Guide to the Alberta Site Rehabilitation Program
The Alberta Government and the Department of Energy have rolled out the Alberta Site Rehabilitation Program.
Until the end of 2022 a total of $1 billion worth of grants will be available, focused on the abandonment and reclamation of Alberta oil and gas wells, pipelines, and associated facilities.
Key Program Details
There is a high priority towards any wells with defaulted surface lease payments in this program.
Landowners can also nominate wells through this program.
Grant payments are made directly to contractors, no monies go to licensee.
Cost overruns are not funded through this program.
All work must be completed and invoiced prior to December 31, 2022 and must meet Alberta Energy Regulator (AER) requirements.
Funding Distribution
The total Federal funding of up to $1.72 billion will be distributed as follows:
$1 billion to Alberta
$400 million to Saskatchewan
$120 million to British Columbia
$200 million to the Alberta Orphan Well Association as a repayable loan
For more information, see our detailed articles about the British Columbia and Saskatchewan programs.
Funding Distribution
Alberta
$1.0 billion
GRANT
Saskatchewan
$400 million
GRANT
British Columbia
$120 million
GRANT
Alberta Orphan Well Association
$200 million
LOAN
Timing of Funds Distribution
The program funds will be distributed in increments of $100 million in periods with targeted priorities, application acceptance criteria, and timelines.
All periods so far are directed towards 100% service company contract value.
Period 1 – May 1 to May 31, 2020
Period 1 has a contract limit of $30,000. A well or a site can have more than one contract applied towards it. Applications are accepted for wells province wide.
Period 2 – May 15 to June 15, 2020
Period 2 applications are limited to section 36 lands or lands where the surface leases have been defaulted upon.
For more information, see our detailed article about Period 2.
Period 3 – July 17, 2020 to March 21, 2021
Period 3 has a per-licensee limit of $139,000 and additional provisions for contractors.
For more information, see our detailed article about Period 3.
Future periods – until December 31, 2022
Future periods are yet to be decided and the program will run until December 31, 2022.
Eligible Sites & Activities
Site eligibility
To be eligible for the program the site must be in Alberta and it must require abandonment and/or reclamation.
Sites may be active and require abandonment, inactive and not producing, or suspended.
Eligible infrastructure includes pipeline and oil and gas well associated facilities.
Sites already under the Orphan Well Program (OWA) do not qualify.
Eligible activities
Scope of eligible activities includes:
well abandonment and re-entry and abandonment
facility abandonment
pipeline abandonment
environmental site assessment
remediation
progressive reclamation leading to reclamation certificate
Also, eligible spend includes purchase of materials and supplies, rental equipment, transport of such and works to site.
Regulations, standards, and guidelines
All laws, regulations, directives, and environmental and occupational health and safety standards, including social distancing and COVID-19 related health orders and guidelines must be followed in carrying out the work.
Ineligible sites and activities
The following sites and activities are ineligible for Alberta Site Rehabilitation Program funding:
suspension of wells and facilities and discontinuation of pipelines that are not a part of abandonment and reclamation projects
spills remediation work
work performed outside of Alberta
work performed prior to or in progress the effective date of the program
sites already under the Orphan Well Program (OWA) do not qualify
Contractor Eligibility
Based in Alberta
For contractors to be eligible they must be based in Alberta as well as having registration, an office and operations in Alberta.
Contractor capabilities
Also, the contractor must have the capacity to complete the work. The licensee is to prequalify the contractor’s abilities to execute the work safely.
Contract between licensee and contractor
There must be an executed contract between the licensee and the contractor without any “subject to” clauses.
The contract must include the scope of services, value of contract included cost breakdowns.
Prior authorization needs to be a part of the application if the contract is to be between an agent and a contractor.
Applying to the Program
When applying to the program, applicants can apply for a single site or multiple sites in a project. Grant amounts may be up to 100% of the contracted amount of work.
The application must be completed accurately to be considered; any deficiencies will be declined.
Municipal taxes
Municipal tax payment dictates the initial payment of the grant.
