2023/ 24
Annual ReportContents

1

7

12

ABOUT USMESSAGESKEARL INCIDENTEVALUATION

15 36 38
HIGHLIGHTSLOOKINGAHEAD

FINANCIALSAN ACKNOWLEDGEMENT
In the spirit of reconciliation, the AER acknowledges that our head
office is in the traditional territories of the peoples of the Treaty 7
region in Southern Alberta. This includes the Blackfoot Confederacy:
the Siksika, Piikani, and Kainai First Nations. Treaty 7 also includes the
Tsuut’ina Nation and the Stoney Nakoda: the Chiniki, Bearspaw, andWesley First Nations. The City of Calgary proper, Mohkinstis, is also
home to the Métis Peoples of the Battle River Territory, Métis District 5,
Calgary Nose Hill, and Métis District 6, Calgary Elbow.
We also have field centres on the traditional territories of Treaty 6 andTreaty 8, and all other territories of the Métis Nation of Alberta.

ALBERTA ENERGY REGUL ATOR

Our Mandate

Our Vision
The AER is a trusted regulator thatdelivers effective and efficient
oversight of resource development.

ii

2023/24 ANNUAL REPORTOur mandate is to provide for the efficient,safe, orderly, and environmentally
responsible development of energy andmineral resources in Alberta throughour regulatory activities. This includes
allocating and conserving water resources,
managing public lands, and protecting theenvironment while providing economic
benefits for all Albertans.

ALBERTA ENERGY REGUL ATOR

What We Regulateovernearlyoverover

447 000

157 000

26 000460

kilometresof pipelines*

operating natural gas
and oil wells

oil facilities

operating gas
processing plants

over

157

26

160

18 000gas facilities

operating oilfield waste thermal recovery
management facilities
in situ projects

overprimary/enhanced
recovery in situ
projects

85operatingoil sands mines

55

operatingbitumenupgraders

operatingcoal mines

decommissioned
coal mines

1

1

6

35

decommissioned coalprocessing plant

geothermalwellbrine-hosted
mineral facilities
and wells

rock-hosted
mineral surface
mines

What We Don’t
gasoline

pipelines thatcross borders

electricity

regulatednatural gas rate

*Operating, permitted, abandoned, and discontinued. We also provide inspection and incident
response support for 12 000 kilometres of pipelines regulated by the Alberta Utilities Commission.

AS OF MAY 2024
2023/24 ANNUAL REPORT

iii

ALBERTA ENERGY REGUL ATOR

About Us
iv

2023/24 ANNUAL REPORTALBERTA ENERGY REGUL ATORABOUT USThe sector the AER regulates is vast, complex
and the largest contributor to Alberta’s economy;
it includes crude oil, natural gas, coal resources,
geothermal, minerals, and an extensive pipeline networkthat moves these resources to markets. Ensuring thatcompanies operate in a safe, efficient, orderly, andenvironmentally responsible manner is no simple task.
Enter the AER, the primary regulator for energy andmineral resource development in Alberta. Few organizations
anywhere are responsible for regulating as large andvaried a mix of energy and mineral resources.

Around the Province
Wood Buffalo
National Park

Treaty 8Fort McMurray
Regional Office

Slave Lake
Regional OfficeGrande Prairie
Field Centre

We oversee extensive established reserves:• 1.8 billion barrels of conventional oil• 158 billion barrels of bitumen• 24.3 trillion cubic feet of natural gas• 36 billion tons of coal

Edmonton Regional Office &Alberta Geological Survey

JasperNational
Park

Drayton Valley
Field Centre

Our mandate officially expanded in 2022 and again in
2023. And with that, new rules and requirements werereleased to support the life-cycle regulation of deep
geothermal resource development and brine-hosted
mineral resources (minerals, such as lithium, extracted

conventional oil

Treaty 6
Red Deer
Field Centre

Banff
National
Park

In 2023, the production value of Alberta’s energy
sector totalled $136 billion.

Established 1.8B bbl
Reserves

Bonnyville
Field Centre

158B bbl
bitumenCore Research Centre
Calgary Head Office

Treaty 7
Medicine Hat
Field Centre

980

10

employees

locations

Permanent employees. Does not include students,
contingent workers, or limited term employees.

24.3Tcf 36B tons $136B Cdn
natural gas

coal

production value

2023/24 ANNUAL REPORT

1

ALBERTA ENERGY REGUL ATORABOUT USthrough well infrastructure). In 2024, we also became
the regulator of mineable minerals known as rockhosted minerals (e.g., limestone). This included thetransition of 35 quarries, 170 metallic and industrial
mineral exploration approvals, and 5 brine-hosted
facilities from other government agencies.

and the Aboriginal Consultation Office. Our statutory
powers, mandate, and functions are governed
under two ministries, who establish policies that we
implement. We also assist government with policy
development, providing analysis, advice, and technicalexpertise as required.

To produce and move energy to market requires morethan 157 000 natural gas and oil wells, nearly 447 000
kilometres of pipelines (about half of Canada’s entire
pipeline network), over 44 000 oil and gas facilities,
5 operating oil upgraders, as well as 5 operating coalmines. We are a full-life-cycle regulator, responsible
for all stages of development—from exploration andproduction to closure and reclamation.

Through legislation, the Government of Alberta
gives us the authority to ensure that the province’s
energy resources are developed safely and in anenvironmentally responsible manner, minimizing
waste. We’re involved at every stage of an energy
resource development’s life cycle.

The Government of Alberta created the AER in 2013
when it proclaimed the Responsible Energy Development
Act. We are accountable to the ministers of Alberta
Energy and Minerals and Alberta Environment andProtected Areas and work closely with other government
departments on regulatory and policy issues, including
Alberta Municipal Affairs, Alberta Indigenous Relations,

Since 1938, Alberta has relied on strong regulation
to ensure that our energy resources are developed
responsibly. Our regulatory decisions are always basedon evidence and supported by science, and we strive
to balance the needs of many Indigenous communities
and stakeholders. The AER works to protect whatmatters to Albertans—public safety, the environment,
orderly energy development, and providing economic
benefit for Albertans and all Canadians.

The AER works to protect whatmatters to Albertans – public
safety, the environment, orderly
energy development, andproviding economic benefit for
Albertans and all Canadians.

22023/24 ANNUAL REPORTALBERTA ENERGY REGUL ATORABOUT US

Board ofDirectors

David Goldie, Board ChairDavid Goldie is a director and independent consultant withover 35 years of experience in the energy industry. He holds
a B.Sc. in Geophysics from the University of Waterloo, a MBAfrom the University of Calgary, is a member of the Institute ofCorporate Directors (ICD) and holds the designation of ICD,
Director (ICD.D.).

Corrina Bryson, Board Director
Corrina Bryson has over 25 years of experience in the energy
industry and currently serves on the Boards of the CanadaNova Scotia Offshore Petroleum Board and the Alberta
Petroleum Marketing Commission. She holds a B.Eng. and
M.Eng. in Chemical Engineering with Management from the
University of Bradford in England and is a P.Eng. in Alberta, is amember of the Institute of Corporate Directors (ICD) and holds
the designation of ICD, Director (ICD.D.).

Jude Daniels, Board Director
Jude Daniels has extensive experience as an oil and gas lawyer,
Aboriginal consultation advisor, and has worked in the oil andgas sector since 1998. Ms. Daniels has her own consulting
company, which specializes in mediation, employment, andregulatory matters.

Georgette Habib, Board Director
Georgette Habib has a long record of public service andbrings over 30 years of experience in the regulation of theenergy industry. Ms. Habib currently serves as an independent
corporate director of the Alberta Electric System Operator.

2023/24 ANNUAL REPORT

3

ALBERTA ENERGY REGUL ATORABOUT US

Gary Leach, Board Director
Gary Leach has over 25 years of senior executive level experience in the oil and gas industry, including serving as presidentof The Explorers and Producers Association of Canada (EPAC).
His background in law supports a deep understanding of
regulatory issues affecting the energy industry.

Tracey McCrimmon, Board Director
Tracey McCrimmon has over 25 years of experience working
in the Alberta oil and gas industry. After obtaining her
designation in Petroleum Land Management, Ms. McCrimmon’s
career began in the land industry, where she worked as asurface landman for several years. This led her into fields
such as public consultation, aboriginal affairs, andstakeholder engagement.

Kasha Piquette, Board Director (until February 2024)
Kasha Piquette served as Deputy Minister, Environment andProtected Areas for the Government of Alberta. She was
entrusted with leading the work on Alberta Emission Reduction
and Energy Development Plan alongside Alberta ESG Secretariat.

Allison Rippin Armstrong, Board Director
Allison Rippin Armstrong is a biologist and environmental
scientist with over 25 years of experience in permitting,regulatory processes and environmental compliance, working
with indigenous organizations, resource companies, regulatory
agencies, indigenous, territorial, and federal governments.

42023/24 ANNUAL REPORTALBERTA ENERGY REGUL ATORABOUT US

Executive
Leadership
Team

Laurie Pushor, President and Chief Executive Officer
Prior to joining the AER, Laurie Pushor served as Deputy Minister for the Saskatchewan
Ministry of Energy and Resources from 2018 until 2020. He served as the Deputy
Minister for the former Ministry of the Economy from 2014 to 2018, and served
four years as Chief of Staff for several government departments in Saskatchewan,
including Social Services, Energy, and Health.
Martin Foy, Chief Operations Officer
In June 2020, Martin Foy became the AER’s Chief Operations Officer, having
previously served as vice president of both the Environment and Operational
Performance, and Industry Operations branches. He has 34 years of regulatory
experience leading people and managing natural resources. The Operations
Division is responsible for regulating the full life cycle of energy resource
development, from issuing approvals to managing closure and liability
Sean Sexton, Executive Vice President, Law Branch, and Counsel General
In May 2022, Sean Sexton became the executive vice president of the Law Branchand general counsel of the AER. He was previously the vice president of the Law
Branch, starting in 2018. He has extensive knowledge of the AER’s legal andregulatory environment.
Mike Dalton, Vice President, Finance, and Chief Financial Officer
Mike Dalton joined the AER in 2020, and is responsible for financial management,
supply chain, and real estate. Mike’s former employers include ATCO, Raytheon
Canada, Canadian Natural Resources and PricewaterhouseCoopers. Mike served
24 years with the Canadian Armed Forces.
Erin Kurchina, Vice President, People, Culture and Learning
Erin Kurchina joined the AER in 2020 as the Vice President, People, Culture andLearning. In this role, she is accountable for aligning business and people strategies,
adding value, and fostering corporate performance. Through human-centric leadership and strategic partnership, she oversees the development of talent programs
and creates a safe, inclusive, and empowering culture so that all employees canreach their full potential and contribute to AER’s success.

