Industry-Wide Closure Spend Requirement for 2024
Release Date: August 31, 2023
Under the Government of Alberta’s Liability Management Framework, we have implemented an Inventory Reduction Program (described in Directive 088: Licensee Life-Cycle Management), which involves setting an industry-wide closure spend requirement annually. Closure spend requirements increase the amount of closure work that is occurring in the province as licensees are required to spend a minimum amount annually on abandoning, remediating, and reclaiming their oil and gas sites. (These requirements are referred to as closure quotas in section 3.014 of the Oil and Gas Conservation Rules.)
We use inactive liability to determine the industry-wide closure spend requirement. Inactive liability is estimated using Directive 011: Licensee Liability Rating (LLR) Program; Updated Industry Parameters and Liability Costs and site-specific liability assessments for sites with an inactive life-cycle status in accordance with Directive 001: Requirements for Site-Specific Liability Assessments.
The industry-wide closure spend requirement for 2024 is $700 million. The industry-wide closure spend requirement is reviewed annually and subject to change due to a variety of factors, such as market conditions and previous years’ closure spending.
Licensee-Specific Closure Quotas
Each oil and gas licensee with inactive wells and facilities is required to meet an individual annual mandatory closure spend quota. In setting licensee-specific mandatory closure spend, we consider the licensee’s proportion of the total industry inactive liability and the licensee’s financial health, determined using financial information provided under Directive 067: Eligibility Requirements for Acquiring and Holding Energy Licences and Approvals. Licensees are reminded that financial submissions under Directive 067 (Schedule 3) must be submitted within 180 days after fiscal year end.
Licensee-specific mandatory closure spend for 2024 will be visible by September 28 within OneStop. Further information about the Inventory Reduction Program is available in Directive 088 and Manual 023: Licensee Life-Cycle Management. If you have any questions regarding the program, please contact @email. Please do not inquire about licensee-specific mandatory closure spend until after September 28, 2023.