2020/21 Orphan Fund Levy
In accordance with Part 11 of the Oil and Gas Conservation Act, the Alberta Energy Regulator (AER) is prescribing an orphan fund levy in the amount of $65 million.
The Orphan Well Association (OWA), Canadian Association of Petroleum Producers (CAPP), and Explorers and Producers Association of Canada (EPAC) have approved a $65 million orphan fund levy to fund the OWA's budget for fiscal year 2020/21. This total levy is to be collected through one levy of $65 million in September 2020. The AER will allocate the year's orphan fund levy among licensees and approval holders included within the Licensee Liability Rating (LLR) and Oilfield Waste Liability (OWL) programs based on the September 2020 monthly assessment. Information on these programs is contained in Directive 006: Licensee Liability Rating (LLR) Program and Licence Transfer Process, Directive 011: Licensee Liability Rating (LLR) Program – Updated Industry Parameters and Liability Costs,and Directive 075: Oilfield Waste Liability (OWL) Program.
Levy Formula
Each licensee or approval holder included within the LLR and OWL programs will be invoiced for its proportionate share of the orphan fund levy in accordance with the following formula:
Levy = A/B x $65 000 000
where
- A is the licensee's or approval holder's deemed liabilities on September 5, 2020, for all facilities, wells, and unreclaimed sites included within the LLR and OWL programs, as calculated in accordance with Directive 006, Directive 011,and Directive 075; and
- B is the sum of the industry's deemed liabilities on September 5, 2020, for all facilities, wells, and unreclaimed sites included within the LLR and OWL programs, as calculated in accordance with Directive 006, Directive 011,and Directive 075.
Each licensee's or approval holder's required orphan fund levy is based on its licensed and approved properties, according to AER records, as of September 5, 2020. Facilities included under the Large Facility Liability Management Program are excluded.
A licensee or approval holder may review its deemed liabilities in the LLR and OWL programs at any time through the Digital Data Submission (DDS) system on the AER website at www.aer.ca.
Notification and Payment
An orphan fund levy invoice will be sent to the attention of each licensee's or approval holder's chief financial officer by email to the address on file with the AER at the time of issuance. Licensees and approval holders must notify the AER of any changes to their email address.
Orphan fund levy invoices will be emailed by September 22, 2020. It is the licensee's or approval holder's responsibility to ensure that the invoice is directed to the appropriate person. If the licensee or approval holder does not receive their orphan fund levy invoice by September 26, 2020, they must contact the AER to request a copy.
To update an email address or request a copy of an invoice, contact @email.
All orphan fund levy invoices must be paid by the licensee or approval holder, and payment must be received by the AER by October 15, 2020. Payment must be made payable in Canadian currency using an acceptable negotiable financial instrument, such as a cheque, money order, bank draft, or cash.
All payments must be made payable to "Alberta Energy Regulator"; failure to pay the full invoiced amount by October 15, 2020, will result in a penalty of 20 per cent of the original invoiced amount being assessed to the licensee or approval holder pursuant to section 74(2) of the Oil and Gas Conservation Act. Additional compliance measures may apply in accordance with the AER's compliance assurance program.
Appeal
Any appeal of the invoiced amount must be made in writing by October 15, 2020, pursuant to section 76 of the Oil and Gas Conservation Act and either emailed to the attention of Orphaning, Insolvency & Legacy at @email or mailed to the following address:
Attention: Orphaning, Insolvency & Legacy
Alberta Energy Regulator
Suite 1000, 250 – 5th Street
Calgary, Alberta T2P 0R4
Even if an appeal is filed, payment in full of the original invoiced amount is required by October 15, 2020, to avoid the assessment of the 20 per cent penalty. The AER will refund any overpayment resulting from a successful appeal within 30 days of the result of the appeal.
Questions regarding this bulletin should be directed to the Liability Management help line at 403‑297‑3113 or @email.