Liability Reduction Program Support

Table of contents

Overview

As noted in Indian Oil and Gas Canada's May 2020 COVID-19 Update #4, the Government of Canada committed to providing up to $1.72 Billion to the governments of Alberta, Saskatchewan, and British Columbia, and to the Alberta Orphan Well Association to clean up orphan and inactive oil and gas infrastructure. From this overall funding, $85 Million in Alberta and $20 Million in Saskatchewan was set aside for the closure of inactive and abandoned wellsites on First Nation lands as part of the provincial site rehabilitation and liability reduction programs (provincial programs):

Our partner organizations, Indian Resource Council and Saskatchewan First Nations Natural Resource Centre of Excellence, were instrumental in ensuring funding for First Nations were set aside and have continued to establish and administer the process to have First Nation-developed plans submitted to the provincial programs. We are encouraging First Nations and industry (contract holders, well licencees, service providers, contractors) with inactive infrastructure on First Nation lands to work collaboratively with each other, our partners, and Indian Oil and Gas Canada (IOGC) to ensure mutual program benefits.

Note: Provincial program dates are set independently from IOGC. First Nations and industry are encouraged to note and monitor important dates such as:

  • the Alberta period six is open until March 31, 2022 and project work must be completed by December 31, 2022
  • the Saskatchewan program is scheduled to run until February 28, 2023
  • the British Columbia program is to be completed by December 31, 2022

Reclamation-exempt wells in Alberta

In the Province of Alberta, the "rec exempt" or reclamation exempt status for wells on federal lands was a provincial administrative code applied by the province to a number of wells on federal lands as part of Alberta's implementation of their Licensee Liability Rating (LLR) program. As rec exempt wells are currently excluded from the provincial program, IOGC is reviewing these wells on First Nation lands to determine their current state and working with provincial regulators to reclassify them to a more appropriate status such as abandoned or to "rec certified" or reclamation certified.

Orphan wells

Wells that have been deemed as orphan by provincial regulators are outside of the scope of the provincial programs and their oversight will remain with the provincial regimes. For further information, First Nations can contact an IOGC Environmental Analyst.

Alberta's Orphan Well Association (OWA) is receptive to coordinating OWA site closures with those funded under the provincial program including exploring if such closures can be coordinated by the same contractor completing provincial program site closures. First Nations are encouraged to contact the project team for more information.

IOGC's role

Although IOGC does not have authority over the provincial criteria, eligibility, or awarding of funding, IOGC established a dedicated project team to provide focused support to First Nation and oil and gas company efforts with oil and gas site closure work:

Our team's goals are to:

The team works closely with our Business Units to ensure readiness to meet the following key regulatory requirements:

In addition to supporting First Nation and industry efforts, the Project Manager is supporting coordinated efforts with the Indian Resource Council, Saskatchewan First Nations Natural Resource Centre of Excellence, and provincial governments and regulators.

First Nation support

If your First Nation has yet to access any of the funding under the provincial programs, please contact the project team, who can:

If your First Nation has been successfully working under the provincial programs, please contact the project team to discuss and prepare for any of the regulatory administrative requirements that will be triggered throughout the process. For example, First Nations and/or surface contract holders should incorporate IOGC's timing for some or all of the following steps into project schedules to ensure they align with the provincial program dates:

First Nation and Indigenous owned businesses and contractors

Indigenous owned businesses and contractors are encouraged to contact First Nations, the Indian Resource Council, Saskatchewan First Nations Natural Resource Centre of Excellence, and oil and gas companies to provide information on potential services related to site closure.

Potential Orphan well coordination in Alberta

Alberta's Orphan Well Association (OWA) is receptive to coordinating OWA site closures with those funded under the provincial program and exploring if such closures can be done by the same contractor completing provincial program site closures. Contact the project team for more information.

Industry support

If your company has yet to access any of the funding under the provincial programs, please contact the project team, who can:

Important note: As a part of IOGC's effort to refine the inventory of sites within our mandate and overall compliance strategy with reference to s 78 of the Indian Oil and Gas Regulations, SOR/2019-196 companies are encouraged to assess their inventory of sites for inclusion with the provincial programs and/or to commence site closure activities of their inactive sites.

If your company has been successfully working with the respective First Nation under the related provincial programs, please contact the project team to discuss and prepare for any of the regulatory administrative requirements that will be triggered throughout the process. For example, surface contract holders should incorporate into project schedules IOGC's timing for some or all of the following to ensure they align with the provincial program dates:

IOGC's remediation and reclamation requirements differ from provincial requirements. Contract holders are responsible for:

  • ensuring the land is in a state that is equivalent to the pre-disturbance state or to a state desired by the First Nation,
  • contacting the First Nation to discuss end land use and reclamation goals,
  • obtaining a First Nation Band Council Resolution (BCR) for any changes to land use or facilities to be left in place.

Submissions for review can be sent to:

First Nation owned businesses or contractors

Industry is encouraged to work with the First Nation to identify First Nation economic opportunities.

Provincial landowner notifications

Notifications for sites associated with the provincial programs should be sent once engagement with the First Nation is complete.

Pipeline rights-of-way

Most pipeline rights-of-way issued prior to 2002 contain both a "compensation review" and "termination" provision. This means that:

  • compensation for the right-of-way is recalculated at regular intervals (typically every 5 or 10 years) using current compensation rates and if the compensation review period results in a higher amount than was paid previously, the difference between the two is remitted to IOGC
  • the surface contract holder can provide notice in writing of their intent to terminate the right of way, which will take effect 90-days after the notice and during the notice period, all materials and installations (including the pipelines) must be removed unless IOGC, in consultation with the First Nation, provides consent for them to be left in place

Removal requirements

When it has been decided to remove all or a portion of a pipeline, the related right-of-way must be amended and/or surrendered. A Phase I Environmental Site Assessment (ESA) for a pipeline must be consistent with the Canadian Council for Ministers of the Environment (CCME) standard 'Guidance Manual for Environmental Site Characterization in Support of Environmental and Human Health Risk Assessment' and CSA Z768-01 (R2016) Phase 1 Environmental Site Assessment.

Note: When there is a lack of information to support a determination regarding the presence of contamination, IOGC will require an electromagnetic (EM) survey to accompany any regulatory submissions to support the surrender of the right-of-way.

Damages

These contracts also require payment of compensation to IOGC, on behalf of the First Nation, for damages that result from remediation and reclamation activities. For newer rights-of-way, unless it states such compensation should be paid to the First Nation directly, the expectation is for the contract holder to remit payments to IOGC.

Future considerations

As part of the draft Environment Module for the next phase of the Regulations, IOGC has proposed a requirement for complete wellsite reclamation applications to be received within seven years of well abandonment. Prior to implementing any changes in IOGC's current site closure timing requirements, IOGC continues to encourage industry to coordinate with First Nations to complete closure activities and to also access available funding through the provincial programs.

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