2023/24 ANNUAL REPORT

5

ALBERTA ENERGY REGUL ATOR

Energy Outlook 2023
Crude
CrudeOil
Oil
Totalcrude
crudeoiloil
Total
production
production

Wellsplaced
placedWells
onproduction
production
on

5%
5%

20%
20%

3
3 3 m
(81.41010
/d)
(81.4
m3/d)

Deliveriesof
oftotaltotaloiloil (including(including bitumen)
bitumen)Deliveries

WTIcrudecrude
WTI
oilprice
price
oil

85% Removals
Removals fromfrom Alberta
Alberta
85%
Remains inin Alberta
Alberta
15% Remains
15%

18%
18%

(2760)(2760)(US$77.62/bbl)$77.62/bbl)(US

Marketablegas
gas
Marketableproduction
production

Wellsplaced
placedWells
onproduction
productionon

AECO-CAECO-Cnaturalgas
gasprice
pricenatural

2%
2%

3%
3%

NaturalGas
Gas
NaturalCrudeBitumen
Bitumen
Crude
Mineable
Mineable
production
production

3%
3%

situ
InInsitu
production
production

4%
4%(Cdn$2.74/GJ)$2.74/GJ)(Cdn

Numberofof
Numberofof
NumberNumberoperating operating
operatingthermal
thermaloperatingmines
situschemes
schemesmines
ininsitu

3
3
3
3
3 /d)
3
3 /d) (281.0 10(266.01010/d)(266.0mm/d) (281.0 103 mm

40% Removals
Removals fromfrom Alberta
Alberta
40%
RemainsinAlberta
60% Remains in Alberta
60%

46%
46%

(921)
(921)

3
6 6 m
(315.01010/d)(315.0m3/d)Deliveriesof
ofgas
gas
Deliveries

88

26
26

Natural Gas
Gas Liquids
Liquids
NaturalEthaneEthanePropanePropaneButaneButanePentanes plus
plus
Pentanes

3%
3%

1%
1%

1%
1%

1%

3
(22.9 101033 mm33/d)/d) (58.9(58.9 101033 mm33/d)/d)(36.310103 3mm3/d)/d) (37.4(37.4101033m
m33/d)/d) (22.9(36.3

EmergingResources
Resources
Emerging

Capital Expenditures
Expenditures
CapitalLithium
HeliumHydrogen
Geothermal
Lithium
HeliumHydrogen
Geothermal
production
production
production
electricity
generation
production electricity generation production production

Oilsands
sands
Oil
investment
investment(2.51010
6
(2.5
t) t)

(Cdn
(Cdn
(Cdn
(Cdn
(Cdn
(Cdn
$13.2
billion)$15.6
billion)$29.5
billion)$13.2 billion) $15.6 billion) $29.5 billion)

2%
2%
6

204%
204%

(21.9GWh)
GWh)
(21.9

0%
0%

0%
0%

3
3
(0.01010(2.110103 3mm3/d)
/d)
3 t)
(0.0
t) (2.1

EnergyProduction
ProductionForecast
Forecast
Energy11%11%62023/24 ANNUAL REPORT

Production
Production(million(millionbarrels
barrelsper
perday
dayofoflight-medium
light-mediumcrude
crudeoiloilequivalent)
equivalent)

Production (petajoules)
Production (petajoules)000
8.0
1818000
Historical
Forecast
8.0
Historical
Forecast
16000
7.0
16 0007.0000
6.01414000
6.0
12 000
12 0005.0
5.0
10 000
10 000
4.0
4.0
8 000
8 000
3.0
6 000
3.0
6 000
2.0
4 000
2.0
4 000
1.0
2 000
1.0
2 000
0
0
0
0
2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033
2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033

Oil&
&gas
gas
Oil
investment
investment

6%
6%

Total
Total value
value of
of
Total
Total
investment production
production
investment

2%
2%

19%
19%

(Cdn
(Cdn
$136
billion)$136 billion)

LegendLegendCoal
Coal
Crude oil
Crude oil
Natural gas
Natural gas
Nonupgraded bitumen
Nonupgraded bitumen
Upgraded bitumen
Upgraded bitumen
NGL
NGL
Wind, geothermal, andWind, geothermal, andother renewables
other renewables

ALBERTA ENERGY REGUL ATORMESSAGES

Messages

2023/24 ANNUAL REPORT

7

ALBERTA ENERGY REGUL ATORMESSAGES

Hello,As my term as Board Chair nears its end,
I am very pleased to reflect on almost five
years with AER. It has been a great honour
to serve on the AER Board.

When I joined in September 2019, I did so during atime of unprecedented change and uncertainty forthis organization and AER employees. We were given
a mandate to reform the AER’s governance, streamline
the organization, and make it more efficient.
I am proud to say these goals have been accomplished.
Under the Board’s direction, we reviewed the industry
funding level that supports the AER, hired a new CEO,initiated a major corporate-wide restructuring tostreamline operations, updated the board’s mandate
and the organization’s governance roles documents forclarity and proper oversight, and sharpened our focus
on four key priorities.

1

Taking care of
our people

3

Enhancing ourregulatory
framework

2

Strengthening ourcredibility and trust

4

Leading operational
effectiveness andinnovation

It is a credit to our talented team, exceptional leadership, and highly committed Board members that the
AER has progressed so successfully through this periodof extraordinary change.

In 2023-24, we stayed focused on ensuring our regulatory framework is efficient, adaptive, and innovative
while supporting the energy transition with our
expanded mandate to regulate emerging resources.
We also acknowledge that in some areas we haven’t
met our own high standards.
Last year’s events at Kearl Lake, and the subsequent
Deloitte report on improvements we can make at
the AER, served as a reminder that creating an evenstronger and more effective regulatory system is an
ongoing continuous improvement journey.
We will learn and grow from these events, and theoutcome will be an even better regulator that serves all
Albertans. And that’s my greatest hope for the AER.
As I draw near on the end of my time as Board Chairon September 1, 2024, I want to say that serving inthis role has been a privilege. I wish the team and theBoard continued success under the leadership of ourincoming Board Chair Duncan Au, whose term begins
on September 1, 2024.
We’ve come a long way, and I know the AER is up forthe challenge of what comes next.
David Goldie CHAIR, BOARD OF DIRECTORS

82023/24 ANNUAL REPORTALBERTA ENERGY REGUL ATORMESSAGES

Greetings,

We can characterize the past year at the AER as
being equal parts progress and growth.
Through the dedication, skill, and passion of ourpeople and driven by our values of accountability,transparency, trust and respect, and collaboration,
we have achieved several milestones.
You’ll read about many of those on the pages that
follow, but they include the Government of Alberta
expanding our mandate to include regulating Alberta’s
burgeoning minerals sector and the publishing of our
first ever liability management performance report as
we continue to bend the curve on industry’s outstanding
inactive liability in the province.
Data from our industry performance program
demonstrate that our regulatory activities on behalf ofAlbertans are delivering positive results:• Across Alberta’s energy industry, companies are using
less water today than what is allocated to them toproduce oil and gas.
• The total amount spent by oil and gas companies on
closure in recent years has nearly doubled, from atarget of $422 million in 2022 to $700 million in 2023,
exceeding the Directive 088 requirements by 65%.
• The Government of Alberta set out to reduce oil andgas methane emissions by 45% from a 2014 baselineby 2025. Reported and estimated emissions from2022 show a 45% reduction in methane emissions
from 2014 levels, well ahead of the planned timeline.
It was also a year of listening to Indigenous communities and stakeholders across the province to take invaluable lessons about our incident and emergency

management systems as well as the approaches andtools we use to engage and inform.
In September 2023, we accepted and began acting on
recommendations from an independent third-party
review by Deloitte of our internal processes andresponse to events at Imperial’s Kearl oil sands facility
in 2022 and 2023.
I am confident these improvements will clarify andmature our processes while preparing us to better
meet the expectations of Indigenous communities
and stakeholders across the province. We continue
to actively engage to strengthen these important
relationships through listening, conversation, andengagement. This ongoing dialogue helps inform ourdecisions and fosters better understanding of ourapproach to responsible energy resource development.
I’ll close with a note of sincere thanks to our high-performing team for their continued dedication in serviceof the AER mandate. Thanks also to our many partners
and stakeholders across the province for being a partof our journey. Rest assured that we are committed
to working every day to building—and rebuilding—credibility and trust with all of you.
Laurie Pushor PRESIDENT & CEO
2023/24 ANNUAL REPORT

9ALBERTA ENERGY REGUL ATORFEATURE

BUILDING RELATIONSHIPSAs we look to continue to renew and rebuild our relationship withFirst Nations and Métis communities, we will also continue to evolveas an organization. We will take every opportunity to learn and growfrom the two incidents that led to the February 2023 filing of anenvironmental protection order against Imperial Oil at its Kearl Lakeoil sands operation, and we will be more transparent about our actions.
Central to our approach is recognitionof the significance of Indigenous
knowledge, values, and perspectives.
This acknowledgement is rooted in
the landmark publication Voices ofUnderstanding, which is premised on
the guidance and insights provided
by Dr. Reg Crowshoe, an esteemed
Indigenous elder. The book serves
not only as a guide, but as atestament to the AER’s commitment
to listening and learning from
Indigenous communities.
And guided by the principles
outlined in Voices of Understanding,the AER’s 2022–25 strategic plan
identified the development of an
Indigenous relations plan as a toppriority. Since then, the organization has been diligently working
to translate these principles into
tangible actions aimed at building
trust and fostering collaboration.