If the municipal taxes have been paid for the current year, the receipts must be provided to obtain this initial payment of 30%.
If taxes have not been paid the initial payment will be 10%.
Surface lease payments
If surface lease payments have been made, then a copy of the cheque issues should be provided as proof.
Staged work
Staged work will not require an application for each activity if all activities can be accurately estimated.
Environmental assessments
Separate estimates for phase 1 and phase 2 environmental assessments should be made to ensure the proper grant amount required.
Removal of abandoned-in-place pipelines
For removal of abandoned-in-place pipelines, AER (Alberta Energy Regulator) approval should be gained before applying for grants as the AER’s approval documents need to be a part of application.
Approval Process
During the approval process the application will be reviewed for completeness and accuracy including a review of the contract used in the application.
The contract must include a section that details scope of work with all proposed work activities, a cost breakdown by activity, and a schedule with estimated timelines and deliverables.
If prices and job scope within the contract do not match the AER and OWA data for similar work activity, the grant may be reduced.
As well, an assessment of the licensee and their ability to pay the costs of the rehabilitation work.
Grants up to 100% of the contract for licensees with limited ability and grants of up to 25 and 50% of the contract for site held by licensees with some ability to pay the costs of site rehabilitation.
All grants are excluding GST. Agents can act on behalf of licensees; however, they need documentation indicating the consent of the licensee.
Grant Dispersal Structure
Alberta Site Rehabilitation Program grants are dispersed according to the following structure:
First payment — If the municipal taxes are paid in full, the first payment of 30% of the contract amount is paid upon grant approval. If the municipal taxes are not paid in full, then the first payment is 10%.
Interim payment — If the contractor completes and submits an interim invoice report then an interim grant payment of up to 60% of the grant amount will be made.
Final payment — The final grant payment is the balance of the grant amount, paid upon the contractor completing a final installment invoice report.
Reporting & Documentation Requirements
In order to receive grant funds, invoice and reporting forms must be completed and submitted with all supporting documentation. This is required for both the interim and the final grant payments.
Supporting documentation may include auditable documentation such as supplier’s invoices, or contractor’s receipts.
Interim payment
For the interim grant payment, the following is required:
invoice and reporting forms completed and submitted
certification from the licensee or agent of site progress
invoices of work up to that milestone
Final payment
To obtain the final installment payment, the requirements are similar, as follows:
final invoice and reporting form submitted
work entries submitted and updated in AER OneStop
licensee or agent must complete a sign-off declaration certifying that the work has been completed
Cost Limitations & Review
The Alberta Site Rehabilitation Program is focused on putting Albertans to work and will be measured by number of hours of work generated and how many sites are abandoned, remediated, or reclaimed.
Cost Limitations
Under the program, an abandonment can cost more than $30,000.
In period 1, the maximum value of a contract is $30,000. A well can have more than one contact.
Licensees are to manage the pricing of contracts.
Contract and pricing review
Contracts and pricing are also reviewed by program reviewers. Submitting high pricing risks grant being denied or a lower percentage being granted.
Streamline your Alberta Site Rehabilitation Program project using our regulatory application and project management experience.
Regulatory application processes are often administrative and time-consuming work. Understanding the appropriate requirements and compiling the necessary documentation is essential, but it can quickly add overhead to any project.
CG Engineering has extensive experience with meeting the application and documentation requirements for regulatory processes. We also apply our project management and engineering experience to streamline the application process, eliminate overhead, and maximize efficiency.
Learn more about our Well Abandonment experience →
Sources
Site Rehabilitation Program | Application Information and Guidelines, viewed 6 May 2020,
https://www.alberta.ca/assets/documents/energy-site-rehabilitation-program-guidelines.pdf
Mcmillan Regulatory, Energy, Oil & Gas Bulletin – April 29, 2020
Federal Aid Package for Energy Sector and Alberta’s Plan to Spend it, Jody Wivcharuk
David Blanchet, LinkedIn, viewed 6 May 2020, https://www.linkedin.com/feed/update/urn:li:activity:6661710538118176768/