The industry closure quota is set each year and proportionally distributed among licensees as licensee quotas to ensure closure activity is prioritized. Closure quotas support a net decrease in the overall amount of inactive oil and gas operator liability in Alberta.
Licensees can complete closure work independently or collaboratively with other licensees to abandon (i.e., decommission), remediate, and reclaim sites. Licensees and oilfield service providers can use the mapping tool in OneStop to plan and coordinate work for added closure efficiency.
Industry Closure Quota
The industry closure quota was introduced in 2022 and set at $422 million. In 2023, the requirement increased to $700 million and was maintained at $700 million for 2024. The 2025 requirement increased to $750 million, and it will remain at this amount for 2026.
The AER reviews the industry closure quota each year. Before setting the amount, we evaluate factors such as market conditions and the results of the previous year’s closure spend to ensure licensees are meeting their spend quota and continuing to close oil and gas infrastructure.
Licensee Quota
A licensee’s quota is its proportional share of the industry closure quota. A licensee’s share is based on its total inactive liability, which is estimated using Directive 011 or site-specific liability assessments when they are required for specific inactive sites.
In 2026, each licensee’s proportional share of inactive liability was calculated using the equation outlined in Manual 023: Licensee Life-Cycle Management.
Licensees can view their annual mandatory licensee quota in the licensee quota report. Their respective inactive liability estimates are in the liability assessment report. Both reports are available in OneStop.
Small Dry Gas Producers
Since 2024, certain micro and junior dry gas producers have been exempted from their licensee quota. The exemption will remain for 2026 for licensees that meet the 2026 exemption criteria. The total exempted licensee quota amounts for 2024 and 2025 were not redistributed among the remaining licensees; however, it will be redistributed in 2026.
For information about eligibility for the 2026 exemption, see Bulletin 2025-27.
Banked Spend
Banked spend will be piloted for licensees from 2025 through 2027. Licensees that exceeded their 2025 mandatory licensee quota by at least 20% will have the excess eligible spending banked and applied to their 2026 quota, reducing the amount of closure spend required in 2026. Any unused banked spend in 2026 will be applied to 2027.
Similarly, in 2026, licensees that exceed their 2026 licensee quota by at least 20% will have the excess eligible spending banked and applied to 2027.
Licensees are not eligible to bank spend in years in which they do not have an assigned licensee quota. This includes licensees that received an exemption as a micro or junior dry gas producer.
In early 2027, the banked spend approach will be evaluated to determine whether the Inventory Reduction Program objectives continue to be achieved. Following this evaluation, a decision will be made on whether to continue banked spend beyond 2027.
Closure Summary Reporting
Closure activity reporting enables us to better understand the costs to safely complete each closure stage (abandonment, remediation, and reclamation) of an energy development site.
Licensees must provide detailed reporting for each infrastructure type (e.g., wells, facilities, or pipelines) across the various closure stages. This information improves our ability to estimate the amount of liability across the province for all types of infrastructure and closure activity, and track industry performance related to liability management.
Our annual Liability Management Performance Report is released in the fall and includes an analysis of data from the previous year. For more information on closure activity completed in 2024 and previous years, see the Liability Management Performance Report webpage.