10

2023/24 ANNUAL REPORTOne notable achievement was thecompletion of foundational training
in Indigenous Relations by 99%
of our employee population. Thisinitiative underscores the organization’s commitment to fostering
cultural competence among its
workforce, laying the groundwork
for authentic interactions with
Indigenous communities.
Another highlight was the hostingof an Elders Circle, with Elders
from Treaties 6, 7, and 8 in Alberta.
Through these gatherings, wesought to expand our relationships
with Indigenous communities,
leading to shared understanding
and respect.
We implemented initiatives within
our Indigenous relations plan,
identifying formal and experiential
learning opportunities to deepen

ALBERTA ENERGY REGUL ATORFEATURE

our understanding of Indigenous
worldviews and enhance interculturalcompetencies, such as the blanket
exercise and reconciliation-focused
panel discussions featuring
Indigenous employees, Indigenous
elders, and Indigenous leaders. We
observed culturally significant days
such as Red Dress Day, the Moose
Hide campaign, National Indigenous
Peoples Day, and National Truth
and Reconciliation Day.
Executive engagement with
Indigenous leaders further
underscores our commitment tomeaningful dialogue and collaboration. Our executives actively
participated in cultural celebrations,such as Fort McKay Treaty Days andTreaty 8 Celebration, and engaged
with Indigenous communities
across Alberta, from the northernreaches to the southern expanseof the province.
In tandem with these efforts,
we extended our outreach to
Indigenous communities and ruralmunicipalities, recognizing theimportance of ongoing dialogue
and collaboration. Throughface-to-face interactions, andvirtual meetings, we will continue
to address the issues and needs ofthese communities, ensuring that
their voices are heard and valued.
We continue to strengthen ourpartnership with the Indian
Resource Council (IRC) through amemorandum of understanding—a testament to the organization’scommitment to fostering meaningful partnerships grounded inmutual trust and respect.

At the AER, we will continue
to build on what we learn tosupport informed decision
making, demonstrate ourapproach to responsible energy
resource development, andhelp strengthen relationships
and understanding with Alberta’s
First Nations and the Métis
within their interaction withenergy resource development.

2023/24 ANNUAL REPORT

11

ALBERTA ENERGY REGUL ATORKEARL INCIDENT

Kearl
Incident
Evaluation

Detailed Findings and the AER’s Response

122023/24 ANNUAL REPORTALBERTA ENERGY REGUL ATORKEARL INCIDENTOn February 6, 2023, our board of directors engaged
an independent third-party, Deloitte LLP, to conduct
a comprehensive review of the AER’s actions leading
up to and following the incident, to better understandthe concerns expressed by Indigenous communities,
Regional Municipality of Wood Buffalo, and other interested groups after the environmental protection order
was issued.Deloitte’s review encompassed the AER’s
incident response processes, communication activities,
emergency response procedures, incident investigation
protocols, and compliance and enforcement processes.
Deloitte’s report recommended key areas for
improvement within the AER’s incident response andcommunication frameworks. In response, our boardof directors has fully accepted all findings andrecommendations. AER management is currently
working on a robust implementation plan, actively
responding to recommendations while continuing tofortify regulatory oversight and ensure the safety andwell-being of Alberta’s communities and environment.
Deloitte will continue to work with the AER to trackprogress and provide external oversight with atarget completion date of December 2024 for all
recommendations. The board of directors remain
accountable for internal oversight.

The scope of the Deloitte review included only the
AER’s internal incident response. With respect to theincident itself, the AER is conducting an investigationin accordance with its statutory authority, which is
ongoing.

Deloitte’s Findings
and Our Response
Incident and Emergency Response

This workstream is enhancing internal documentationthat guides our activities and actions during incident
and emergency response, including process mapping,call-down procedures, escalation criteria, and consistentuse of the incident and emergency definitions areapplied in all regulatory contexts.

Compliance and Enforcement

In this focus area, the AER is working on the Statutory
Decision Making Guide and the Order Procedure
to clarify the definition of significant impacts andstandard timelines for Environmental Protection
Orders (EPOs).

Response

Feb. 6, 2023

Mar. - Sept. 2023

Nov. 2023 - 2024

environmental protection order issued

independent third-party review

continued work to track progressand external oversight2023/24 ANNUAL REPORT

13

ALBERTA ENERGY REGUL ATORKEARL INCIDENTEngagement and Communication

This workstream is improving the AER’s incident
response communication. Focus is on updating
information-sharing guidelines and defining
communication incident roles, responsibilities, andinternal protocols. A risk-informed decision-making
process, informed by engagements to better
understand how incidents may impact Albertans,is being established in addition to defining internal
communication escalation protocols, such as whento bring in our Board of Directors.

Oil Sands Oversight

The Deloitte review identified a need to increase
the AER’s capacity in areas such as additional review
and field inspection of oil sands mining approvals,
community education, and joint inspections with
Indigenous communities. As that work continues,
we have recruited a new Director of Field Operations& Response, Oil Sands Mining, added inspector
capacity to increase our field presence with focus
on inspecting oil sands development and its related
activities, as well as adding additional technicalspecialists in hydro-geology, limnology, and wetlands.

Communication andEngagement Protocols
Relevant, effective, streamlinedMore risk-informed understandingof impacts on Albertans
Define higher-level decision escalations
Define when board informed

14

2023/24 ANNUAL REPORT

Increase Review Capacity
Additional review of oil sands
mining approvals
Approval conditions
Community education
Joint inspections with Indigenous
communities

ALBERTA ENERGY REGUL ATORHIGHLIGHTS

Highlights

2023/24 ANNUAL REPORT

15

ALBERTA ENERGY REGUL ATORHIGHLIGHTS

To keep Albertans informed, we report on how wellindustry complies with our requirements, ourmanagement of liabilities and inventory reduction,and our application processing metrics.

Overseeing Industry Compliance
Inspections and Compliance Rate

We regularly monitor and inspect thousands of wells,
production and processing facilities, pipelines, and coaland oil sands mines annually to ensure that companies
follow our requirements and safely develop energy
resources in a manner that protects the environment.
We do this by visiting energy sites to inspect a company’s
activities and auditing the information they provide.
In 2023/24, we conducted 9500 inspections, of which
72% resulted in a satisfactory compliance finding, with
2646 notices of noncompliance issued. In addition,
we audit all aspects of energy development toconfirm that industry follows specific operational andreporting requirements. In 2023/24, we performed
4300 audits and issued an additional 1585 notices ofnoncompliance. Regular inspections and audits provide
us with important information that strategically focuses
our attention where it’s needed most.

Investigations and Enforcement

If we find that a company is not following ourrequirements, we’ll apply one or more of ourcompliance and enforcement tools to educate thecompany and correct the noncompliance. These tools
range from notices of noncompliance to orders. Orders
are important tools to prevent, stop, or minimize
environmental effects or risks to public safety. During2023/24, we issued 235 orders.

162023/24 ANNUAL REPORT

Major investigations are formal evidence collection
processes that must follow established legal
procedures to ensure the integrity of the investigation.
Investigations can take anywhere from three months
to two years to complete. When noncompliance isdeemed serious, it is triaged for investigation. When an
investigation is completed and if there is a finding of
noncompliance, an appropriate enforcement action is
selected. Enforcement tools range from warning lettersto prosecution. The tools we use vary depending on
the significance of the noncompliance. In 2023/24,
fines from creative sentences and penalties totalled$718 000. Since 2017, administrative penalties andprosecution creative sentencings fines have totalled$4 727 850.
Regardless of the compliance and enforcement action
we take, our goal is to work with companies to bringthem back into compliance, to ensure public safety,
and to protect the environment. We publicly report onenergy incidents and enforcement actions through ourCompliance Dashboard on aer.ca.

Investigation Results 2023/24

23

15

investigations
openedenforcement
actions

4

4

7

administrative
penalties

prosecutions
with fines

warning
letters

ALBERTA ENERGY REGUL ATORHIGHLIGHTS

Emergency Management

We have staff on call to support incident response
24 hours a day, 7 days a week, 365 days a year.
Emergencies are ranked, as outlined in Directive 071,
as an alert or a level 1, 2, or 3 emergency based on therisk level to members of the public or the environment.
In 2023/24, the following occurred:• 56 energy-related emergencies were reported to the
AER: 51 level 1, 3 level 2, and 2 level 3.
• Emergency response staff were deployed to 14
emergencies (emergency response staff are deployed
to some level 1 emergencies and to all level 2 andlevel 3 emergencies), which included approximately
36 days of deployment to the provincial emergency
coordination centre to support the 2023 Alberta
wildfires.
• We evaluated 21 emergency response plan exercises
and completed 106 emergency response plan audits,
resulting in 54 notices of noncompliance issued.
• We conducted extensive engagement to understandthe multiple perspectives on emergency preparedness
and response needs related to energy development.
This engagement will inform the implementationof our newly revised requirements in Directive 071:
Emergency Preparedness and Response.

Methane Emission Reduction
The Government of Alberta set out to reduce oil andgas methane emissions by 45% from a 2014 baselineby 2025.
New methane emissions reduction requirements
established in 2020 by the AER set industry on a pathto achieve that target. Our effective regulation alongwith industry compliance resulted in the target being
achieved three years early, as the Government ofAlberta was able to announce November 28, 2023.
Reported and estimated emissions from 2022 show a
45% reduction in methane emissions from 2014 levels.
In 2023/24, we achieved the following:• conducted aerial surveillance on 388 facilities (making
a total of 6271 facilities surveyed since the start of theaerial surveillance program)• inspected 1219 facilities, of which 82% were compliant• conducted 345 methane audits, of which 52% werecompliant. Audits target and prioritize the highest risksites, equipment, and/or companies, therefore it ismore likely to result in a notice of noncompliance.

Methane Emissions Reduction
2014‒2245%2023/24 ANNUAL REPORT

17

ALBERTA ENERGY REGUL ATORHIGHLIGHTSManaging Energy Liabilities
Energy companies in Alberta are responsible for
ensuring their infrastructure and sites are safely closed
and cleaned up. The closure work required to meet
end-of-life obligations and the costs associated with it
are called “liability.”
We continue to implement the Government of Alberta’s
liability management framework and update ourrequirements to ensure the oil and gas industry meets
its end-of-life obligations. This includes the following:• Directive 067: Eligibility Requirements for Acquiringand Holding Energy Licences and Approvals includes
financial requirements that allow us to assess thecapabilities of oil and gas operators to meet theirregulatory and liability obligations throughout theenergy resource development life cycle.
• Directive 088: Licensee Life-Cycle Management
introduced the licensee management program, theinventory reduction program, and the holistic licensee
assessment that considers more than 40 different
factors, including the company’s financial and liability
risk; the company’s administrative, operational, andclosure performance; and the remaining lifespan of
the resource.
• Manual 023: Licensee Life-Cycle Management wasdeveloped alongside Directive 088 to provide details
and clarity around the new programs.

End-of-Life
Obligations

18

2023/24 ANNUAL REPORTIn January 2024, we published the 2022 Liability
Management Performance Report. The online reportis the first of what will be an annual publication on
how the conventional oil and gas sector manages theclosure and cleanup of oil and gas wells, pipelines, andother facilities across the province.
The report shares how specific licensees and industry
as a whole are meeting their end-of-life obligations.

Stages of Closure

1

Inactive

information andnot produced forgroundwater.

Well/facility has
6‒12 months.

2

Decommission

4

Permanently

wellbore. Remove
equipment.

3

Environmental
Site Assessment
Review historicallicensee management andassessment, inventory reduction

Remediate (ifneeded) Clean up

any contaminated soil

plug and cut/cap

Directive 067 Directive 088
financialrequirements

assess soil andand groundwater.

5

Reclaim

Redistribute soils andrevegetate the site

for eventual returnto equivalent state.

Manual 023
details and clarity
on new programs

ALBERTA ENERGY REGUL ATORHIGHLIGHTS

2023/24 ANNUAL REPORT

19

ALBERTA ENERGY REGUL ATORHIGHLIGHTS

Reducing Inactive Inventory
A minimum mandatory closure spend for all oil and gas
companies with inactive liability is part of Directive 088
and the Inventory Reduction Program to facilitate
the closure of inactive wells, pipelines, and facilities.
This program increases the amount of closure work
occurring in Alberta, reduces liability, and ensures more
timely land restoration to original or alternative uses.
All licensees with inactive inventory must meet anannual minimum mandatory closure spend. The closure
spend specifies the minimum amount of money thatlicensees are required to spend on oil and gas
closure work each year. Companies are encouraged
to collaborate using an area-based closure approach
to increase efficiency of development closure andcomplete more closure work.
Between January and December 2022, industry
reported spending $696 million, which exceeded
the requirement of $422 million by 65%. A further$185 million in closure work was completed by theindustry-funded Orphan Well Association, and an
estimated $383 million in grant funding came from theGovernment of Alberta’s Site Rehabilitation Program.
Altogether, over $1.2 billion was spent on closure workin Alberta in 2022.

Minimum
Mandatory
Closure Spend
Requirements
20

2023/24 ANNUAL REPORTIn 2023 and 2024, the industry-wide closure spend
requirements were set at $700 million for each year,
and the orphan fund levy was set at $135 million. The
2025 closure spend requirement will be announced in
the summer of 2024.

Closure Activities

Completing closure activities is the primary methodof reducing liability from inactive infrastructure andinvolves decommissioning infrastructure and site remediation and reclamation. All infrastructure and energy
development sites must be permanently and safely
decommissioned, assessed, remediated if necessary,and reclaimed, and the costs and responsibility for thiswork rests with industry.
There has been a significant increase in decommissioning
activity during the past two calendar years. In 2022,
11 080 wells were decommissioned and 7323 in 2023.
The increased closure activity is partly attributable tothe new AER minimum mandatory closure spend, theGovernment of Alberta’s Site Rehabilitation Program,$422 million$700 million$700 million

2022

2023

2024

Actual industry spend in 2022 was $696 million, exceeding requirements by 65%.

ALBERTA ENERGY REGUL ATORHIGHLIGHTS

which ended in 2023, and AER changes to allow someroutine abandonment of commingled wells. We issued
over 4100 reclamation certificates on wells and facilities
in 2023.

Orphaning and Insolvency

When an energy company ceases operations without
having properly closed its infrastructure, the AER willorder any party with a legal or beneficial interest inthat infrastructure to close it. These parties are known
as working interest participants. If there are no working
interest participants, the AER may designate the well,facility, or pipeline as an orphan to the Orphan Well
Association’s (OWA) care to be suspended, abandoned,
remediated, and reclaimed. More information on the
OWA can be found on their website.
The AER monitors the closure of sites where thelicensee is no longer active. This includes monitoring
active insolvencies, closure of orphan sites, and closureof defunct licensee sites by responsible parties.

As of March 31, 2024
7440 wells that remain subject to active
insolvency proceedings that could besold to a new responsible party or may
remain with the licensee if successfully
restructuring to continue operations.
2752 defunct licensee wells where
AER has ordered the remaining active
responsible parties (working interest
participants) to complete closure workthat the licensee failed to close.
10 558 orphan wells designated to beclosed by the OWA.
684 reclamation certificates obtainedby the OWA and working interest
participants on defunct licensee wells.

Closure Activity
increased decommissioning
activity in the last

2 years7323
wells decommissioned
in 2023nearly4500

reclamation certificatesissued in 2023

2023/24 ANNUAL REPORT

21

ALBERTA ENERGY REGUL ATORHIGHLIGHTS

Processing Applications
and Submissions
We have established application processing targets toensure we review applications in a timely and diligent
manner. We review over 90 different types of applications,and each type receives a target that reflects thecomplexity of the application process. Of the

34 744 applications processed in 2023/24, 21 389 wereclassified routine and 13 355 nonroutine (high risk andmore complex). We met our processing targets for
98% of routine applications and almost 96% of
nonroutine applications.

Activity Breakdown by Application Type in 2023/24

22

10 5632013

9900

record of site condition (RoSC)
submissions received

RoSCs requiring
review

Public Lands Act
applications received

8

1coal mines
inspected

geothermal well licenceissued (the AER’s firstunder GRDA)

Oil Sands Conservation
Act and Environment
Protection andEnhancement Act
applications reviewed

waste management andstorage applications
reviewed

72

3225

313

47

waste management andstorage audits conductedtemporary diversion
licences issued

Water Act approval
applications reviewed

new Water Act term
licences issued

2023/24 ANNUAL REPORT

over

250

133

ALBERTA ENERGY REGUL ATORHIGHLIGHTS

In 2023/24, we received nearly 2600 applications
related to the subsurface requirements specified in
the Oil and Gas Conservation Act and the Oil Sands
Conservation Act. We met our application timelines
even though volumes increased by relying on process
improvements, collaborative support, and enhanced
data usage.

We also enhanced our regulatory framework for carbon
capture, utilization, and storage (CCUS), including
Directive 065 application requirement updates. All CCUS
projects must meet our regulatory requirements before
being allowed to inject CO2 into the deep subsurface.

We provide regulatory oversight of contamination
management submissions using the OneStop Recordof Site Condition (RoSC) form. In 2023/2024 we
received 10 563 RoSC submissions, with 2013 (20%)
classified as nonroutine (high-risk and more complex)
and 80% routine submissions.

Of the 34 744 applications processedin 2023/24, 21 389 were classified
routine and 13 355 nonroutine (highrisk and more complex). We met
our processing targets for 98% ofroutine applications and almost
96% of nonroutine applications.

Our regulatory oversight includes ensuring contaminatedsites are adequately understood and that remedial
measures are satisfactory. Remedial measures include
source control, environmental site assessments,
risk assessment, and contamination management,
including remediation.
We made process enhancements to improve intake
efficiency, data quality, and baseline responses through
OneStop. Our most recent improvements include
refinements for further baseline conditions, improving
wording for industry clarity, and developing a RoSC
Submission Summary Report in OneStop to provide
compliance-related RoSC data.

2023/24 ANNUAL REPORT

23

ALBERTA ENERGY REGUL ATORHIGHLIGHTSStatement of Concern

Hearings

Anyone who believes they may be directly or adversely
affected by a proposed energy or mineral development
project—be it a well on their land or a pipeline running
through their community—may file a statement ofconcern (SOC). SOCs help the AER to understand theconcerns of Albertans, Indigenous communities andindustry potentially impacted by energy development
and, where possible, provide an opportunity for theapplicant to mitigate those concerns. SOC filers can
submit the form and supporting documents online
through aer.ca or by email or regular mail. The AER alsooffers dispute resolution services at any time over theenergy development life cycle to support relationshipbuilding between involved parties and assist in
resolving concerns outside of the SOC process.

We may refer files to the Hearing Commissioners’
Office to decide on disputed energy resource activities.
The Hearing Commissioners’ Office includes ninecommissioners, acting as independent decision makers
operating at arm’s length from the AER. Commissioners
come from many backgrounds and are appointed
by Orders in Council by the Lieutenant Governor ofAlberta.

Statement Of Concern
Application Review Files
Completed In 2023/24

32

13

Applications closed orwithdrawn (28 SOC files
closed or withdrawn due toapplication being closed orwithdrawn)

SOCs withdrawn (12SOC files withdrawn
due to SOC being
withdrawn)

51

7

SOC files completed with SOC files completed with ahearing recommendation
no hearing

24

2023/24 ANNUAL REPORTThe Hearing Services team supports commissioners as
they perform their work. The Hearing Commissioners’
Office may hold public hearings on applications, regulatory appeals of AER decisions, and reconsiderationsof previous AER decisions.
A hearing is quasi-judicial and can feel like a formal
court proceeding. It involves hearing evidence andlegal arguments for and against proposed andapproved energy resource activities and disputed AER
enforcement actions. But not all disputed activities orregulatory appeals require a hearing.
The hearing commissioners adhere to a Code of
Conduct. The code was updated in July 2023. It
identifies the values and responsibilities that hearing
commissioners demonstrate in their work. It outlines
what the public, governments, stakeholders, Indigenous communities, and other parties can expect fromthe hearing commissioners.
Hearing commissioners can also use Alternative
Dispute Resolution (ADR) processes to help parties
resolve disputes. A hearing may be cancelled if theparticipants withdraw their statement of concern or

ALBERTA ENERGY REGUL ATORHIGHLIGHTS

request for regulatory appeal or the proponent withdraws its application. The Hearing Commissioners’
Office may also issue a costs order requiring acompany to pay for some expenses incurred byhearing participants.
In 2023/24, sixteen new files were referred to the
Hearing Commissioners’ Office, while twelve proceedings continued from previous years. Four hearings
were held, and twelve were cancelled. Hearing
commissioners issued two hearing decisions.
No costs orders were issued.
As of March 31, 2024, ten proceedings were ongoing,
and three were adjourned. Eight ADR files were closed,
and four remain active. More information on hearings,
the hearing process, decisions, and the ADR process isavailable on aer.ca.

2023/24 Hearing Files

Municipal Property Taxes
Near the end of our fiscal year on March 20, 2023, theMinister of Energy directed the AER to receive evidence
from energy companies that confirms that they have
paid any outstanding municipal property taxes above
a set threshold amount prior to us approving applications for new well licences or well transfers. The AER
developed and implemented a process to meet that
direction by April 30, 2023.

Our Expanded Mandate
Under the direction of the Government of Alberta, the
AER’s mandate expanded from oil, oil sands, naturalgas, and coal to include additional areas of resource
development, such as geothermal and minerals. This
work is part of the government’s economic recovery
effort to relaunch and diversify Alberta’s economy.
This will in part, create a clear, predictable, and robust
regulatory regime and support a renewed mineral
strategy and action plan.

