May 2015 - Volume 10 Issue 5

Down-Spacing or Holding in Alberta

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Discover Your Superpower

Down-Spacing or Holding in Alberta
Changes That Could Affect Your Projects



Holding or down-spacing: not sure what you need? You've heard of the new regulations -- but how does it affect your operation?

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.

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.



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.

~Granger J. Low
MetroPetro


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Technical Presentation
Pipeline vs. Rail: The Pro's & Con's
Calgary, AB
12 May 2015
spe.org
Technical Luncheon
The AER: Positive Outcomes from Transformational Thinking
Calgary, AB
14 May 2015
apega.org
Technical Luncheon
Extension of OH Logs into the Realm of Geomechanics
Calgary, AB
20 May 2015
cwls.org