Directive 065: Resources Applications for Oil and Gas Reservoirs ...

1.2 Application for a Common Purchaser Order
1.2.1 Background
The Oil and Gas Conservation Act (the OGCA) affords each owner the opportunity of
obtaining its share of the production of oil or gas from any pool. Accordingly, the ERCB may
issue a declaration of common purchasers of oil and gas under Sections 50(1) and 51(1) of
the OGCA. Historically the ERCB has not received applications filed under Section 50(1)
respecting common purchasers of oil, as the prorationing of oil has been handled under other
legislation. However the ERCB has considered many applications under Section 51(1)
respecting common purchasers of gas and, accordingly, existing practices primarily deal with
the common purchasers of gas.
1.2.2 When to Make This Application
A situation that would warrant the filing of a common purchaser application with the ERCB
would be when the gas reserves associated with a well are being drained by other wells
producing in the same pool because the owner of the well cannot obtain a reasonable market
for its gas or negotiate a share of the existing markets of other owners with producing wells in
the same pool. The well owner has recourse to apply for the declaration of a common
purchaser in order to recover its share of gas from the pool.
1.2.3 Terms of Application
An order under Sections 50(1) and 51(1) of the OGCA obliges each common purchaser,
among other things, to purchase production offered for sale to it without discrimination in
favour of one producer or another in the same pool. Thus, a common purchaser order would
allow an owner that has been unable to obtain its own market to share in the markets obtained
by other owners in the pool.
Under Section 56 of the OGCA, an applicant filing a common purchaser application has the
option of requesting that the common purchaser order be effective retroactively to the date of
the application. The ERCB considers such a request in light of the particular situation and has
the discretion to grant the request, deny it, or provide some measure of retroactivity other
than what was requested.
In order to give effect to a common purchaser order, an applicant filing a request for the
declaration of a common purchaser of gas under Section 51(1) of the OGCA also has the
option to request under Section 51(4)(a) or (b) that the ERCB direct
• the point at which the common purchaser shall take delivery of gas offered for sale, and
• the proportion of gas that the common purchaser shall purchase from each producer or
owner offering gas for sale.
If there is a dispute as to the price to be paid by the common purchaser for the gas, either the
common purchaser or an owner may also apply to the ERCB to set the price under Section
55(2). An applicant may choose to file an application for the ERCB to set the price of the gas
at the same time as it files an application for declaration of a common purchaser. However, in
most cases where the ERCB is prepared to grant a common purchaser order, the application
for setting the price of the gas is likely to be deferred to allow for additional negotiations.
Usually it would not be necessary for an applicant making a request under Section 51(1) for
the declaration of a common purchaser to also make requests under each of Sections 51(4)(a),
1-6 • ERCB Directive 065: Resources Applications / Common Purchaser (October 2011)