Minerals

9
regulatory appeals

61

applications

reconsideration

We assumed regulatory oversight of mineral resources
development in the province with the full proclamationof the Mineral Resource Development Act (MRDA) on
Feb. 28, 2024. The MRDA expanded our mandate toinclude responsibility for the development of rockhosted mineral resources, throughout their life cycle.
Brine-hosted minerals came under our authority in
March 2023 with the release of Directive 90: BrineHosted Mineral Resource Development.

2023/24 ANNUAL REPORT

25

ALBERTA ENERGY REGUL ATORHIGHLIGHTS

Throughout 2023/24, we began planning andexecuting this next phase of regulation to support thedevelopment of mineable minerals known as rockhosted minerals (e.g., limestone). This included a robust
engagement strategy that obtained input to informfuture regulatory decisions as well as geoscience
resources and tools.
On March 1, 2024, we released Directive 091: Rockhosted Mineral Resource Development, which sets out
our requirements throughout a development’s life
cycle, and in the coming year, in collaboration with theGovernment of Alberta, we will make amendments toexisting regulations, rules, and directives to incorporaterock-hosted mineral resource development.
We now accept applications for brine- and rock-hosted
mineral resource development. Additionally, we transitioned existing mineral operators into our regulatory
oversight from other Government of Alberta ministries.

26

2023/24 ANNUAL REPORTALBERTA ENERGY REGUL ATORHIGHLIGHTS

Geothermal

Alberta’s foray into geothermal energy marks asignificant step towards a more diversified energy
portfolio. The establishment of the Geothermal
Resource Development Act (GRDA) and subsequent
regulations, including Directive 089: Geothermal
Resource Development, provide a clear framework
for industry stakeholders, ensuring regulatory
certainty while promoting safe and efficient project
development. This framework underscores Alberta’s
commitment to harnessing deep geothermal potential
for sustainable energy production. As of August 2022,
the AER began accepting geothermal applications that
operate below the base of groundwater protection.

Mineral Mapping

Mineral resource development is part of the Governmentof Alberta’s strategy to diversify the energy andresource sector. As such, the Alberta Geological Survey(AGS), a branch within the AER, and the Governmentof Alberta partnered on one of the largest mineral
mapping programs in Alberta’s history, supported by a
$25 million grant from the Government of Alberta.
This data collaboration is part of a multiyear program
initiated in 2021 to provide critical information onmineral characterization and potential throughout
the province. These data will inform future regulatory
decisions regarding mineral applications and unlock
critical information to inform industry operations.
Additionally, these data will support information
sharing with non-industry groups on areas whereminerals are present in Alberta. They will also informdiscussions on where future mineral development may
occur. In 2023, the AGS released the first data setsfrom this extensive collection and conducted several
engagement sessions with Indigenous communities, aswell as both industry and non-industry stakeholders.

Evaluating Mineral Potential

The AGS has collected data related to
the following:
airborne geophysics
brine geochemical datacore scanning
digitization of mineral
assessment reports
electron microprobe analysisof minerals in Alberta
indicator mineral
sample processing
magnetotelluric (MT) study
powder x-ray diffraction
analysis of rock samples
remote sensing
rock samplingtill and stream
sediment sampling

2023/24 ANNUAL REPORT

27

ALBERTA ENERGY REGUL ATORHIGHLIGHTS

Updating Our Requirements
Our red tape reduction initiative was formed in May
2019 in response to the Government of Alberta’s Red
Tape Reduction Implementation Act. The government
set a goal to reduce regulatory requirements by
one-third, cut costs and inefficient processes, andspeed up approvals.
During 2023/24, we continued to reduce regulatory
requirements in regulatory instruments such as directives, forms, and manuals. At the same time, we haveupheld our environmental and public safety mandateand conducted Indigenous, stakeholder, and public
engagement where appropriate.
When the red-tape initiative launched, the AER had
a red tape count of 41 146 requirements across 204
regulatory instruments. In 2023/24, the AER updated
52 regulatory instruments and reduced the total countby 1488 requirements, which helps energy companies
and stakeholders to understand our requirements andmore easily navigate our regulatory instruments.
Since 2019, we have reduced the cumulative red tapecount by 22.2% (or 9154 requirements) and provided
industry-verified cost savings of over $1.6 billion
while maintaining levels of environmental andsafety oversight.

28

2023/24 ANNUAL REPORTALBERTA ENERGY REGUL ATORHIGHLIGHTS

Keeping A Pulse On
the Subsurface
Groundwater Inventory

The AGS’s groundwater team provided key information
about groundwater quality, quantity, and availability at
local and regional scales in strategic locations acrossthe province, including four hydrogeological maps
highlighting water quality and groundwater flow.
A study was also completed on the suitability forcommingled well abandonment in central Alberta,
which examined how to gain regulatory efficiencies
while maintaining protection of groundwater
resources.
The AGS also participated in two Alberta Innovates
Water Innovation Program projects, as an important
contributor to groundwater resource research.

Seismic Monitoring

AGS experts observe and characterize earthquakes
throughout the province with the goal of earthquake
forensics, mitigation, and industry compliance.
The AGS continues to expand and maintain its seismic
monitoring network and added one station to its
inventory in 2023 (over 60 stations, 24 of which itowns). Additionally, land and equipment were procured
for a sizeable network expansion project planned forthe second half of 2024.

2023/24 ANNUAL REPORT

29

ALBERTA ENERGY REGUL ATORHIGHLIGHTS

Carbon Capture, Utilization, and Storage Process

Carbon Capture Utilizationand Storage (CCUS)
CAPTURE

Capturing CO2 from industrial
and energy-related
processes. as a pivotal piece in Alberta’s pursuit
CCUS is emerging

of emissions reduction and sustainable energy practices.
By capturing
carbon dioxide emissions from large
Transporting
CO2 by pipeline.
stationary sources such as gas-fired generating units
and petroleum refineries, CCUS redirects CO2 before
STORAGEUSE
it enters the atmosphere,
contributing to climate
1. Injecting CO2 in
Using captured CO2
mitigation
efforts.
underground oil andas input or feedstock
TRANSPORT

No

ns

ali

ne

gro

un

dw
ate
r

gas reservoirs forenhanced oil recovery andfor permanent storage.

to create products.

Monitoring, Measurement, andVerification (MMV)
2. Injecting CO in

Effective
MMV is integral to ensuring the safe andundergroundgeologicalformationsforreliable operation of CCUS projects. Alberta’s rigorous
permanent storage.
2

Im

pe

rm

ea

ble

ca

pro

ck

oversight includes the delegation of MMV oversight to
the AER, with updated guidelines and requirements toenhance risk management and accountability. Throughcontinual monitoring and verification, Alberta maintains
the integrity and effectiveness of CCUS activities,
mitigating environmental risks and advancing
sustainable energy practices.

Socioeconomics
In 2023/24, we provided a standard and consistenteconomic and socioeconomic approach when reviewing
regulatory applications and statements of concern.
We developed and rolled out a socioeconomic impact
assessment to complement our existing regulatory
impact assessment, enabling us to make more informed
decisions and consider all Albertans when reviewing
proposed projects.

30

2023/24 ANNUAL REPORTALBERTA ENERGY REGUL ATORHIGHLIGHTS

Disclosure

OneStop Technology Platform

In 2023/24, we did not receive any disclosures ofwrongdoing under our Whistleblower Protection Policy.
Through OneStop, we received:

Integrated Decision Approach
OneStop

We recognize the critical role technology plays in
improving both processes and data. During 2023/24,
we continued to migrate our technology infrastructure
to cloud technologies, enabling us to share data more
effectively across our organization and accelerateinnovative solutions, such as OneStop.

385 164 submissions
26 294 applications
21 171 notifications

OneStop uses a complex set of rules to automate
routine (low-risk) applications and forward nonroutine(high-risk and more-complex) applications to technicalexperts for review.
We continue to add new functionality to OneStop.
In 2023/24, the platform was updated to include functionality for public lands objections and cancellations,
Water Act borrow pit applications, updated pipeline
rules and enhancements, and reclamation liability
reduction initiatives.
We have also increased the amount of data available
from OneStop to improve transparency.

2023/24 ANNUAL REPORT

31

ALBERTA ENERGY REGUL ATORHIGHLIGHTS

Our
Reporting

At the AER, we take reporting seriously as a means to ensuretransparency and accountability. Our suite of reports provides Indigenous
communities and stakeholders with detailed insights into various aspectsof energy development and regulation in Alberta.

Liability Management Performance Report

Our Liability Management Performance Report offers a comprehensive view of ourefforts to manage oil and gas liabilities effectively. It tracks progress in addressing
orphaned wells, facilities, and pipelines, outlining our actions to mitigate associatedrisks and ensure compliance with regulatory requirements.

Water Use Performance Report

Water is a critical resource in energy extraction, and our Water Use Performance
Report provides stakeholders with data on water usage by the energy industry inAlberta. This report covers withdrawals, consumption, and recycling practices, aiming
to promote sustainable water management and minimize environmental impact.

Closure Quota Highlight Report

Timely closure of inactive and abandoned energy infrastructure is crucial for environmental protection and public safety. Our Closure Quota Highlight Report tracks
progress in meeting closure targets for wells, facilities, and pipelines, demonstrating
our commitment to responsible resource management and remediation.

State of Fluid Tailings Management for Mineable
Oil Sands Report

Alberta has eight operating oil sands mines, and each site has an approved tailings
management plan (TMP) in place. Each year since 2015, the AER reports on thevolume of tailings at each oil sands mine and the technologies that companies use
to treat them. This report summarizes fluid tailings volumes, water volumes stored32

2023/24 ANNUAL REPORTALBERTA ENERGY REGUL ATORHIGHLIGHTS

in tailings facilities, tailings volumes reaching ready to reclaim status, whether
operators are within approved fluid tailings profiles, site-wide tailings management
activities, alignment with approved TMPs, and continual improvement of tailings
treatment technologies.

Pipeline Performance Report

Pipelines are integral to Alberta’s energy infrastructure, and our Pipeline Performance
Report focuses on their integrity and reliability. It provides data on key performanceindicators, incidents, and maintenance activities, ensuring the safe operation ofAlberta’s pipeline network.

Alberta Energy Outlook Report

Our Alberta Energy Outlook Report offers forecasts and analysis of energy
production, market trends, and policy developments. This report serves as avaluable resource for industry stakeholders and policymakers, informing strategic
decision making and fostering a deeper understanding of Alberta’s energy andmineral landscape.
Through these reports, we aim to provide stakeholders with transparent andreliable information, enabling informed decision making and contributing to the
responsible development of Alberta’s energy and mineral resources.

