ELC Year in Review Blog Series: The Alberta Energy Regulator in 2025 

The Alberta Energy Regulator (AER) issues bulletins to advise about new regulatory requirements, new programs or new processes.  In 2025, the AER issued 43 bulletins dealing with a wide variety of matters, from reminders about annual water conservation and sensitive bird seasons to significant regulatory and policy changes. 

This blog highlights some of the changes made in 2025. This includes ongoing refinements being made to the AER’s liability management framework; regulatory changes to address the AER’s expanded mandate over geothermal development, brine-hosted minerals and rock-hosted minerals; and changes to various operational matters including elimination of solution-gas flaring limits.  As well, this blog highlights some matters which arose this year and are expected to continue to develop in 2026.

The AER’s liability management framework

In 2025, the AER continued with refinements to its liability management framework (see some of our past blogs on this here and here).  The following were updated to reflect changes to the liability management framework:

These changes were made to reflect the transition from the prior Liability Management Rating (LMR) and Licensee Liability Rating (LLR) system to the current holistic assessment, which includes a Licensee Capability Assessment (LCA).  The LCA approach forms part of a “holistic assessment of companies throughout the energy development life cycle in the oil and gas sector”.[1]  The LCA involves consideration of the financial health, magnitude of liability, remaining lifespan of resources, operations, rate of closure, and compliance with administrative regulatory requirements.  The LCA and other relevant factors are considered by the AER when making decisions about licence issuance or transfer, security requirements, and other regulatory or enforcement actions that may be deemed necessary.

In Bulletin 2025-40, the AER announced changes to Directive 088 and Manual 023 to reflect adjustments to the 2026 industry-wide closure spend requirements (previously announced in Bulletin 2025-27) and adjustments to mandatory closure spends for licence transfers (previously announced in Bulletin 2025-35).  The industry-wide closure spend for 2026 is set at $750 million.  The approach to assigning an individual licensee’s spend is changed to assigning a proportionate share of the industry-wide closure spend (the proportion determined by a ratio of the licensee’s inactive estimated liability over the industry’s inactive estimated liability).  Upon approval of a licence transfer, the licensee’s mandatory closure spend will be adjusted.  In addition to these changes, some licensees were granted an exemption from the mandatory spend requirement in 2026, due to continued low natural gas prices.  Finally, licensees who exceed their minimum mandatory spend are allowed to “bank” the exceedance between 2025 and 2027.

The new edition of Directive 011 was announced in Bulletin 2025-026.  The parameters set out in Directive 011 are used to estimate liabilities of a licensee (an important factor in the AER’s liability management system). Changes were made to some well abandonment cost parameters, in particular, creating exceptions for instances in which no additional well event sequences will be applied and clarification of when the base of groundwater protection liability is applied.

There were also announcements relating to the orphan fund.  Firstly, Bulletin 2025-13 set out the orphan fund levy to be paid by licensees for the 2025/26 year.  Secondly, Bulletin 2025-41 announced changes to the working interest cost claim (WICC) process to “ensure fair and cost-efficient use of the orphan fund for WICC reimbursements”.  A WICC is submitted for a defaulting working interest participant’s share of incurred costs as per s. 70(1) of the Oil and Gas Conservation Act.

Finally, the AER announced updates to the mine financial security program to reflect changes made by the Government of Alberta’s Mine Financial Security Program.  This program applies to liability arising from coal and oil sands developments.  In particular, Manual 024: Guide to the Mine Financial Security Program was updated to include changes to valued reserves, asset calculation, timing of security contributions and public reporting requirements (for more on this topic, see our blog post here).

Rock-hosted mineral and geothermal operations

Since 2021, with the proclamation of the Geothermal Resource Development Act, the AER has been the regulator for geothermal operations. With the proclamation of the Mineral Resource Development Act, the AER became the regulator for brine-hosted minerals in 2023 and for rock-hosted minerals in 2024.  Brine-hosted minerals are found in underground saltwater and typically extracted through wells much like oil and gas whereas rock-hosted mineral extraction uses traditional mining or quarrying processes.[2] 

Several bulletins announced updates to address the AER’s expanded mandate for these activities:

As well, it is noteworthy that the AER released several documents to address the liability process as it relates to rock-hosted mining operations (see Bulletins 2025-38 and 2025-43).  This includes Specified Enactment Direction 005: Rock-Hosted Mine Liability Process and Manual 033: Rock-Hosted Mine Liability Process – Mine Liability Estimation Tool User Guide.

Image of Oil refineries with gas flaring by Chris Liverani on unsplashed.com
Image of Oil refineries by Chris Liverani on unsplashed.com

Flaring, emergency planning, pipelines, and well abandonment

A variety of other regulatory changes were made to various operational matters under the purview of the AER.  A particularly significant change is that the provincial solution gas flaring limit was removed as per Ministerial Order 15/2025 (see Bulletins 2025-2,  2025-15 and 2025-21).  This change was reflected via revision to Directive 060: Upstream Petroleum Industry Flaring, Incinerating, and Venting.  Solution gas flaring is the controlled burning of natural gas that is dissolved in crude oil (which can include a variety of gases including methane).  Prior to this Ministerial Order in June 2025, a revised version of Directive 060 had been released in April 2025 and maintained limits on the allowable level of solution gas flaring.[3]  With the removal of those limits, there is a good chance that the wasteful and polluting practice of solution gas flaring – which includes methane combustion – will increase (for some more information on methane regulations, see our 2018 blog posts here and here).

