A Working Interest Claim (WIC) is a cost claim submitted to the Alberta Energy Regulator (AER) for a defaulting Working Interest Participant’s (WIP) share of incurred costs as per s. 70(2)(b) of the Oil and Gas Conservation Act (OGCA). These costs, which includes suspension, abandonment, remediation, reclamation, and reasonable care and measures (RCAM) costs, are eligible for reimbursement from the Orphan Fund based on the working interest (%) held by the defaulting WIP. For WIPs who cannot be deemed as defaulting as per s. 70(2)(b) of the OGCA please see the AER’s webpage on s. 30 applications for eligibility and requirements.
Prior to undertaking any closure work on behalf of a defaulting WIP please review Step One (below) and contact the Orphan Well Association. WICs must only be submitted to the AER when the incurred costs are complete in accordance with the Regulator’s rules and regulations. All costs must be segregated into their associated activities and claimed independently. Please note, only one WIP may submit a WIC with funds being redistributed amongst any remaining WIPs post-reimbursement.
WIC Types and Eligibility:
|Incurred Costs/Activity WIC Eligibility and Additional Required Documentation||Incurred Costs/Activity WIC Eligibility and Additional Required Documentation|
|Suspension||Typically ineligible unless extenuating circumstances exist including the following:
1. SCVF/GM repairs made and actively monitoring
2. High carrying costs and associated low WI% held by non-defaulting WIP
|Abandonment||Includes downhole abandonment and surface cut and cap/decommissioning activities
|Remediation||Well or facility remedial and earthwork activities (delineating/confirmatory sampling, soil replacement, recontouring)
|Reclamation||Well or facility reclamation activities (seeding, vegetation monitoring)
|RCAM||Other costs that do not pertain to the above activities may be eligible as an RCAM WIC associated with AER RCAM Order or otherwise directed
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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 includes anticipated cumulative RCAM costs exceeding $5000. This process will help the OWA 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.
Please submit AFEs to AFE@orphanwell.ca. You can expect a response within 30 days.
Step Two – Claim Submission and Eligibility
WICs must be submitted digitally to the AER once the work is complete and must include the completed WIC form and supporting documentation (see Step Three). The AER will determine WIC eligibility based on a review of the criteria for a defaulting WIP in the OGCA. The AER may request supplementary information to support working interest (%) in subject wells and facilities if discrepancies arise against AER records.
Completed submissions and inquiries can be directed to the AER’s Orphaning, Insolvency and Legacy Team at CostClaims@aer.ca with email subject line ‘WIC Cost Reimbursement’. Please consider submitting the claim to the AER via USB stick or a file sharing site as hard copy submissions are no longer accepted.
Step Three – Documentation and OWA Review
The AER will refer eligible WICs to the OWA for a technical review of incurred costs and to provide comment. The minimum requirements for WIC submission are found in s. 16.541 of the OGCR. The WIC must include:
- AER WIC Form completed in full
- Copy of AER Order, if applicable
- Documentation to support the request to deem the WIP as defaulting as per s. 70(2)(b)
a) Proof of Non-Active Corporate Status from Corporate Registry Search
b) Where a WIP retains and active corporate status, documentation to support multiple attempts to collect including rejected/returned deliveries, and any response from the defaulting WIP.
- Summary sheet of expenditures using the OWA template provided here [SINGLE SITE | MULTI SITE], the template provided must be used and include:
1. WIC Activity
2. Invoice Date
3. Vendor Name
4. Invoice Number
5. Invoice Amount
6. Amount Claimed (working interest %)
a) If applicable, please indicate the specific activities that have received SRP funding. Licenses/sites that have received SRP funding will not be eligible for a WIC unless the WIP/claimant can demonstrate which specific closure activities have received funding. Any additional costs being claimed through the WIC program will be the sole responsibility of the WIP/claimant to demonstrate as separate and unfunded to the satisfaction of the AER. The AER will continue to review submissions on a case-by-case basis and may request additional information/documentation to ensure eligibility as per s.3.071(2)(g) and 16.541(2)(i) of the Oil and Gas Conservation Rules.
b) For Rec/Rem work, please include a comment stating whether the cost was for Phase 1 ESA, Phase 2 ESA, Remediation cost or Reclamation cost, as well as totals for each Phase
- Invoices and tickets for all expenditures
- Daily operation reports
- Salvage credits, or alternately, an explanation detailing why no salvage was obtained. Please note that the salvage value given is expected to be market value, even if the tubing or equipment has not yet been sold at the time of the application.
- If licenses were operating during the time period where a working interest participant is known to be in an insolvent state, claimants are expected to identify net production revenue received pursuant to s.71(1) of the OGCA without set-off for working interest participant expenditures incurred on unrelated assets.
NOTE: Claims with insufficient documentation may be rejected or returned, including incomplete claims (missing invoices, invoices with inadequate work description) or poorly organized submissions.
GST, surface lease payments, municipal taxes and legal expenses are not eligible for reimbursement. ‘Overhead’ reimbursement is now eligible for all Cost Claim activities conducted on or after April 1, 2021. For clarity, ‘overhead’ includes internal costs such as technical oversight in the office/field; auxiliary costs such as accounting, payroll, filing, budgets, AFE preparation, Human Resources, safety, communication and office costs. Therefore, ‘overhead’ reimbursement will not be eligible for operational work contracted out to a Third Party. ‘Overhead’ reimbursement has been aligned with the typical industry standard of 3% on first $50k, 2% on the next $100k, 1% for the remainder. WIPs who are seeking overhead reimbursement can apply these costs directly on the excel summary sheet on a per license basis. 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 reviews the amount and if approved, notifies the OWA that the final payment can be made directly to the claimant. If the claimant maintains any outstanding debt with the AER, final reimbursement may be withheld until debt(s) have been satisfied. Please note it is the AER/OWA preference that only one claim is submitted with reimbursement to be redistributed by the claimant amongst any remaining WIP(s).
NOTE: The AER/OWA targets a 90-day turnaround time from submission to reimbursement. 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.