New Well Base Maximum Rate Limitation (Form O-38)

 

New Well Base Maximum Rate Limitation (Form O-38)

Allowables, or maximum rate limitations (MRLs), are rate controls applied primarily to oil entities in accordance with Directive 007-1: Allowables Handbook. MRLs are assigned to new oil pools when conservation is or could potentially be an issue. MRLs help limit the effects of depletion on oil pools and ensure that enhanced oil recovery is addressed. MRLs also help maintain intrapool equity.

The application for new well base maximum rate limitations is also referred to as AER form
O-38. For wells that discover a new pool or are drilled in a confidential pool or outside existing pool order boundaries, operators must complete AER form O-38 and submit it to O38.Applications@aer.ca once 30 days of initial production have passed.

The following outlines the process to follow to obtain MRLs. It includes links to application submission procedures and guidance documents.

Application Submission

The applicant is to submit the O-38 Application Form by e-mail to O38.Applications@aer.ca.

Review Process for O-38 Applications

After the application is received, it is registered in the O-38 application register and reviewed for administrative completeness. If the application is not deemed administratively complete, it will be closed and notification of closure will be sent to the applicant by e-mail under the following conditions:

  • The well’s status is “Drilled & Cased.” The well is a gas well, a bitumen well, or an oil well drilled inside an existing AER pool order.

Once the application is deemed administratively complete, a technical review will be conducted that may include the points listed below:

  • The application is referred to the geology section of Subsurface Authorizations (Oil and Gas). The geologists complete a geological review and pool designation, including the geological parameters and isopach mapping if applicable.
  • The reserves engineers review reservoir performance, establish or update reserves, and calculate allowables and base gas-oil ratio.
  • If a well is designated in a newly defined oil pool, the pool shall be assigned good production practice (GPP) if it meets the criteria outlined in Bulletin 2015-29. Where gas volumes are reported as flared on Petrinex, the application will be referred to Resources Compliance for assessment of Directive 60 requirements.
  • The O-38 application is referred to the rate applications manager for approval and disposition.
  • If the well has oil pay with a gas cap, the applicant will be advised that continued production may require approval for concurrent production.
  • If the well is producing from two or more pools without a commingling approval, a successful application for commingling is required.
  • Horizontal wells included in MRL pools will be assigned a horizontal well modifier and will be prescribed in the O-38 disposition.
  • In confidential pools, reserves and base MRLs are assigned on a well basis.

Application Timelines

The processing time for an O-38 application is 35 business days, and the AER aims to meet this target 90 per cent of the time.