While not an AER development, it should be noted that the federal government introduced revised methane regulations, along with background and explanatory information in December.  These regulations amend existing federal methane regulations made under the Canada Environmental Protection Act, 1999. For additional commentary, see David Thurton, “Ottawa releases plan to slash methane pollution, as new footage shows the extent of the problem” (December 16, 2025) CBC News. Under the recent MOU signed between Alberta and Canada, the governments are to enter into a methane equivalency agreement by April 2026 with a 2035 target date.  Thus, it is not clear that the federal methane regulations will apply in Alberta.

There was also a revision of Directive 039: Revised Program to Reduce Benzene Emissions from Glycol Dehydrators (see Bulletin 2025-20) to clarify reporting requirements for methane on the required annual dehydrator benzene inventory form.  A licensee is required to report the annual mass of methane released in kilograms for each dehydrator operated in a calendar year.

There were several developments relating to emergency planning and preparation.  A new model for calculating emergency planning zones for sour wells and pipelines – called AERH2S – was released for immediate use (see Bulletin 2025-34).   As well, revised versions of Directive 071: Emergency Preparedness and Response and Manual 026: Emergency Preparedness and Response Guide (see Bulletin 2025-39).  These revised editions are not yet in force, as the AER is awaiting further regulatory changes to the associated rule.  Under the revised directive and manual, every approval holder will be required to develop an emergency management program and use the AER’s incident command system, and to identify potential emergency scenarios. As well, the scope of Directive 071 has been expanded to include all operations (not just active operations) under the Oil and Gas Conservation Act, the Pipeline Act, the Oil Sands Conservation Act, the Geothermal Resource Development Act, the Coal Conservation Act and the Mineral Resources Development Act.

The new Specified Enactment Direction 004 was published in July (see Bulletin 2025-24) to set out application requirements for AER-regulated pipelines that require an approval under the Environmental Protection and Enhancement Act.  It also sets out postconstruction reclamation assessment reporting requirements for these pipelines.  It is also noted that the AER issued revised Pipeline Rulesin October (see Bulletin 2025-36) to make changes that clarify definitions and ensure consistency in terminology, as well to align with CSA Group pipeline standards.

Finally, the AER published a new edition of Directive 020: Well Abandonment(see Bulletin 2025-19).  Under this revised directive, operators are allowed to use AER-approved alternative materials as capping materials in certain routine abandonments.  Well abandonment is the process of permanently sealing and taking a well out of production (but it does not mean that the well-site has been remediated and reclaimed).

Looking forward to 2026

There are quite a few things to keep an eye on in 2026.  A couple of these items are proposals that the AER recently sought feedback on:

  • In October, the AER published an invitation for feedback on proposed revisions to the closure nomination process that appears in Directive 088 (see Bulletin 2025-32). and, as such, changes are likely to appear in Directive 088 in early 026.   
  • The AER has proposed revisions to Directive 058: Oilfield Waste Management Requirements for the Upstream Petroleum Industry (see Bulletin 2025-30) and a new manual addressing oilfield waste management. 

For both of these proposals, the public feedback opportunity closed in November, so it is likely that changes will be seen in early 2026.

Another matter that may continue into 2026 is the Coal Industry Modernization Initiative (CIMI).  In 2020, the Government of Alberta announced a decision to rescind a long-standing policy around coal development in the Eastern Slopes (the 1976 Coal Policy).  This led to public outcry, reinstatement of the policy, and some abrupt shifts in policy which triggered litigation (for more, see our blog posts here, here, here, here, and here). 

In Bulletin 2025-03, the AER announced a new direction for coal activity in the Eastern Slopes arising from Ministerial Order 003/2025.  This order confirmed that the 1976 Coal Policy was reinstated and gave directions to the AER to lift the suspension of all approvals and to extend expiry dates to account for the period of suspension (those suspensions had been imposed as a result of previous Ministerial Orders 054/2021, 093/2021 and 002/2022 which were rescinded by Ministerial Order 003/2025).  It is possible that there may be more to this story to come in 2026, perhaps litigation or regulatory changes.

Another matter which is sure to develop further in 2026 is the Government of Alberta’s Mature Asset Strategy (MAS) (see our blog here).  The MAS is intended to create an approach to managing Alberta’s aging oil and gas infrastructure.  Given that the strategies and recommendations set out in the MAS are quite vague, many of which are an intention to establish future working groups, it is clear that further development of the MAS is needed. In addition, once MAS strategies and recommendations have been clarified, it is very likely that regulatory and policy changes will be implemented.

A final matter to keep an eye on in 2026 is an appeal of a decision by the AER’s Chief Executive Officer to cancel a public hearing in relation to a coal mine.  As parties granted participant status in the scheduled public hearing on the coal mine, Alberta Wilderness Association (AWA) and the Canadian Parks and Wilderness Society (CPAWS) sought permission to appeal the AER Chief Executive Officer’s decision to cancel the public hearing.  In late November, the Court of Appeal granted AWA and CPAWS permission to appeal that decision. As such, more developments should be expected in 2026.

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[1] Alberta Energy Regulator website online: https://www.aer.ca/regulations-and-compliance-enforcement/liability-management-programs/holistic-assessment-and-licensee-capability-assessment.

[2] Alberta Energy Regulator website online: https://www.aer.ca/understanding-resource-development/resource-development-topics/mineral-resource-development.

[3] For more information, see Amanda Bryant, Comments on Red Tape Reduction Changes to Directive 060 (Calgary: 2024, Pembina Institute).

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