The CAPL Operating Procedure & Unconventional Resource Projects/AIPN JOA
A question that sometimes arises relates to whether the CAPL Operating Procedure is suitable for unconventional resource projects. The PDF materials below address that topic in two 2009 Negotiator articles, my 2011 CAPL Conference Presentation on unconventional projects and two presentations I made to the Calgary chapter of the AIPN.
The primary focus in the 2015 update was to offer a step change in approach that would enhance greatly the functionality and flexibility of the 2015 document to accommodate more complex projects. It reflects many of the topics noted in my earlier comments about the post-2007 “shale revolution” by offering users a more appropriate foundation for shale projects without attempting to predict or prescribe detailed project specific development processes that are more appropriately left for the parties to negotiate for their particular circumstances.
The 2015 updates to the CAPL Operating Procedure were designed to offer the more typical users with modest sized land bases a much better foundation from which to drill longer reach wells and to initiate at least their early-stage work. The “waiting functionality” approach contemplated in the document allows users to append customized modules that can evolve over time to address their needs as the project advances to development. For users that choose to use that approach, this may be through such steps as the inclusion of customized provisions respecting multiple well drilling programs and subsequent modifications to address a pilot development or a broader development vision and, perhaps over time, additional modules respecting decision making processes and annual budgets. And some of those projects (but certainly not all) might evolve in ways in which the scale of the potential project ultimately warrants the full scale AIPN Unconventional Resources Operating Agreement (“UROA”) project-based development approach.
The net effect is that I do not believe that either the CAPL Operating Procedure or a Canadian version of the AIPN UROA is a “one size fits all answer” for all unconventional projects. Instead, I believe that each of them has its place and that the real objective must always be to provide users with appropriate tools through which to advance their projects in the context of their own circumstances. It is reasonable to expect, for example, that parties with a 400 section (~100,000 hectare) development area that involves international financing would have a very different perspective than a group of small to medium sized Canadian companies with a potential 20 section (~5,000 hectare) development area.
2009 Negotiator Articles on Unconventional Projects
2011 CAPL Conference Presentation on Unconventional Projects
2012 AIPN Presentation on CAPL and Canadian Unconventional Projects
2017 AIPN Presentation Providing a Context on CAPL Relative to AIPN