, or if a tract owner is missing and untraceable, or if there is a dispute about the ownership of a tract, the owner wishing to drill a well may apply to the AER for a compulsory pooling order. This order serves the same purpose as a voluntary pooling arrangement by ensuring that each owner in the DSU shares appropriately in the costs and revenues associated with a well in the DSU.

The AER’s role in pooling matters is to offer a regulatory avenue to resolve pooling-related problems, thereby allowing each owner the opportunity to secure its share of oil and gas from any pool.

Applications for compulsory pooling are made

  • under section 80 of the Oil and Gas Conservation Act (OGCA);
  • if one of the tract owners in the spacing unit is missing and untraceable, under both sections 80 and 85 of the OGCA (section 85 provides that the revenues associated with the missing and untraceable owner be paid to the public trustee); and
  • if there is a dispute about the ownership of a tract or if ownership is unknown, under both sections 80 and 86 of the OGCA (section 86 provides that revenues associated with the disputed tract be paid to the provincial treasurer to be held in trust pending an order of the Court of Queen’s Bench or until a settlement has been reached by the parties).

The AER’s current pooling policies and practices arise from a combination of specific provisions of the OGCA, historical decisions made by the AER, consultations with industry, and AER decisions resulting from pooling applications considered at public hearings. This has resulted in an AER pooling order with standard terms. Nonstandard terms are included in an order only if there is substantial justification to do so. AER staff can provide more detailed information.
The following outlines the process to follow to get approval for compulsory pooling applications. It includes links to application submission procedures and guidance documents.

Application Submission

The applicant will submit its compulsory pooling application through electronic applications submission (EAS). Applications are registered using the Integrated Application Registry (IAR), and all material related to an application is stored in this system.

Presubmission Checklist

Compulsory pooling applications must include the requirements outlined in section 1.5.3 of Directive 065. Please also note the following clarifications and explanations of the requirements:

  • The requirements in the application should be listed in numerical order as in Directive 065.
  • Applicants should check the standard oil or gas spacing for the DSU in question and address how many wells are planned to be drilled if it is more than one.
  • Equipping and tie-in costs are considered by the AER to be shared as operating costs under the provisions of a compulsory pooling order.
  • In regards to the penalty provision, the AER’s normal practice is not to allow a penalty provision to be applied to freehold mineral owners that are individuals. This practice takes into consideration that these individuals are unlikely in most cases to have the information, background, and resources to properly decide whether to accept a penalty. These individuals are also most likely to not have the financial resources to pay and avoid penalty.

Review Process for Compulsory Pooling Applications

After the application is received, it will be reviewed for completeness under Directive 065 requirements. If the application is determined to be incomplete, the application will be closed and returned with an explanation. If an application contains minor deficiencies, a letter will be issued itemizing the information required.

Except in cases involving missing and untraceable owners or minor amendments to existing pooling orders, the AER normally issues a notice of application once an application is complete. The notice of application would not usually be published in any newspapers but would be sent directly to parties with an interest in the petroleum and/or natural gas rights underlying the DSU. Interested parties would have a specified period in which to file any submissions they may have about the application.
If the application is determined to be complete, a review will be conducted as follows:

  • Notice of all applications will be published on the Public Notice of Application page on the AER website to encourage public participation throughout the application process. This is in addition to the AER notification mentioned above.
  • People who believe they may be directly and adversely affected by an application may file a statement of concern (SOC) with the AER.
  • If an SOC about an application is received, the application is considered “Non-Routine” and must follow the AER’s SOC procedures and will not be subject to the application timeline.
  • If clarification or more information is required, you may receive a request for additional information by e-mail.
  • A pooling order will be generated once applications have been reviewed and are considered complete and compliant with application requirements, rules, statutes, and the AER mandate.
  • You will receive an e-mail notification when your application has been dispositioned. You can find the disposition by following the link that will be provided in the notification e-mail for 30 days after the date of disposition.
  • Some decisions on the application can be appealed by eligible persons based on the Responsible Energy Development Act. The filing requirements for a request for regulatory appeal, including form, content, and time limits, are set out in section 30 of the Alberta Energy Regulator Rules of Practice. The regulatory appeals procedures are set out in sections 30 through 33 of the Alberta Energy Regulator Rules of Practice.

Application Timelines

The processing time for this application is 90 calendar days.