You may apply to group a licence as soon as the well licence has been issued for the proposed grouping well. The deadline for submitting your grouping application depends on the rig release date of the well you wish to use for grouping:
If the rig release date of your grouping well is more than 1 month before expiry, your application to group must be received no later than 1 month after the rig release date.
If the rig release date of your grouping well is after expiry, your application to group must be received no later than 1 month after the rig release date. By drilling the grouping well through expiry, the initial term of the licence is automatically extended to one month after rig release.
However, if the rig release date is less than one month before expiry your application must be received by the expiry date of the licence containing the grouping well. For example if the rig release date was January 10 and the licence expiry date is Jan 20, then the grouping application must be submitted on or before January 20.
All licences in the group must meet the grouping criteria at the time of the grouping application i.e., the licences must be in their initial term and within one section of the licence containing the grouping well. The application must be from the designated representative or an authorized agent.
A licence in its initial term can be transferred only as an entire agreement. Partial transfers are not allowed for a licence that is still in the initial term as each licence carries with it an obligation to evaluate the licence. If the area of a licence were split there would be an obligation to evaluate each of the agreements.
Licences purchased after December 31, 2001 are subject to severance. Deeper rights that were not evaluated will be severed below the deepest rights evaluated. This is based on the deepest zone penetrated more than 15 meters by a grouping or validating well. Severed rights are returned to the Crown to become available in a future land sale.
Severance of rights for Plains licences came into effect in January 2004. Severance of rights for Northern licences commenced in January 2006. Severance of rights in Foothills licences†commenced in January 2007.
For petroleum and natural gas tenure purposes, when the department specifies one or more months by which to respond or take action, the department means a calendar month. The expiry date falls on the corresponding date in the expiry month. For example, if an offer letter is dated March 15, the one month response period expires on April 15. Therefore, a response or action after April 15 is late. However, if the expiry date does not occur in the expiry month, then the last day of the one month response period is the last day of the following month. For example, if a letter is dated March 31, the last day of the one month response period is April 30. If a letter is dated January 30, the one month response period is February 28 (or February 29 in a leap year).
An Application for Validation received prior to the three-month period before expiry will be returned for resubmission.
A licence cannot be validated early in its initial term, even if drilling occurred early in the initial term. Applications for validation are only accepted by the department within the last 3 months of the initial term, in accordance with Section 11(2)(a) of the P&NG Tenure Regulation. Applications received before or after the last 3 months of the licence term will be rejected. Validation of a licence into its intermediate term is finalized by the department after the initial term expires.
If a well has been drilled or re-entered on the location during the term of the licence, a notice will be sent giving the licensee one month to apply for validation, subject to payment of the late application penalty of $5,000.00, rent at $3.50 per hectare and GST.
The licences are stacked. One licence is for shallow rights and other licence is for deeper rights.
In such a situation, the depth of the well will be pro-rated to the rights in each licence, and the sections earned will be calculated based on the pro-rated depth in relation to each licence. The well must evaluate the deeper rights licence. You are required to provide the well log.
If minimum depth as described in Section 1(m.1) of the Petroleum and Natural Gas Tenure Regulation is not reached, you are required to submit the well logs and the department will confirm if the well evaluated the rights and the depth and will advise you of the entitlement.
The section containing the validating well does not have to be selected when validating the licence. However, if the section is not selected then the well must be abandoned. If it is not abandoned, the well will be addressed at the time of validation, and the†Energy Resources Conservation Board (ERCB)†will issue a notice ordering the abandonment of the well.
Licences purchased after December 31, 2001 are subject to severance. This has been in effect for initial term licences in the Plains Region and the Northern Region since January 2004 and January 2006, respectively. For licences subject to severance, you must submit a full set of open hole logs (e.g., Resistivity/Sp and Gamma Ray/Neutron density logs.) Formations should be clearly marked on the logs. Well logs will be evaluated by the departmentís Geology unit in order to determine the deepest zone evaluated by the well. Rights will then be severed below the base of that zone.
Licences purchased before January 1, 2002 are not subject to severance. This now only applies to initial term licences in the Foothills regions which expired January 1, 2007. The information on the Validation Application and Administrative form is often sufficient. However, if a licence contains only deeper rights, a full set of logs must be submitted for evaluation by the departmentís Geology Unit, in order to confirm if the rights in the licence have been evaluated.
Please ensure the†ERCB well status information is up to date. The department relies on the†ERCB information to confirm the well validates the licence.
A well drilled outside the location (not on another licence) and outside the spacing unit is not a validating well unless prior approval has been granted by the department. Data must be submitted prior to drilling the well, proving the well evaluates the licence and that the well could not be drilled on the licence because of surface conditions or environmental concerns.
Yes. The Department requests the well licence number on the Grouping Application Form. The Department uses the well licence information to determine if the intended drilling target supports the evaluation of the rights in the licences to be grouped. At the time of validation, the grouping well is reviewed again to confirm that it has met the grouping criteria under Section 10 of the Petroleum and Natural Gas Tenure Regulation, so it can be used for validation under Section 11.
Always use non-grouped wells first as they can only be used to validate the licence on which they have been drilled. Use grouped wells only after all the earned sections from non-grouped wells have been applied to the sections to be validated in the licence.
A well drilled in a lease or an intermediate term licence can only be used as a grouping well if that lease or licence completes the spacing unit of the initial term licence, and the well evaluates the rights in the grouped licences.
The section earned would be calculated based on the location of the well. If the well were drilled on the licence in the Foothills area then the earned sections would calculated based on the section of the regulation governing Foothills licences.
A well re-entered on location with additional drilling to at least minimum depth.
A well drilled outside the location (not on another licence) but part of the spacing unit falls within the location and the well is drilled to minimum depth.
A well re-entered on location but with less than minimum depth of additional drilling and in the opinion of the Minister, the new drilling operation provides significant new information (potential productive zone).
Licences can be vertically or horizontally grouped, providing the well evaluates the rights in all the licences. The well must penetrate to a zone contained in all the deeper rights licences and drill to at least the minimum depth.