Operations & Industries

Working Interest Participant Agreements

Before closing a defunct company site, we encourage Working Interest Partners (WIPs) to consider a Working Interest Partner Agreement (WIPA) with the OWA. WIPAs allow the OWA to close a site that is licensed to a defunct company when there is an active company with a working interest in the site (that is, the site is not an orphan), as if it were an orphan site. The OWA closes the site and pays the costs for that work, and the working interest participant reimburses the OWA for their portion of the costs. These agreements allow WIPs to pay their percentage of the closure costs only, rather than paying 100 per cent of costs and then waiting for reimbursement through a WIC.

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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

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Activity:

Abandonment

WIC Eligibility:

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

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Additional Required Documentation:

Daily Operation Reports

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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.

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Additional Environmental Site Assessments must be available upon request

Activity:

Reclamation

WIC Eligibility:

Well or facility reclamation activities (seeding, vegetation monitoring)

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Additional Required Documentation:

Reclamation Certificate number

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Additional Environmental Site Assessments must be available upon request

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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

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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

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Additional Required Documentation:

Benefits of a WIPA

A major benefit of a WIPA is that the OWA executes all closure work on the proponent’s behalf and can leverage efficiencies based on our large, province-wide program. As such, the OWA typically executes projects for significantly less than industry averages.

The overall intent of a WIPA must always be to reduce costs to the Orphan Fund.

Eligibility

The OWA retains discretion on where and when WIPAs are undertaken. The OWA may enter into WIPAs in many situations; however, the following criteria will be used to determine situations were a WIPA may be formed:

  • 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 by the AER.
  • The defunct licensee’s working interest percentage (WI%) typically exceeds 50 per cent.
    • 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 per cent.
  • The WIP must be financially viable but may be required to post up-front financial security that will cover their WI% of the liabilities.
  • WIPs are in good standing respecting any previous agreements with the OWA.
  • 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. 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.

LEARN MORE ABOUT WIPA PROCEDURES

For further information, please contact WIPA@orphanwell.ca

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