Well spacing defines the number of subsurface drainage locations necessary to maximize hydrocarbon recovery from a pool or formation. Spacing regulations promote conservation through efficient and orderly development of reservoirs, and protect equity among mineral rights owners.
As prescribed in part 4 of the Oil and Gas Conservation Rules (OGCR), standard drilling spacing units (DSUs) are one section of land for a gas well and a quarter section for an oil well. Baseline well densities for standard DSUs are prescribed in section 4.021 of the OGCR and vary depending on the substance, production source, formation, and area of the province in which oil or gas is being produced. Under section 79(4) of the Oil and Gas Conservation Act (OGCA), the AER will consider an application for special well spacing that would allow for an increase in well density from the baseline.
Under section 4.040(3) of the OGCR, special well spacing applications must demonstrate that
- recovery will be improved,
- additional wells are necessary to provide capacity to drain the pool at a reasonable rate without adverse effect on resources conservation, or
- the spacing has already been substantially established in a pool, and the proposed spacing provisions are equal to or more restrictive than the established pool spacing.
Approval of special well spacing does not authorize the drilling of any wells nor the construction of any related facilities. Additional approvals from the AER or a government agency are also required in order to drill wells for the production of oil or gas.
Holdings and units must be composed of whole and contiguous DSUs, and the ownership must be considered common at both the lessor and lessee levels in accordance with section 1.020(2)(4) of the OGCR and unit 7 of Directive 065. A block of land containing multiple, contiguous DSUs of common ownership may be developed without a special well spacing approval, limited only by the standard target area on the external boundaries of that block of land, as long as the baseline well density per DSU is not exceeded for that area or strata.
The following outlines the process to follow to get approval for standard and nonstandard spacing applications. It includes links to application submission procedures and guidance documents.
The applicant will submit its standard or nonstandard spacing 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.
Standard and nonstandard spacing applications must include the requirements outlined in section 7.3.2 of Directive 065. Please also note the following clarifications and explanations of the requirements:
- All data provided in the application must be presented in International System of Units (SI).
- An analysis of all data provided in support of an application must be submitted with the application. It must describe how the data supports the requested increase in well density.
- Applications to establish special spacing in holdings or units should reflect standard buffer zone distances as outlined in unit 7 of Directive 065. For heavy-oil development where oil density is 920 kg/m³ or more at 15°C, a buffer zone of 50 metres from all holding or unit boundaries may be considered.
- Oil applications for which the density of the oil is 920 kg/m³ or more at 15°C require a fluid analysis that analyzes the native reservoir fluid, which includes the density of the oil.
- Applications should include a proposed development plan for the area of application, including a map of locations, the timing of drilling, and the type of drilling.
- The estimated ultimate recovery (EUR) from decline analysis entered for each well into the volumetric data form must match the EUR from the decline submitted as an attachment to the application. If the EUR does not match, a discussion of the reasons for the discrepancy is required in the application document. If this discussion is not included when there is a discrepancy, the application will be closed.
- The DSU area entered for each well into the volumetric data form must be adjusted to account for the number of DSUs the productive part of the wellbore extends across. For horizontal wells, this may require a DSU area greater than one standard DSU.
- Wells entered into the productivity and volumetric data forms should represent the type of development being proposed (e.g., vertical, deviated or horizontal wells).
- If a commingled pool name is populated in the productivity and volumetric data forms, applicants must edit the producing formation and producing pool to specify the appropriate producing formation and pool.
- (Bullet 2 in section 7.3.2 of Directive 065): The discussion of how the proposed spacing will affect hydrocarbon recovery must include
- recovery factors at current well spacing and proposed spacing, and
- incremental recovery volume.
- (Bullet 3 in section 7.3.2 of Directive 065): The discussion of well productivity and volumetric data must include
- how the petrophysical properties used in the volumetric form were derived;
- the economic limit / abandonment rate used in the decline analysis;
- how the wells in the forms are representative of the proposed development and the entire area of application;
- a comparative analysis of the estimated and calculated recovery factors, including how these recovery factors support the requested well density; and
- a discussion of fluid ratios and water-cut values of wells included in the productivity form.
Review Process for Spacing Applicaitons
After the application is received, it will be reviewed for completeness under Directive 065 requirements and as further clarified in the presubmission checklist section of this process guide. If the application is determined to be incomplete, the application will be closed and returned with an explanation. If the application is determined to be complete, a technical review will be conducted as follows:
- Notice of all applications will be published on the Public Notice of Application page on the AER website to encourage public participation throughout the application process. This is in addition to any notification requirements an applicant must fulfill before submitting an application.
- A person who believes they may be directly and adversely affected by an application may file a statement of concern (SOC) with the AER.
- If an SOC about an application is received, the application is considered “Non-Routine” and must follow the AER’s SOC procedures and will not be subject to the application timeline.
- The AER processes the applications by considering the distance of the proposed application areas to previously approved spacing for the same formations and substance, the proposed provisions, and available production and reservoir information.
- Staff will review the available production, reservoir, and geological information from within the area of application and offsetting areas. This analysis is not limited to the information submitted by the applicant and may include analysis of additional wells and information.
- Staff review will focus on the impact of the proposed well spacing on resource recovery, typical performance of existing wells, existing and proposed development within the area of application, conservation risks, pool depletion, and reservoir management.
- If clarifications or additional information is required, you may receive a request for additional information by e-mail.
- A disposition document will be generated once applications have been reviewed and are considered complete and compliant with application requirements, rules, statutes, and the AER mandate.
- You will receive an e-mail notification when your application has been dispositioned. You can find the disposition by following the link provided in the notification e-mail for 30 days after the date of disposition.
- Some decisions on the application can be appealed by eligible persons based on the Responsible Energy Development Act. The filing requirements for a request for regulatory appeal, including form, content, and time limits, are set out in section 30 of the Alberta Energy Regulator Rules of Practice. The regulatory appeals procedures are set out in sections 30 through 33 of the Alberta Energy Regulator Rules of Practice.
The processing time for this application is 65 calendar days.