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Licensee Liability Rating (LLR) Program Changes Security Payment Time Extension
The Energy Resources Conservation Board’s (ERCB) Bulletin 2013-09, dated March 12, 2013, announced and outlined changes to the LLR program to address concerns shared by the Canadian Association of Petroleum Producers (CAPP) and the Explorers and Producers Association of Canada (EPAC) that the previous LLR program significantly underestimated abandonment and reclamation liabilities. Those changes became effective on May 1, 2013.
The ERCB implemented the LLR program changes following extensive consultation with, and with the full support of, CAPP and EPAC. The changes resulted in amendments to requirements in Directive 006: Licensee Liability Rating (LLR) Program and Licence Transfer and Directive 011: Licensee Liability Rating (LLR) Program: Updated Industry Parameters and Liability Costs (collectively referred to in this bulletin as “LLR program changes”).
The ERCB has received feedback from licensees expressing concerns about the LLR program changes. The primary concern is that licensees require additional time to comply with the new requirements. The ERCB has assessed the risk of granting an extension and has deemed the risk acceptable. In response, the ERCB is providing a one-time extension of the deadlines for payment of security owing under the ERCB’s liability management programs. This will allow licensees additional time to achieve compliance with the new LLR program requirements.
The ERCB’s standard process is to allow approximately 301 days to comply at each stage of the enforcement process relating to nonpayment of security deposits. For the period of May 1, 2013, through September 7, 2013 (the date of the September LLR run), the ERCB will provide approximately 30 extra days at each stage of this enforcement process. This may result in extensions totalling up to a maximum of approximately 90 days. It should be noted that during this period of time, no other aspect of the standard enforcement process will change.
The ERCB will return to its standard enforcement process and timelines as of the October 2013 LLR run—meaning licensees will again have approximately 30 days to comply with security deposit requirements.
See the attached appendix for a detailed explanation of the time extensions outlined in this bulletin.
Note that the financial security owing under Liability Management Programs is subject to change with each month’s LLR run. Licensees that avail themselves of the extensions outlined in this bulletin must pay the outstanding security deposit based on the most recent monthly LLR run preceding payment. The security deposit owing can be confirmed through the ERCB’s Digital Data Submission (DDS) system. The ERCB encourages all licensees to pay any financial security owing in accordance with the timelines to ensure they maintain compliance with the requirements of the LLR program.
Licensees are reminded that the ERCB is implementing the approved LLR program changes over three years as described in Bulletin 2013-09. The second phase of implementation occurs in May 2014, which may result in additional financial security being owed by some licensees. The ERCB will require payment of this security prior to the June 2014 LLR run, per its standard process.
Licensees are encouraged to contact the ERCB to discuss options to maintain compliance with the requirements of the LLR program. For additional information, contact Liability Management at LiabilityManagement@ercb.ca or call the Liability Management Group’s help line 403-297-3113.
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Acting Chief Operating Officer
1 The actual number of days can vary between 27 and 34, depending on when specific monthly LLR runs take place.