Canada: The Alberta Energy Regulator Provides Guidance On Disputes Over Use Of Pore Space

Last Updated: August 28 2014
Article by Laurie Ziola and Michael A. Marion

Most Read Contributor in Canada, November 2017

Pore space is finite.  As there is increasing demand for it, disputes between parties having interests in or rights to use pore space in Alberta will become more frequent.  The guidelines and framework by which the Alberta Energy Regulator (AER) will decide these disputes is still developing.  Carbon dioxide disposal, water disposal and underground hydrocarbon storage operations all require access to pore space in geologically isolated formations.  This is particularly true in respect of water disposal formations where demand in particular areas is growing and acceptable disposal formations are in high demand.  This conflict is at the root of the July 28, 2014 decision of the AER in Canadian Natural Resources Limited (CNRL) Application for Disposal Lloydminster Field, 2014 ABAER 008Click here for a copy of the full decision. 


CNRL produces oil in the Lloydminster area with significant production of associated water.  CNRL drilled the 3-17-51-2W4/3 well (3-17 Well) and originally planned to dispose of water through the 3-17 Well into the Dina formation.  Ener T Corporation (Ener T) expressed concern with CNRL using the Dina formation for this purpose, following which CNRL obtained approval from the AER, pursuant to section 56 of the Mines and Minerals Act, RSA 2000, c. M-17 and AER Directive 51, to inject into the Moberly and Cooking Lake formations.  As a result of poor injectivity in these formations, CNRL brought this further application seeking approval to inject into the Dina formation. 

Ener T objected to the application on the basis that allowing CNRL to inject into the Dina formation would adversely impact Ener T's ability to dispose into the AB/16-7-51-02W4/4 well (AB/16-7 Well), located approximately 1000 meters away.  Ener T maintained that CNRL's injection into the Dina formation would lead to the reservoir being saturated or over-pressured at an accelerated rate, which would require higher injection pressures at the AB/16-7 Well and reduce the amount of fluid Ener T could inject into the reservoir.  Ener T maintained that small operators would be in ever increasing competition with CNRL's insatiable need for water disposal.  

The AER ultimately approved the application concluding that:

"[79] The panel finds that the evidence in this proceeding does not support Ener T's view that injection into the Dina Formation at the 3-17 location will result in significant adverse effects to the ongoing disposal at the Ener T AB/16-7 Well.  While the potential for some effects to Ener T's injection operations at the AB/16-7 cannot be ruled out, the panel concludes that the potential for adverse impacts to the Ener T's disposal at the AB/16-7 well is low and would be mitigated by the MWHIP limitation assigned to the 3-17 well.

[80] The panel notes that additional oil production can be brought on by CNRL if it secures additional disposal capacity for its produced water, and this additional oil production will provide a benefit to the province in the form of royalties to the Government of Alberta.  Given that the panel has found the risk of adverse impact to Ener T's AB/16-7 well to be low, the panel finds there to be a positive net benefit, if the application is approved."   


The panel focused on the following 4 issues:

1. CNRL's need for additional disposal capacity.  This issue was not seriously contested.  The panel noted that CNRL had productive oil wells that were shut-in in the area due to insufficient produced water disposal capacity and concluded that for CNRL to fully maximize recovery of oil reserves in the area, additional water disposal capacity was required.

2. The evaluation of alternative disposal zones.  The panel concluded that CNRL's decision to apply for disposal in the Dina formation in the 3-17 well was reasonable.  The main considerations in reaching this conclusion included:  

  • The 3-17 Well appeared to maximize the number of known disposal formations and avoided potential oil bearing zones, not typically approved as disposal formations;  
  • Since the 3-17 Well was already drilled, surface disturbance, land owner and environmental concerns associated with drilling another well could be minimized or avoided;  
  • CNRL had alternative injection locations but existing wells presented potential wellbore integrity issues; and  
  • CNRL made reasonable, but unsuccessful efforts, to enhance injectivity in the Moberly and Cooking Lake formations.    

3. The capacity of the Dina formation for injection fluids.  The Dina formation was recognized as an acceptable disposal formation with close to 300 wells in the area disposing in that formation.  The main geological contention was whether the Dina at the 3-17 Well was a regionally extensive aquifer and an ideal candidate for water disposal as argued by CNRL or a channel sand isolated from the regional Dina formation which would act as a closed system with limited volume as argued by Ener T. 

The panel concluded that, while there may be localized barriers in the Dina sand and the quality of sand may be variable, the geological evidence did not support the interpretation of a narrow channel sand that would act as a closed system.  The panel also considered seismic and hydrogeology evidence and concluded that the Dina reservoir was more likely open and regionally extensive as opposed to a limited closed system.

4. Potential adverse effects on Ener T's AB/16-7 Well.  Ener T's submission focused on the public interest in rewarding people who "incur the risk and the cost of drilling into a certain area".  Ener T also raised the need for a "buffer zone" to prevent large producers from coming in and drilling in the same zone as a small producer and negatively impacting the smaller producer's operations.  Ener T proposed a 1.6 km buffer zone around the existing disposal wells. 

The panel noted that AER regulations allowed both disposal operations to co-exist and did not restrict the distance between disposal wells.  Accordingly, the panel did not entertain the "buffer zone" proposal.   The panel noted that CNRL's submissions, including a case study and regional analysis of the Dina, indicated that risks of loss of injectivity at Ener T's AB/16-7 Well or saturation of the Dina formation were low.  The panel concluded that the Dina reservoir should be able to accept disposal fluids from both Ener T's and CNRL's wells and that CNRL's proposed injection at the 3-17 Well should not adversely affect Ener T's disposal well.  Further any unlikely impact on Ener T's AB/16-7 Well would be reduced by assigning a maximum wellhead injection pressure limited to the default wellhead pressure assigned by Table 1 in Appendix O of AER Directive 065


While this decision raises some questions, it provides little clarification on resolution of competing claims to finite pore space.  Geology of the Dina formation was contentious and the ability of the Dina reservoir to accept disposal fluids from both Ener T's and CNRL's wells without adversely impacting Ener T's pre-existing disposal well was uncertain.  However the AER was not inclined to recognize a pre-existing disposal operation as having any priority to the disposal zone, nor was the AER prepared to recognize a "buffer zone" around the pre-existing disposal operation.   One is left with the impression that a significant consideration for the AER was that additional water disposal capacity would maximize CRNL's oil recovery in the area and the corresponding royalties to the Government of Alberta.  This raises the question of whether a large producer with the most resources at risk if additional disposal capacity is not available has injection priority to a disposal zone.  It also raises the question of how the AER would have dealt with the matter had it been satisfied that Ener T's operations would have been adversely impacted. While the AER effectively sidestepped these issues in this decision, it is only a matter of time until the AER is required to squarely address the question of competing rights to pore space. 

While there is some uncertainty, this decision suggests that key factors the AER will likely consider in addressing competing rights and priority issues include (1) the need for the use of the pore space by the applicant; (2) whether there are other alternatives to achieve the applicant's goals; (3) whether the pore space or formation sought to be used is appropriate for the applied for use; and (4) whether the proposed use would adversely impact others, including other existing or proposed oil and gas operations that are in the public interest.  Any decision in this regard may have broader implications for carbon dioxide disposal and hydrocarbon storage operations. 

About BLG

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions