Established in the 1990s, the Orphan Well Association (OWA) manages the closure of orphaned oil and gas wells, pipelines, and facilities, and the reclamation of associated sites, across Alberta. Every year, we issue an orphan levy to energy companies in Alberta in accordance with the Oil and Gas Conservation Act and transfer the funds to the OWA’s operating budget.
The levy is used to pay for project closure costs, including suspension, abandonment, remediation and reclamation, if an energy company cannot meet its obligations to safely and responsible close its energy project. The funds help prevent closure costs from being borne by Albertans.
The latest levy formula is listed in Bulletin 2019-09: 2019/20 Orphan Fund Levy.
What “Orphan” Means
When an energy company ceases its operations without having properly closed its infrastructure, we will order anyone with a legal or beneficial interest in the well, known as a working interest participant, to close it. If there is no responsible party, we may designate the well as an orphan to be suspended, abandoned, remediated, and reclaimed by the OWA.
How the Orphan Levy Is Calculated
The annual orphan levy amount, which is approved by the Government of Alberta, is set by the AER in consultation with the OWA, Canadian Association of Petroleum Producers (CAPP), and the Explorers and Producers Association of Canada (EPAC). The assessed amount is based on
- estimated costs for the fiscal year for carrying out suspension, abandonment, remediation, and reclamation;
- anticipated claims by defaulting working interest participants;
- payment of any debts arising from the previous year’s operations; and
- any surplus for emergency and nonbudgeted expenditures the AER deems necessary.
Each year, a company receives an invoice from the AER for its share of the total levy. A company’s annual levy is based on its share of the industry’s estimated liability, as determined by our Licensee Liability Rating Program and the Oilfield Waste Liability Program. The invoiced amount must be paid by cheque, bank draft, money order, or cash.
Any company that does not pay the orphan levy may face consequences. Learn about our compliance and enforcement tools.
Where can I find previous levy amounts?
Historical levy assessments, including which wells and facilities were assessed, are available on our Digital Data Submission (DDS) system.
When and how is the orphan levy collected?
The orphan levy is collected annually. Dates can vary based on the timeliness of budget approvals from the AER, Government of Alberta, OWA, CAPP, and EPAC.
Can a third party pay the levy invoice on behalf of another company?
Yes, we will accept third-party payment; however, it must be submitted with a copy of the invoice.