A Working Interest Participant Agreement (WIPA) is an agreement between the OWA and Working Interest Participants (WIP’s) to execute the suspension, abandonment, decommissioning, remediation or reclamation work on a WIP-controlled site(s) licensed to a defunct company. The overall intent of any WIPA entered into by the OWA must always be based on the foundation of reducing costs to the Orphan Fund. Based on economies of scale, the OWA can typically execute projects for substantially less cost than a WIP.
Section 4(1) of the Orphan Fund Delegated Administration Regulation (OFDAR) provides the OWA with the authority to enter into agreements with any person for any reason related to exercising its delegated authority. Section 4(2)(b) further states that the OWA may enter into “an agreement with working interest participants for the purpose of suspension, abandonment, remediation or reclamation of a well, facility, well site or facility site;”.
The OWA may enter into WIP agreements under a wide variety of situations. In general, however, the following criteria will be used to determine situations were a WIP agreement may be formed and work executed.
- The licensee of record is defunct and a WIP has been issued a corporate-level Abandonment Order or an Operator Letter/Environmental Protection Order for closure work
- The defunct licensee’s working interest percentage (WI%) typically exceeds 50%.
- This may be individually for a single site or in the aggregate for several sites.
- Where more than one defunct company is involved, the aggregate of the defunct companies combined WI% typically exceeds 50%.
- The WIP must be financially viable and in a position to post up-front financial security that will cover their WI% of the liabilities in their entirety.
- WIP’s are deemed to be in good standing respecting any previous agreements with the OWA.
- The OWA retains discretion on where and when WIPAs are undertaken.
- Field execution programs are subject to budgetary considerations. WIPAs may be extended where current-year budget restrictions apply.
Other considerations may be reviewed by the OWA prior to any given WIP project. The OWA is not obligated to enter into an agreement with a WIP and will ultimately make the final decision. The AER will be engaged prior to any “atypical” agreements being considered.
OWA Working Interest Participant Agreements SOP
For further information please contact WIPA@Orphanwell.ca