GOR Penalty Relief

A Gas-Oil ratio (GOR) penalty is initially assessed on the production of oil and gas from a hydrocarbon pool for resource conservation purposes. GOR penalty relief is approved for such pools on a fixed-term basis to allow for the acquisition of the data/information required to make an informed decision on the optimal exploitation strategy. A term-based GOR penalty relief status can be granted to production from a pool with conservation of the produced gas in accordance with Directive 060: Upstream Petroleum Industry Flaring, Incinerating, and Venting.

A Directive 065: Resources Applications for Oil and Gas Reservoirs application must be submitted in accordance with section 10.060 of the Oil and Gas Conservation Rules for approval to exploit a hydrocarbon resource without the standard GOR penalty restriction. Producing intervals in the hydrocarbon pool must already be on stream, with a clear idea of the production performance, before this application is submitted.

The following outlines the critical information the AER requires and the process to follow to get a GOR penalty relief approval for a hydrocarbon pool. It contains links to relevant application submission procedures and guidance documents.

Application Submission

A GOR penalty relief application must be submitted using the Digital Data Submission (DDS) system available through the Systems & Tools on the AER website, www.aer.ca.

Applications are registered using the Integrated Application Registry (IAR), and all material related to an application is stored within this system.

All submissions made in relation to any application are held non-confidential by the AER and are accessible, upon request, by other interested parties.

Approval Process for a GOR Penalty Relief Application

All applications are published on the Public Notice of Application (PNoA) page on the AER website (www.aer.ca) to encourage public participation in the approval process.
Applications are initially reviewed for administrative completeness upon receipt at the AER. An application may be closed if significantly deficient of Directive 065 requirements. If the application is declared administratively complete, a technical review will be conducted to ensure that the application includes the following (supplemental information may be requested during the review period):

  • Statements of concern (SOCs) filed by parties that may be directly and adversely affected by the GOR penalty relief for which approval is sought. These are evaluated for relevance to the application. If relevant, an SOC may necessitate a public hearing to address the stated concerns prior to the disposition of the application. The relevance of the SOC is decided by the AER director of subsurface authorizations;
  • Notifications in accordance with Directive 065 guidelines;
  • The applicant’s reservoir fluid volumetric estimates and the AER’s database estimates;
  • The saturated nature of the reservoir fluid;
  • Assessment of the possible sources of the excess gas being produced;
  • Assessment of the reservoir pressure depletion trend;
  • The effect of reservoir energy depletion on the production performance trend;
  • The list of active producers in the pool and their perforation intervals relative to the reservoir gas/oil and oil/water contacts;

Other application process and approval considerations:

  • The application may need to be referred to AER Authorizations Subsurface (Geology) for answers to questions about the expansion potential of the pool and the existence of an associated gas accumulation.
  • The reservoir engineering manager or the manager’s delegates make the final decision on the merits of any application and sign off on the approval.
  • The application is finalized in accordance with the decision of the panel, when a public hearing is required;
  • A technical memorandum, with disposition recommendations, and draft approval letter are prepared and presented for supervisory review.

Application approvals can be appealed after disposition if the SOC is received from eligible parties. Eligibility for an SOC is based on the Responsible Energy Development Act. The filing requirements and process for a request for regulatory appeal, including form, content, and time limits, are set out in sections 30 through 33 of the Alberta Energy Regulator Rules of Practice.

Application Timelines

The processing time for this application is 65 business days and the AER aims to meet this target 95 per cent of the time. This timeline is made up as follows:

Task Business Days
Administrative Completeness 5
Assignment 5
Referral 20
Supplemental Information 10
Technical Review 15
Decision 10
TOTAL 65