Working Interest Claims

A Working Interest Claim (WIC) is a claim submitted by an active Company to the Alberta Energy Regulator (AER) for the proportionate share of abandonment and/or reclamation costs incurred on behalf of a defaulting Working Interest Participant (WIP). Prior to undertaking any abandonment and/or reclamation work, please review Step One (below) and contact the Orphan Well Association. Working Interest Claims must only be submitted to the AER when the abandonment or reclamation activities are complete.

Abandonment is considered complete when the well/pipeline abandonment or facility decommissioning is done in compliance with AER requirements and the AER Digital Data Submission (DDS) system is updated. Of note, for well sites, the well must be cut and capped and surface abandoned prior to making a claim. Reclamation is considered complete when a reclamation certificate has been obtained from the AER.

Instructions for completing a working interest claim are outline below:

Step One – Authorization for Expenditures

The OWA requests that applicants notify the OWA of their intentions of making a WIC by sending the OWA an AFE for review prior to commencing operations. This process will help us better manage the influx of claims and ensure that the proposed work plan is in line with industry standards. This is for the protection of all parties. Please note that an AFE submission to the OWA is not considered a pre-approval of the claim as this evaluation is done after the claim is submitted to the AER under Step Two.

Step Two – Claim Submission and Eligibility

WIC’s must be submitted digitally to the AER once the work is complete and must include a cover letter and supporting documentation (see Step Three). The AER reviews WIC’s and first determines that the claims are eligible for a company that has been deemed a defaulting working interest participant in accordance with section 70 (2)(b) of the Oil and Gas Conservation Act.  At this time, if the working interest percentage claimed is inconsistent with AER’s records, supplementary information may be required.

Completed submissions and inquiries can be directed to the AER Orphaning and Closure Team at liabilitymanagement@aer.ca with email subject line ‘WIC Cost Reimbursement’.  Please consider submitting the application to the AER by USB stick if the application data size is large.

Step Three – Documentation and OWA Review

The AER sends the approved WIC to the OWA to review for appropriate backup and to provide comment. The following backup information is required and is supplied by the WIP.

  1. Cover Letter, with the following details:
    1. Applicant’s full legal name, address, telephone number, email address and a contact person.
    2. Legal description and licence number of the well or facility that has been suspended or abandoned or of the site that has been reclaimed.
    3. A complete list, totalling 100 per cent of the working interest, of the working interest participants in the well or facility at the time the costs were incurred.
    4. The full legal name, last known address, telephone number, email address (if available) and a contact person for each working interest participant and the proportionate share of the costs for each participant for which reimbursement is sought.
    5. For abandonment: Confirmation the abandonment of the well or facility has been completed, was carried out in accordance with the Regulator’s rules and other requirements, and that the Regulator’s records have been updated to reflect the work performed.
  2. Copy of AER Abandonment Order, if applicable.
  3. Proof of Non-Active Corporate Status of proposed defaulting partner from Corporate Registry Search.
  4. Where a company retains an active corporate status, provide proof of written attempts to collect actual abandonment and/or reclamation costs incurred, including proof of delivery, and any response from the partner.
  5. Copy of Reclamation Certificate (reclamation claims only).
  6. Summary sheet of expenditures using the OWA template provided here [LINK FOR EXAMPLE], the template provided must be used and include:
    1. Invoice Date
    2. Vendor Name
    3. Invoice Number
    4. Invoice Amount
    5. Amount Claimed (working interest %)
  7. Invoices and tickets for all expenditures.
  8. Daily operation reports.
  9. Salvage credits, or alternately, an explanation detailing why no salvage was obtained.

NOTE: Claims with insufficient documentation may be rejected. Incomplete applications (missing invoices, invoices with inadequate work description) or poorly organized applications may delay application processing time.

GST, administration, overhead expenses, surface lease payments, municipal taxes and legal expenses are not reimbursed. Costs shared with another well or site that is not subject to the cost reimbursement application is not reimbursable unless the proportional cost related to the claim is clearly identifiable on the invoice and ticket.

Step Four – Final Processing and Payment

After the OWA has completed their review and confirmed that all relevant documentation has been provided, it notifies the AER of the proposed payment amount. The AER approves the amount and notifies the OWA that the final payment can be made directly to the applicant.

NOTE: All claims are benchmarked against industry baseline costs prior to payment. Any claims that are considered materially above industry average will be reviewed in detail and may be disputed. In these situations, applicants will be contacted by the OWA to seek clarity and justification for the work undertaken. In some cases, payment may be less than the amount claimed.