Unit and Gas Storage Frequently Asked Questions

The department requires the proposed tract factors, how the tract factors were calculated in detail, technical information (such as net pay and structure mapping, cross sections, engineering and geophysical data) that explain the pool being unitized, the extent of the pool, presence of a gas cap and Alberta Energy and Utilities Board water flood application and project area approval. 

The basis for determining tract factors, particularly in a unit containing both Crown and freehold lands, must be equitable and technically justifiable.  In some cases remaining reserves may be acceptable.  However, the use of several parameters such as original hydrocarbon pore volume, remaining reserves and productivity is encouraged if they produce a better result.  A formula that heavily penalizes undrilled lands or relies mainly on surface area is normally not acceptable to the department as the basis for tract participation. 

A Production Allocation Unit Agreement (PAUA) is a unit-type agreement used for a single well.  It is used where there are two spacing units adjoining each other, one freehold and one Crown, but only one well is required to drain both sections.  This may be a well whose productive wellbore crosses both spacing units.  The PAUA ensures that the royalty payments from one well are distributed to both royalty owners in a fair and equitable manner. 

No, a unit cannot be executed retroactively.  The unit becomes effective on the first of the month following execution by all required working interest owners and royalty owners, including the Crown.

However, a Production Allocation Unit Agreement must become effective at 0800 on the first day of the first calendar month which is the earliest of:

• the month in which production of production allocation substances from the well commences, or
• the month following the date of execution and delivery of the agreement by the owners of one hundred percent (100%) of the Working Interest and one hundred percent (100%) of the Royalty Interest within the production allocation area.

 

The overall Unit Participation Percentage for a working interest owner (WIO) is taken from Exhibit A.  All of the tracts that the WIO has an interest in are added together.  This calculates the overall Unit Participation Percentage for the WIO.

The Crown interest is calculated as:

(WIO participation % in all Crown Tracts ÷ WIO participation % in all Tracts) x 100

 

The effective dates of Exhibit A and Exhibit D should be the same. 

The unit operator should revise an Exhibit A whenever there is a change in working interest owners, sale of interest, partial transfer of interest, change in royalty interest, name change or an amalgamation of companies.

A letter should accompany the revised Exhibit A outlining what changes are taking place on the revised exhibit.  The department requires all pages to be sent, including the pages where the changes occur.  If you only submit one page, the department would never have a complete revision on hand that will match the Exhibit D.

 

Unless the company name is spelled out in full on the Exhibit A or Exhibit D, the department requires an abbreviation page for Exhibit A to be included with the revision. 

Exhibit D is used to verify the Share of the Tract Participation Percentage for each working interest owner.  When crosschecked to Exhibit A, the Share of Tract Participation Percentage must be the same for Exhibit A and Exhibit D (Part II of Exhibit A) for each working interest owner. 

Yes, when changes are made to ownership (working interest owner or royalty owner), the Exhibit A needs to be revised and a new effective date is required. 

Yes, the current revision received should be of a later date than the previous one on file.  If the department receives two revisions with the same effective date, we will use the last revision received, which means that valid changes from the first revision will not be noted on our system and the information from the first revision will not be used in royalty calculations. 

The unit operator can revise the way the revisions are numbered as long as the numbering system is consistent after the change. 

We require a letter from either the new or previous unit operator advising the department of the new unit operator and when the change is effective. 

If a revised exhibit has already been entered in our system and a correction is required, an amended exhibit must be submitted with the word 'Correction' following the revision number.  For example:  Revision No. 2 (Correction).  If there is no revision number, the word 'Correction' needs to follow the effective date. 

The revision number and effective date should remain the same when submitting corrected documents. 

As long as the facsimile is legible, the department does not need the original.