2023/24 ANNUAL REPORT

33

ALBERTA ENERGY REGUL ATORFEATURE

CREATING MORE TRANSPARENCY
THROUGH OUR ONLINE PRESENCE
We are committed to transparently reporting on industry—and our own—performance, clearly and in a timely manner.
Aer.ca is the Alberta Energy
Regulator’s central access point for
information about Alberta’s energy
industry. It’s also a tool for industry
to submit applications, data, andperformance information to us. We
provide application notices, hearing
notices, incident and complianceinformation, and a host of otheropportunities to learn more about
regulating the energy industry
in Alberta.
An improved, central access point
to key metrics about Alberta’s
upstream oil and gas industry
and our work to oversee resource
development now provides always
accessible, up to date information.
The Data Hub is one way we areworking to increase and simplify
access to our data. We’ll continue to
add to this platform over time.

aer.ca34

2023/24 ANNUAL REPORTOur Products and Services
Catalogue is a highly used tool
found within aer.ca. In 2023/24,
we responded to 6000 requests
for data or reports and provided
self-service access to 151 data
products and reports.
The Alberta Geological Survey
website (ags.aer.ca) is anothertrusted and accessible sourceof geoscience information forAlbertans, providing publications,interactive data products and tools,
as well as information on the AGS’s
many research initiatives.
Within ags.aer.ca is a new interactive mapping application. In 2024,
the AGS published the Alberta
Geology, Minerals, and Energy
Infrastructure Interactive Mapping
Application. The application increases

ags.aer.ca

ALBERTA ENERGY REGUL ATORFEATUREdata accessibility by combining
spatial data sets from the AGS and
the AER. It enables Indigenous
communities, municipalities,
landowners, and other interested
parties to select, integrate, share,
communicate, and interact witha wide variety of energy resource
developments and metallic andindustrial mineral potential data
across Alberta.
This year, we began improvements
to both websites that will launch
during our next fiscal year
(2024/25). Our objectives include
streamlining information, improving
search functionality, and allowing
for better user experience througha more intuitive design andnavigation. We are also working
to increase and simplify access tothe information we understand isimportant to Albertans. We havealready implemented 20 of the
51 recommendations identified
in a third-party audit to improvenavigation and information accessand more efficiently track, locate,and update broken links.

Most visited pages
on AER.ca in 2023/24
OneStop
Systems and Tools
Directives
Careers

Most visited pages
on AGS.aer.ca in
2023/24
All Publications
Conversion Tools
ATS Geographic Degrees
Dig 2013-0002, Surficial
Geology of Alberta
generalized digital mosaic

2023/24 ANNUAL REPORT

35

ALBERTA ENERGY REGUL ATORLOOKING AHEAD

LookingAhead

36

2023/24 ANNUAL REPORTALBERTA ENERGY REGUL ATORLOOKING AHEAD

As much as we are focused on the priority work infront of us today at the AER, we are also diligently
preparing for the future.
Our path forward is carefully laid out in the 2024–27
Strategic Plan, which guides our work in the years
ahead in four key focus areas (Taking care of people;
Enabling our operational effectiveness and innovation;
Enhancing our regulatory framework; Strengthening
our credibility and trust).
Over the coming year (2024/25), we will continue
to prioritize these focus areas so we can establish amore efficient way of regulating, strengthening a safe
and inclusive culture, and meeting the expectationsof Albertans, Indigenous communities, and otherstakeholders.
We will continue to implement recommendations fromthe Deloitte-led review of our internal processes andresponse to events at Imperial’s Kearl oil sands facility
in 2022 and 2023. This includes engaging with Indigenous communities and key stakeholders to develop
specific notification and communication protocols,
processes, and procedures tailored to meet their needs.
We will also focus on other key pieces of work in
2024/25:• EMERGING RESOURCES. We will continue to advance
new regulations on energy and mineral resources.
This includes amending existing regulations, rules,and directives to incorporate rock-hosted mineral
resource development. The AGS constantly monitorsand evaluates updates to national and global
emerging resources of interest to ensure their Mineral
Mapping Program is providing relevant and timely
information and data on Alberta’s mineral potential.
The team continues to explore new ways to share

information that reflects the current interests ofAlbertans and collect data in strategic locations on
emerging commodities.

• LONG-TERM REDUCTIONS IN THE LIABILITIES OF AERREGULATED ASSETS. We will continue to implement
the Liability Management Framework and Directive 088:
Licensee Life-Cycle Management to hold the industry
accountable for end-of-life closure activities such asreclamation and remediation.
• ADVANCING OUR CULTURE. We will continue todevelop and empower our people with a frameworkthat helps us retain engaged, diverse, andcontributing employees who align with our values andculture and feel comfortable voicing their opinions.
• TECHNOLOGY ENABLEMENT. Our data management
strategies will support improved access to information
as well as the seamless sharing of information with
our Government of Alberta partners through cloudbased technologies.

As we look ahead to the coming year,
we remain focused on what matters—
public safety, the environment,
responsible energy and mineraldevelopment, and providing economic
benefit for Albertans.

1

Protecting the public
and environment

2

Responsible development

3

Economic benefit
for Albertans

2023/24 ANNUAL REPORT

37

ALBERTA ENERGY REGUL ATORFINANCIALS

Financials

38

2023/24 ANNUAL REPORTALBERTA ENERGY REGUL ATORFINANCIALS

Consolidated Financial Highlights
Consolidated Summary ofAnnual Highlights

2024
Budget2023

AdjustedbudgetAdjustments

ActualActual(in thousands)
Revenues
Administration fees$

217 419$833$

218 252$

218 234$

201 429

Orphan fund levies and transfers

135 000665

135 665

150 241

80 294Government of Alberta grant

12 356

7 039

19 39514 18516 754

Other revenue

3 999

4 422

8 421

9 924

6 661

368 774

12 959381 733

392 584

305 138

Energy regulation

231 274

12 294

243 568

237 132

223 496

Orphan well abandonment

135 000665

135 665

150 241

80 294366 274

12 959379 233

387 373303 790

2 500

-

2 500

5 211

1 348

Expenses

Operating surplus
CapitalCapital investment

14 50014 50014 11412 808Less: Amortization of tangible
capital assets(12 000)(12 000)(12 903)(13 114)Net loss on disposal and writedown of tangible capital assets

-

-

(148)

(418)

Proceeds on disposal of tangible
capital assets

-

-

(12)

(47)

2 500

1 051

(771)

		
		

Net capital investment
Surplus

-

2 500
$

-

$

-

$

-

$

4 160

$

2 119

All amounts are expressed in thousands of Canadian dollars.

2023/24 ANNUAL REPORT

39

ALBERTA ENERGY REGUL ATORFINANCIALSThe AER is an industry-funded regulator accountable
to the Government of Alberta. The AER’s operating
expenses and capital investment are from the following
revenue sources: administration fees (referred to as
the administrative levy), government grants, and otherrevenue (e.g., the sale of products). The AER collects
orphan fund levies, which are paid directly to theOrphan Well Association (OWA).
The previous table summarizes the results of ouroperations and net capital investment for the year
ended March 31, 2024.

Administration Fees

Alberta’s Responsible Energy Development Act
authorizes the AER to levy an administration fee on
the following regulated sectors—the province’s oil andgas, oil sands, coal, pipeline sectors and facilities. The
funds collected from administration fees are used tofulfil the AER’s mandate to ensure the safe, efficient,orderly, and environmentally responsible developmentof energy and mineral resources in Alberta throughour regulatory activities. For the year ended
March 31, 2024, administration fees increased by$16 805 or 8.3% to support the AER’s operational
needs. In the fiscal year ended March 31, 2024, theAER collected:• 71.0% (2022/23 – 70.8%) of industry levies fromoil and gas,
• 19.9% (2022/23 – 22.4%) from oil sands,• 4.0% (2022/23 – 4.3%) from coal operations,• 3.4% (2022/23 – 1.7%) from pipelines, and• 1.7% (2022/23 – 0.8%) from facilities in the formof administration fees.
All amounts are expressed in thousands of Canadian dollars.

40

2023/24 ANNUAL REPORT

Additionally, administration fees for the 2023/24
fiscal year include $341 (2022/23 – $54) in issued latepayment penalties.

Government of Alberta Grant

The AER received $12 356 in grant funding to support
its mandate expansion work related to mineral
resource regulation. The grant revenue is recognized
as expenses pertaining to the agreement are incurred,and unspent funds are carried over from year toyear and expensed in accordance with accounting
standards. For the year ended March 31, 2024, theAER recognized $14 185. $5 210 will be carried over
into 2025/26 to support the continued development
and operationalization of the various mandate
expansion workstreams.

Orphan Fund Levy and Transfers

Under Part 11 of the Oil and Gas Conservation Act, the
AER is required to prescribe an orphan fund levy. Thislevy is based on the revenue requirements identified
by the OWA board and approved by the Governmentof Alberta. In 2023/24, the AER issued an orphan fundlevy of $135 000, an increase of $63 000 comparedwith 2022/23. This increase was necessary to maintainthe pace of closure activity. In 2023/24, the AER did notissue a large facility program orphan levy, a decreaseof $6 000 compared with 2022/23. Additionally, theAER collected and transferred $14 260 (2022/23 – $1 535)
in forfeited security deposits, $465 in application fees
(2022/23 – $669) and $103 (2022/23 – $90) in penalties.

ALBERTA ENERGY REGUL ATORFINANCIALS

Other Revenue

Other revenue consists of data subscriptions,enforcement revenue, electronic data and publications
sales, revenue from projects performed on a
cost-recovery basis, and investment income. In 2023/24,
other revenue increased by $3 263 or 49.0%, primarily
driven by higher investment income due to higher
interest rates.

Energy Regulation

Expenses increased by $13 636 or 6.1% in 2023/24 due
to increased salary costs, inflationary pressures, andcontinued IT modernization as the AER is currently
supporting multiple aging technology platforms.
Overall, the AER continues to exercise financial
prudence and seeks opportunities to reduce costs
where possible.

Capital Investment

Developing and acquiring tangible capital assets,
predominately investments in information technology,
is critical in helping the AER achieve its mandate at
the lowest possible cost. Investments in information
technology ensures that the AER remains relevant
and responsive.

In 2023/24, the AER made capital investments totalling$14 114. These investments focused on continued IT
infrastructure improvement, OneStop, AERs Integrated
Decision Approach (IDA) technology, leasehold
improvements aimed at reducing office space, andsafety-related building improvements at the Core
Research Centre. Additionally, the AER transitioned
from leasing to purchasing fleet vehicles to mitigate
the impact of higher interest rates.

