Operators & Industry

Working Interest Claims Process

Before you begin closure work on a site for which you will be submitting a Working Interest Claim (WIC), contact us to discuss your plans. If there are technical issues as you are performing the closure work, we can provide guidance about what the OWA generally reimburses, and what we will not. The OWA is not compelled to reimburse all costs, so early and ongoing discussions can help ensure the WIC process goes smoothly for an operator.

The AER and OWA target a 90-day turnaround time from submission to reimbursement.

Companies submitting a WIC may not receive full reimbursement for the amount claimed. The OWA has discretion to partially or fully reject claims, including claims that appear to exceed industry norms, involve unnecessary work, or where confirmatory information is missing. In these instances, companies will have an opportunity to submit additional information prior to a final decision from the OWA.

WIC Types and Eligibility

Activity:

Suspension

WIC Eligibility:

Ineligible unless extenuating circumstances exist including:
1. SCVF/GM repairs have been made and are actively monitored.
2. There are high carrying costs and the non-defaulting WIP has a low working interest percentage.

Additional Required Documentation:

Daily Operation Reports

Activity:

Abandonment

WIC Eligibility:

Includes downhole abandonment and surface cut and cap/decommissioning activities.

Additional Required Documentation:

Daily Operation Reports

Activity:

Remediation

WIC Eligibility:

Well or facility remedial and earthwork activities (delineating/confirmatory sampling, soil replacement, recontouring)

Remediation must be completed

Additional Required Documentation:

Record of Site Condition with Contamination Review for Reclamation Intent and Submission Status “Accepted” or Remediation Certificate number.

Additional Environmental Site Assessments must be available upon request

Activity:

Reclamation

WIC Eligibility:

Well or facility reclamation activities (seeding, vegetation monitoring)

Additional Required Documentation:

Reclamation Certificate number

Additional Environmental Site Assessments must be available upon request

Activity:

RCAM

WIC Eligibility:

Other costs that do not pertain to the above activities may be eligible as reasonable care and measures associated with AER RCAM Order or other direction

Additional Required Documentation:

AER Order and/or other AER direction

Activity:

Overhead

WIC Eligibility:

“Overhead” reimbursement is 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 and 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 OWA’s Working Interest Participant Agreement (WIPA) program and is set at a flat rate of 2.5%. 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

Additional Required Documentation:

Specific Instances of Ineligible WIC expenses

  • Effective October 7, 2022, the AER will not approve reimbursement WICs related to pipeline abandonment costs that may be attributable to a defunct partner. The Pipeline Act and associated Rules contain no reference or recognition of working interest and/or working interest participants for pipelines.
  • GST, surface lease payments, municipal taxes and legal expenses are not eligible for reimbursement.

Instructions to Submit a WIC

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.

  1. Authorization for Expenditures (AFE)
    1. Applicants should notify the OWA of their intentions of making a WIC by sending the OWA an AFE for review prior to commencing operations. The OWA will not “approve” any AFEs but will acknowledge receipt and provide information to applicants should any proposed costs appear to be outside of industry norms. We will approve WICs that follow the AFE as provided.
    2. We will discuss decisions that need to be made during operations to ensure work is completed efficiently, and is potentially eligible for reimbursement. If the work has already occurred, the OWA will not reply to the AFE. This process is meant to 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. 
    3. Please submit AFEs to AFE@orphanwell.ca. You can expect a response within 30 days.
  2. Claim Submission and Eligibility
    1. WICs must be submitted through the AER website once the work is complete. The AER will determine WIC eligibility based on a review of the criteria for a defaulting WIP in the Oil and Gas Conservation Act (OGCA). The AER may request supplementary information to support working interest percentage in the wells and facilities, if discrepancies arise against AER records.
    2. Inquiries can be directed to the AER’s Orphaning, Insolvency and Legacy Team at CostClaims@aer.ca. If the total required document size exceeds 70 MB, please email the remaining files to CostClaims@aer.ca.
  3. Documentation and OWA Review
    1. 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:
      1. AER online WIC Form completed in full,
      2. Copy of AER Order, if applicable,
      3. Documentation to support the request to deem the WIP as defaulting, as per s. 70(2)(b) of the OGCA:
        1. Proof of Non-Active Corporate Status from Corporate Registry Search.
        2. Where a defunct WIP retains an active corporate status, documentation to support multiple attempts to collect funds from the defunct partner, including rejected/returned deliveries and any response from the defaulting WIP
      4. Summary expenditures using the OWA single-site or multi-site template, including:
        1. WIC activity
        2. Invoice date
        3. Vendor name
        4. Invoice number
        5. Invoice amount
        6. Amount claimed (working interest per cent)
        7. Comments:
          If applicable, please indicate the specific activities that have received Site Rehabilitation Program (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.

          For reclamation or remediation work, please include a comment stating whether the cost was for Phase 1 ESA, Phase 2 ESA, remediation cost (Remediation Certificate required) or reclamation cost, as well as totals for each Phase.
      5. Invoices and tickets for all expenditures. This must include total costs incurred as outlined in OGCR s. 16.541.
      6. Daily operation reports.
      7.  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.
      8. If licenses were operating during the period when a working interest participant is known to be insolvent, 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.
    2. NOTE: Claims with insufficient documentation may be rejected or returned, including incomplete claims (missing invoices, invoices with inadequate work description) or poorly organized submissions.
  4. Final Processing and Payment
    1. After the OWA has completed the review and confirmed that all relevant documentation has been provided, we notify the AER of the proposed payment amount. The AER reviews the amount and if approved, notifies us 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)