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In Alberta, Canada the standard drilling spacing unit size for gas wells is one section.  A section of land is one mile square.  The standard drilling spacing unit size for oil wells is one quarter section.

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Normally one well is drilled per drilling spacing unit (DSU).  However, recent regulation has changed the standard well density for several areas of the province. 

Historically you could apply to the Alberta Energy Regulator (AER) to change the size of a DSU or change the number of wells in a DSU. The first is down-spacing. The latter is a holding.

Down-spacing decreases the DSU size but keeps one well per DSU.  Drilling targets within the down-spaced DSUs were rigidly set by regulation. The AER no longer has regulations to approve new down-spacing applications.

Instead of down-spacing, an operator can apply for a holding.  A holding is usually the same size as the existing DSU but allows for a higher well density and more flexibility in drilling target.

Down-spacing can affect the tenure of land when small DSUs don't have a producing well.

For example, if a company wants to drill four gas wells in a particular section, they previously could apply for a down-spacing or a holding as shown in the following table.

	Down-spacing	Holding
Existing DSU
Existing DSU size	1 section (one mile x one mile)	1 section (one mile x one mile)
Existing well density	1 well per DSU	1 well per DSU
Existing target	150 m inside the south and west boundaries	150 m inside the south and west boundaries
New DSU
New DSU size	1 quarter section (half mile x half mile)	1 section (one mile x one mile)
New well density	1 well per DSU	4 wells per DSU
New target¹	LSD 6, 8, 14, or 16	150 m buffer central
Total number of wells	4 wells per section	4 wells per section

Notes to example table:

¹A Legal Subdivision (LSD) is one quarter mile by one quarter mile.  Four LSDs fit in a quarter section.  Sixteen LSDs to a section.

In the above example, you can see that holdings are much more flexible that down-spacing. But before you start rescinding all your down-spacing approvals, be aware that there are some rare circumstances where wells can only be drilled on down-spaced DSUs. Nuking these down-spacings approvals will prevent an operator from ever drilling on such land -- there exist no regulations to down-space again.

Holding and down-spacing applications are a specialty of Proven Reserves.  We have prepared and submitted over 1000 Alberta AER holding applications, as well as similar applications to the Saskatchewan SMER and BC OGC.

We have the best approval ratio in the industry. In any one month 10-50% of spacing applications are refused by regulators. At Proven, we guarantee your approval.

Your regulatory needs met by Proven Reserves.

You Need	Proven’s Service
Get it done, get it right the first time cost effectively	Best approval rate in the industry.  Some months up to 50% of applications are closed. Not ours -- we get very few applications closed. We guarantee approval.
Quick approval to drill and produce wells	Since we get very few applications closed, you get quick approval rather than getting rejected and starting back at the beginning of the queue. That means no seasonal drilling windows missed. No production targets missed. No cash flow postponed.
Strong understanding of oil and gas regulations	Prepared and submitted over 1000 regulatory applications to Alberta AER, Saskatchewan SMER and BC OGC.
Smooth approvals through the regulator	Experienced engineers ensure your applications not only meet the regulatory requirements but are designed to be easily understood and approved. We speak regulator-ese.
Avoid hidden regulatory traps	Our relationship with regulators ensure your applications take advantage of the latest unwritten policies.  Only half of what you need to know to have a successful application is in the guides.
Make sure your application doesn’t get held up	We identified 34 issues that could cause your application to get stuck at the regulator.  We have 42 strategies to make sure they don’t.
See an application through to approval	We at Proven follow up with the regulator and negotiate any objections the AER has to your application. We’re focused on your success.

 

It pays to use experts.

 

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