Budget Management

In 2023/24, the AER planned for a balanced budget,
and, despite facing nondiscretionary pressuresthroughout the year, continued to forecast a balanced
position. Nondiscretionary pressures were more thanoffset by increased investment revenue and effective
cost management, which included prioritizing funding
initiatives and focusing on savings opportunities.
Consequently, the AER completed the year witha surplus of $4 160 (2022/23 – $2 119), 1.1% of
total revenues.

All amounts are expressed in thousands of Canadian dollars.
2023/24 ANNUAL REPORT

41

Alberta Energy Regulator
Consolidated Financial Statements
For the Year Ended March 31, 2024

Statement of Management Responsibility
Independent Auditor's Report
Consolidated Statement of Operations
Consolidated Statement of Financial Position
Consolidated Statement of Change in Net Financial Assets
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Schedules to the Consolidated Financial Statements

MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL REPORTING
The accompanying consolidated ﬁnancial statements of the Alberta Energy Regulator and all otherinforma�on rela�ng to the AER contained in this annual report have been prepared and presented bymanagement, who is responsible for the integrity and fair presenta�on of the informa�on.
These consolidated ﬁnancial statements are prepared in accordance with Canadian public sector
accoun�ng standards. The consolidated ﬁnancial statements necessarily include some amounts that are
based on informed judgments and best es�mates of management. The ﬁnancial informa�on contained
elsewhere in this annual report is consistent with that in the consolidated ﬁnancial statements.
Management is responsible for maintaining an eﬀec�ve system of internal controls designed to provide
reasonable assurance that ﬁnancial informa�on is reliable, transac�ons are properly authorized, assets
are safeguarded and liabili�es are recognized.
The Auditor General of Alberta, the AER’s external auditor appointed under the Auditor General Act,
performed an independent external audit of these consolidated ﬁnancial statements in accordance with
Canadian generally accepted audi�ng standards, and has expressed his opinion in the accompanying
Independent Auditor’s Report.
The Board of Directors is responsible for ensuring that management fulﬁlls its responsibili�es forﬁnancial repor�ng and internal controls. The Board of Directors exercises this responsibility through the
Audit and Finance Commitee, composed of Directors who are not employees of the regulator. The Audit
and Finance Commitee meets with the internal auditors and the external auditors-both in the presence
and in the absence of management to discuss their audit, including any ﬁndings as to the integrity ofﬁnancial repor�ng processes and the adequacy of our systems of internal controls. The internal andexternal auditors have full and unrestricted access to the Audit and Finance Commitee.

[Original signed by Laurie Pushor]
President and Chief Execu�ve Oﬃcer[Original signed by Mike Dalton]
Vice-President, Finance and Chief Financial Oﬃcer

Date: May 16, 2024

Security Classiﬁca�on: Protected A

Independent Auditor’s Report
To the Board of Directors of the Alberta Energy Regulator
Report on the Consolidated Financial Statements

OpinionI have audited the consolidated financial statements of the Alberta Energy Regulator (the Group),
which comprise the consolidated statement of financial position as at March 31, 2024, and theconsolidated statements of operations, change in net financial assets, and cash flows for the year
then ended, and notes to the consolidated financial statements, including a summary of significant
accounting policies.

In my opinion, the accompanying consolidated financial statements present fairly, in all material
respects, the consolidated financial position of the Group as at March 31, 2024, and the results of its
operations, its changes in net financial assets, and its cash flows for the year then ended inaccordance with Canadian public sector accounting standards.

Basis for opinion
I conducted my audit in accordance with Canadian generally accepted auditing standards. My
responsibilities under those standards are further described in the Auditor's Responsibilities for the
Audit of the Consolidated Financial Statements section of my report. I am independent of the Group inaccordance with the ethical requirements that are relevant to my audit of the consolidated financial
statements in Canada, and I have fulfilled my other ethical responsibilities in accordance with theserequirements. I believe that the audit evidence I have obtained is sufficient and appropriate toprovide a basis for my opinion.

Other information
Management is responsible for the other information. The other information comprises theinformation included in the Annual Report, but does not include the consolidated financial
statements and my auditor’s report thereon. The Annual Report is expected to be made available tome after the date of this auditor’s report.
My opinion on the consolidated financial statements does not cover the other information and I do
not express any form of assurance conclusion thereon.

In connection with my audit of the consolidated financial statements, my responsibility is to readthe other information identified above and, in doing so, consider whether the other information ismaterially inconsistent with the consolidated financial statements or my knowledge obtained in theaudit, or otherwise appears to be materially misstated.
If, based on the work I will perform on this other information, I conclude that there is a material
misstatement of this other information, I am required to communicate the matter to those charged
with governance.
Classification: PublicResponsibilities of management and those charged with governance for the consolidated
financial statements
Management is responsible for the preparation and fair presentation of the consolidated financial
statements in accordance with Canadian public sector accounting standards, and for such internal
control as management determines is necessary to enable the preparation of the consolidated
financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing theGroup’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless an intention exists to liquidate or tocease operations, or there is no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Group’s financial reporting
process.

Auditor's responsibilities for the audit of the consolidated financial statements
My objectives are to obtain reasonable assurance about whether the consolidated financial
statements as a whole are free from material misstatement, whether due to fraud or error, and toissue an auditor's report that includes my opinion. Reasonable assurance is a high level ofassurance, but is not a guarantee that an audit conducted in accordance with Canadian generally
accepted auditing standards will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in theaggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of these consolidated financial statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, I exercise
professional judgment and maintain professional skepticism throughout the audit. I also:• Identify and assess the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks,and obtain audit evidence that is sufficient and appropriate to provide a basis for my opinion.
The risk of not detecting a material misstatement resulting from fraud is higher than for one
resulting from error, as fraud may involve collusion, forgery, intentional omissions,misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
• Conclude on the appropriateness of management’s use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related toevents or conditions that may cast significant doubt on the Group’s ability to continue as a going
concern. If I conclude that a material uncertainty exists, I am required to draw attention in myauditor’s report to the related disclosures in the consolidated financial statements or, if suchdisclosures are inadequate, to modify my opinion. My conclusions are based on the audit
evidence obtained up to the date of my auditor’s report. However, future events or conditions
may cause the Group to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the consolidated financial
statements, including the disclosures, and whether the consolidated financial statements
represent the underlying transactions and events in a manner that achieves fair presentation.
Classification: Public•Obtain sufficient appropriate audit evidence regarding the financial information of the entities
or business activities within the Group to express an opinion on the consolidated financial
statements. I am responsible for the direction, supervision and performance of the group audit.
I remain solely responsible for my audit opinion.

I communicate with those charged with governance regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies ininternal control that I identify during my audit.
[Original signed by W. Doug Wylie FCPA, FCMA, ICD.D]
Auditor General
May 16, 2024
Edmonton, Alberta

Classification: Public

ALBERTA ENERGY REGULATORCONSOLIDATED STATEMENT OF OPERATIONSYEAR ENDED MARCH 31, 2024

2024

2023

Budget(Note 5, Schedule 3)

Revenues
Administration fees
Orphan fund levies and transfers (Note 6)
Government of Alberta grants
Information, services and fees
Investment income$

Expenses
Energy regulation (Schedule 1)
Orphan well abandonment (Note 6)

Annual operating surplus
Accumulated surplus at beginning of year
Accumulated surplus at end of year$

217,419
135,000
12,356
1,299
2,700
368,774

Actual(in thousands)$

218,234
150,241
14,1852,701
7,223
392,584

Actual

$201,42980,294
16,7542,576
4,085
305,138

231,274
135,000
366,274

237,132
150,241
387,373

223,496
80,294
303,790

2,500
74,93577,435

5,211
74,93580,146

1,348
73,58774,935The accompanying notes and schedules are part of these consolidated financial statements.

$$

ALBERTA ENERGY REGULATORCONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT MARCH 31, 2024

2024

2023
(in thousands)

Financial assets
Cash and cash equivalents (Note 7)
Accounts receivable (Note 8)
Portfolio investments (Note 9)
Pension assets (Note 16)$

Liabilities
Accounts payable and other accrued liabilities (Note 10)
Payable to Orphan Well Association
Deferred revenue (Note 11)
Deferred lease incentives (Note 13)
Net financial assets

19,142
2,641
19,902
13,73755,422$

43,171
2,927
9,903
56,001

25,317
1,459
6,588
8,387
41,751
13,671

26,017
2,419
7,657
9,849
45,942
10,05957,723
8,752
66,47556,6728,204
64,876

Non-financial assets
Tangible capital assets (Note 17)
Prepaid expenses and other assets

Net assets
Accumulated surplus (Note 18)$

Asset Retirement Obligation (Note 15)
Contractual rights (Note 19)
Contingent liabilities (Note 20)
Contractual obligations (Note 21)
The accompanying notes and schedules are part of these consolidated financial statements.

80,146$74,935ALBERTA ENERGY REGULATORCONSOLIDATED STATEMENT OF CHANGE IN NET FINANCIAL ASSETSYEAR ENDED MARCH 31, 2024

2024

2023

Budget(Note 5, Schedule 3)

Annual operating surplus
Acquisition of tangible capital assets (Note 17)
Amortization of tangible capital assets (Note 17)
Net loss on disposal and write-down of tangible capital assets
Proceeds on disposal of tangible capital assets(Increase)/decrease in prepaid expenses and other assets
Decrease in spent deferred capital contributions (Note 11)
Increase in net financial assets
Net financial assets at beginning of year
Net financial assets at end of year

$

2,500

Actual(in thousands)
$

5,211

$

(14,114)
12,903
148
12
(548)
3,612
10,05913,671(14,500)
12,000$10,05910,059The accompanying notes and schedules are part of these consolidated financial statements.

