Under the Government of Alberta’s Liability Management Framework, the AER’s Inventory Reduction Program (described in Directive 088: Licensee Life-Cycle Management) includes setting an annual industry closure quota. We review the industry closure quota each year and adjust it based on several factors, including market conditions and the previous year’s licensee closure spending. We also consider the closure work completed by the industry-funded Orphan Well Association.
Industry closure quota requirements increase the amount of closure work in the province as licensees are required to spend a minimum amount annually on decommissioning, remediating, and reclaiming their oil and gas sites. These requirements are referred to as closure quotas in section 3.014 of the Oil and Gas Conservation Rules.
The industry closure quota for 2027 is $750 million.
Licensees with inactive liability as of September 17, 2026, will receive a quota for their proportionate share of the industry closure quota for 2027 using the formula below.
As such, licensees are encouraged to verify their inventory and licence statuses before September 17, 2026, to ensure their quota is calculated correctly.
Later in September, licensees will have access through OneStop to the licensee quota report for their assigned 2027 quota and the liability assessment report, allowing them to understand the estimated inactive liability used to calculate their quota.
Exemption from Licensee Quota
Licensees meeting all of the following criteria on September 17, 2026, will be exempt from the 2027 licensee quota:
- Peer group of Producer, Micro, or Junior Dry Gas (refer to section 2.1.2.1 of Manual 023: Licensee Life-Cycle Management).
- Total magnitude of estimated liability is low (refer to section 2.1.1.2 of Manual 023).
- Compliant with the financial submission requirements set out in section 4.4 and 5 of Directive 067: Eligibility Requirements for Acquiring and Holding Energy Licences and Approvals.
- Not involved in a Companies’ Creditors Arrangement Act process.
This exemption is an exceptional circumstance resulting from continued low natural gas prices. We will directly contact all micro and junior dry gas producers that qualify for this exemption.
Reallocation
Licensees with a peer group of Dry Gas that are larger than Micro or Junior on September 17, 2026, have the option to have any deficit from their 2026 quotas assigned to their 2027 quota if they are compliant with AER requirements and have overspent their 2023 to 2025 quotas by an average of 20% or more. Reallocation of these amounts is an exceptional circumstance resulting from continued low natural gas prices. We will contact all impacted licensees directly by email.
Banked Spend
Banked spend, announced in Bulletin 2025-27, will be extended for one year to 2028. By extending it, the AER may better evaluate the success of banked spend.
For more information on the Inventory Reduction Program, see Directive 088 and Manual 023.
If you have any questions, contact our Customer Contact Centre by phone at 1-855-297-8311 or by email at inquiries@aer.ca.
