The holistic assessment includes multiple factors that provide insight into a company's ability to manage their regulatory and liability obligations, including cleaning up their sites. A list of factors that we consider can be found in section 4.5 of the updated Directive 067: Eligibility Requirements for Acquiring and Holding Energy Licences and Approvals.
Licensee Capability Assessment
The licensee capability assessment (LCA) is the backbone of our holistic assessment of companies throughout the energy development life cycle in the oil and gas sector. Introduced through Directive 088: Licensee Life-Cycle Management, the LCA considers a variety of factors to help us evaluate a company, including their financial and liability risk, their performance compared with similar companies, and other operations, closure, and administrative factors, with compliance history being considered throughout.
The information that feeds into the LCA comes from several sources, including financial information that companies are required to provide us through Directive 067.
While each company will be able to view their LCA information in OneStop, confidential company-specific information will not be made available publicly. Financial and reserves information collected by the AER must be kept confidential for five and fifteen years, respectively, as outlined in section 12.152(2) of the Oil and Gas Conservation Rules. As a result, the financial information submitted and used in LCA calculations, as well as the results, will be kept confidential. If stakeholders or other interested parties are interested in obtaining company-specific financial information, they may request it directly from the company.
A comprehensive overview of the LCA and all the factors we consider can be found in Manual 023: Licensee Life-Cycle Management.
Our holistic assessment will replace the use of the liability management rating (LMR) over time. While we know that LMR is not an accurate measure of whether a company will be able to address its regulatory and liability obligations, it currently plays an important role in calculating the deemed liability in the oil and gas sector. The LMR is also integrated in several of our directives, as well as the Oil and Gas Conservation Rules, and cannot be easily or quickly removed without careful thought and consideration to impacts it could cause in other areas. As our first step towards removing LMR, the holistic assessment has replaced the use of the LMR for licence transfers and security collection for licence transfers.
Feedback received from industry and stakeholders on the licensee capability assessment and our responses have been summarized in our What we heard report. Check out our video presentation below to learn more about the licensee capability assessment.