ERCB closes comment period for proposed reforms to Alberta's Well Spacing Framework

January 25, 2011

The Alberta Energy Resources Conservation Board (“ERCB”) has closed the comment period regarding proposed reforms to the province’s well spacing framework for conventional and unconventional oil and gas reservoirs.

At present, Part 4 of the Oil and Gas Conservation Regulations (“OGCR“) specifies that the normal drilling spacing unit (“DSU”) for an oil well is one quarter section, and the DSU for a gas well is one section. An operator may apply to the ERCB to order a special DSU which amends the normal DSU’s size, shape or target area on a case-by-case basis.
ERCB’s Bulletin 2010-39 outlines the following four proposed reforms to Part 4 of the OGCR:

1. Remove Well Density Controls for Unconventional Gas Reservoirs  

Well density controls will be removed for coal bed methane (“CBM”) and shale gas reservoirs, and for all gas zones to the base of the Colorado Group outlined in Schedule 13A of the OGCR. Existing holdings will require a spacing application to replace the current approved spacing.

2. Increase Baseline Well Densities for Conventional Gas Reservoirs

The baseline DSU for a gas well will be increased from one gas well to two gas wells per section. The increased baseline well density would only apply to lands that are not subject to previous spacing approvals.

3. Standardize Target Areas for Standard DSUs

Target areas for the placement of wells would increase in size so that the target area for the production of gas would be 150 metres from all boundaries of a section and the target area for oil would be 100 metres from the boundaries of a quarter section. Furthermore, references in the OGCR to corner target areas would be eliminated in favour of central target areas across the province.

4. Streamline Regulations regarding Well Spacing Applications

The special DSU application process will be eliminated in favour of operators establishing holdings under Part 5 of the OGCR to allow the operator flexibility to locate wells, increase well density, avoid surface obstructions and access seismic features outside of standard target areas.

Additionally, operators drilling on fractional tracts of land will not be required to apply for a special DSU if the fractional tract of land meets the OGCR’s criteria for a DSU. 
In addition to the proposed reforms, the ERCB stated that it would explore increasing the baseline well density for oil pools from one well per pool per standard DSU to two wells per pool per standard DSU.


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