Alberta's New Liability Management Framework: A Teaser Of What's Coming

On July 30, 2020, the Government of Alberta announced a pending overhaul to the province's current regime for managing oil and gas liabilities, which is being referred to as the Liability Management Framework ("LMF"). The LMF is described as a new approach to more actively manage the reclamation of oil and gas sites throughout their entire life cycle, from exploration and licensing, through operations, reclamation and post-closure.

Currently, the Alberta Energy Regulator ("AER") administers the Licensee Liability Rating program, which requires companies with oil and gas assets that are licensees to maintain a minimum liability management ratio ("LMR") as a tool for assessing a company's ability to address abandonment, remediation and reclamation obligations. A licensee's LMR is a ratio of the licensee's deemed assets value to its deemed liabilities. Companies with a low LMR (below 2.0) are required to provide the AER with a security deposit to cover