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
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.
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.
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:
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:
The processing time for this application is 90 calendar days.