Actual

$

1,348

$

(12,808)
13,114
418
47
438
(240)
2,317
7,742
10,059

ALBERTA ENERGY REGULATORCONSOLIDATED STATEMENT OF CASH FLOWSYEAR ENDED MARCH 31, 2024

2024

2023
(in thousands)

Operating transactions
Annual operating surplus
Non-cash items included in annual operating surplus:
Amortization of tangible capital assets (Note 17)
Change in pension assets
Net loss on disposal and write-down of tangible capital assets (Note 17)
Bad debt expense
Amortization of deferred lease incentives (Note 13)

$

5,211

$

1,348

12,903(3,834)148
1,325(1,462)
14,291(1,039)
(548)
(700)
(960)
(1,069)
9,975

13,114(5,945)418
34(1,466)
7,503(1,277)
438
(708)
1,355
(3,705)
3,606

Capital transactions
Acquisition of tangible capital assets (Note 17)
Proceeds on disposal of tangible capital assets
Cash applied to capital transactions(14,114)12(14,102)(12,808)47(12,761)

Investing transactions
Purchase of portfolio investments (Note 9)
Cash applied to investing transactions(19,902)(19,902)

-

-

(240)
(240)

(24,029)
43,171
19,142(9,395)52,56643,171

Increase in accounts receivable(Increase)/decrease in prepaid expenses and other assets
Decrease in accounts payable and other accrued liabilities(Decrease)/increase in payable to Orphan Well Association
Decrease in deferred revenue
Cash provided by operating transactions

Financing transactions
Decrease in spent deferred capital contributions (Note 11)
Cash applied to financing transactions
Decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year$

The accompanying notes and schedules are part of these consolidated financial statements.

$

ALBERTA ENERGY REGULATORNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2024
Note 1 AUTHORITY
The Alberta Energy Regulator (AER) is an independent and quasi-judicial organization of the Government of Alberta. The AER operates under the
Responsible Energy Development Act. The AER's mandate provides for the efficient, safe, orderly and environmentally responsible development ofenergy and mineral resources in Alberta through regulatory activities. This includes allocating and conserving water resources, managing public lands,
and protecting the environment while providing economic benefits for all Albertans. The AER is exempt from income taxes under the Income Tax Act.
Note 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND REPORTING PRACTICES
These consolidated financial statements are prepared in accordance with Canadian Public Sector Accounting Standards (PSAS).
Reporting Entity and Method of Consolidation
The consolidated financial statements reflect the assets, liabilities, revenues and expenses of the AER, which is composed of all components controlled by
the AER. The Orphan Fund is a fund retained and administered by the AER. The AER collects an orphan fund levy and a large facility program orphan
levy, and transfers the funds to the Orphan Well Association through the orphan fund. The AER also transfers funds for first time licensee application fees,
including regulator directed transfer fees, and forfeited security deposits through the orphan fund. The AER and the orphan fund are consolidated using
the line-by-line method.
Basis of Financial Reporting
Revenues
All revenues are reported on the accrual basis of accounting.
The AER recognizes revenue from transactions with no performance obligations, such as administration fees and orphan fund levies, at their realizablevalue. Revenue from transactions with performance obligations, including information, services and fees, is recognized when the AER provides thepromised goods and/or service to a payor.
Cash received for goods and/or services not yet provided before year end is recognized as deferred revenue and recorded in accounts payable and otheraccrued liabilities.
Government of Alberta grants
Transfers from the Government of Alberta are referred to as provincial grants.
Provincial grants without stipulations for the use of the transfer are recognized as revenue when the transfer is authorized and the AER meets the eligibility
criteria (if any). Provincial grants with stipulations for the use of the transfer are recognized as deferred revenue and subsequently recognized when the
AER meets the stipulations.
Investment income
Investment income includes interest income and realized gains and losses on the sale of portfolio investments. Once realized, these gains or losses arerecognized in the Consolidated Statement of Operations.
Expenses
Expenses are reported on an accrual basis. The cost of all goods consumed and services received during the year are expensed.
Employee future benefits
The AER maintains its own defined benefit Senior Employees Pension Plan (SEPP) and two supplementary pension plans to compensate senior staff who
do not participate in the government management pension plans. Retirement benefits are based on each employee's years of service and remuneration.
Pension assets represent the sum of the accumulated cash contributions less the sum of the current and prior years' pension expense.

ALBERTA ENERGY REGULATORNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2024
Note 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND REPORTING PRACTICES (continued)
Basis of Financial Reporting (continued)
Employee future benefits (continued)
Accrued benefit obligations are actuarially determined using the projected benefit method prorated on length of service and management's best estimateof expected plan investment performance, projected employees' compensation levels and retirement age of employees.
Accrued benefit obligations and pension benefit costs for the year are calculated using the expected rate of return on plan assets as the discount rate,
which is determined using market values of plan assets.
Actuarial gains and losses are amortized over the average remaining service period of the active employees, which is 11.1 years (2023 - 11.2 years).
Past service cost arising from plan amendments is accounted for in the period of the plan amendments.
Gains and losses determined upon a plan curtailment are accounted for in the period of curtailment.
The AER participates in the Government of Alberta's multi-employer pension plans: Management Employees Pension Plan, Public Service Pension Planand Supplementary Retirement Plan for Public Service Managers. Defined contribution plan accounting is applied to these plans as the AER has
insufficient information to apply defined benefit plan accounting. Accordingly, pension expense comprises employer contributions to the plans that are
required for its employees during the year, which are calculated based on actuarially pre-determined amounts that are expected to provide the plans'
future benefits.
Valuation of financial assets and liabilities
The AER's financial assets and liabilities are generally measured as follows:
Financial Statement Component

Measurement

Cash and cash equivalents
Accounts receivable
Portfolio investments
Pension assets
Accounts payable and other accrued liabilities
Payable to the Orphan Well Association
Environmental Liabilities
Deferred lease incentives

Cost
Lower of cost or net recoverable value
Amortized cost
Lower of cost or net recoverable value
Cost
Cost
Cost
Amortized cost

The AER has not designated any financial assets or liabilities in the fair value category, does not have any significant foreign currency transactions anddoes not hold any derivative contracts. The AER has no significant remeasurement gains or losses and consequently has not presented a Consolidated
Statement of Remeasurement Gains and Losses.
Financial assets
Financial assets are assets that could be used to discharge existing liabilities or finance future operations and are not for consumption in the normal
course of operations.
Financial assets include cash and the AER's financial claims on external organizations and individuals at year end.
Cash and cash equivalents
Cash comprises cash on hand, externally restricted cash and demand deposits.
Accounts receivable
Accounts receivable are recognized at the lower of cost or net recoverable value. A valuation allowance is recognized when recovery is uncertain.

ALBERTA ENERGY REGULATORNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2024
Note 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND REPORTING PRACTICES (continued)
Basis of Financial Reporting (continued)
Portfolio investments
Portfolio investments are recognized at amortized cost. Investment premiums and discounts are amortized proportionately over the term of the respective
investments using an effective interest method. Any declines in market value below costs are considered to be temporary and therefore no write-downs
have been recorded.
Liabilities
Liabilities are present obligations of the AER to external organizations and individuals arising from past transactions or events occurring before the year
end, the settlement of which is expected to result in the future sacrifice of economic benefits. They are recognized when there is an appropriate basis ofmeasurement and management can reasonably estimate the amounts. Liabilities include all financial claims payable by the AER at fiscal year end.
Deferred lease incentives
Deferred lease incentives, consisting of leasehold improvement costs, reduced rent benefits and rent-free periods, are amortized on a straight-line basis
over the term of the leases.
Environmental liabilities
Liability for Contaminated Sites:
Contaminated sites are a result of contamination of a chemical, organic or radioactive material or live organism that exceeds an environmental standard,
being introduced into soil, water or sediment.
A liability for remediation of a contaminated site may arise from an operation that is either in productive use or no longer in productive use and may also
arise from an unexpected event resulting in contamination. The resulting liability is recognized when all of the following criteria are met:i. an environmental standard exists;
ii. contamination exceeds the environmental standard;iii. the AER is directly responsible or accepts responsibility;
iv. it is expected that future economic benefits will be given up; andv. a reasonable estimate of the amount can be made.
Contingent liabilities
A contingent liability is recognized when:i. there is an existing condition or situation;
ii. there is an expected future event that will resolve the uncertainty as to whether a present obligation to sacrifice economic benefits exists;
iii. it is likely that a future event will confirm that a liability has been incurred at the date of the financial statements; andiv. a reasonable estimate of the amount can be made.
Non-financial assets
Non-financial assets are acquired, constructed or developed assets that do not normally provide resources to discharge existing liabilities, but instead:(a) are normally employed to deliver AER services;(b) may be consumed in the normal course of operations; and(c) are not for sale in the normal course of operations.
Non-financial assets of the AER include tangible capital assets, prepaid expenses and other assets.

ALBERTA ENERGY REGULATORNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2024
Note 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND REPORTING PRACTICES (continued)
Basis of Financial Reporting (continued)
Tangible capital assets
Tangible capital assets are recognized at cost less accumulated amortization, which includes amounts that are directly related to the acquisition, design,
construction, development, improvement or betterment of the assets. Cost includes overhead directly attributable to construction and development of theasset.
The cost, less residual value, of the tangible capital assets, excluding land, is amortized over their estimated useful lives as follows:
Leasehold improvements
Straight line
Term of the lease
Furniture and equipment
Straight line
3 - 10 years
VehicleStraight line
5 - 15 years
Computer hardware
Straight line
3 - 10 years
Computer software - purchased
Straight line
3 - 10 years
Computer software - developed
Straight line
3 - 10 years
Amortization is only expensed when the tangible capital asset is put into service.
Work-in-progress, which may include developed computer software and leasehold improvements, is not amortized until a project is complete and the asset
is put into service.
Tangible capital assets are written down when conditions indicate that they no longer contribute to the AER's ability to provide goods and services, orwhen the value of future economic benefits associated with the tangible capital assets is less than their net book value. The net write-downs areaccounted for as an expense in the Consolidated Statement of Operations.
Prepaid expenses
Prepaid expenses are recognized at cost and amortized based on the terms of the agreements.
Measurement uncertainty
Measurement uncertainty exists when there is a variance between the recognized or disclosed amount and another reasonably possible amount,whenever estimates are used. The amounts recognized for amortization of tangible capital assets are based on estimates of the useful life of the related
assets. Accrued defined benefit obligations are subject to measurement uncertainty due to the use of actuarial assumptions. The resulting estimates arewithin reasonable limits of materiality and are in accordance with the AER's significant accounting policies.
Estimates of contingent liabilities for contaminated sites are subject to measurement uncertainty because the existence and extent of contamination, theresponsibility for clean-up, and the timing and costs of remediation cannot be reasonably estimated in all circumstances. The degree of measurement
uncertainty cannot be reasonably determined.
Note 3 CHANGE IN ACCOUNTING STANDARDS
Effective April 1, 2023, the AER adopted the new accounting standard PS 3400 Revenue. There were no changes to the measurement of revenues on
adoption of the new standard.
At the beginning of the same fiscal reporting period, the AER also adopted the PSG-8 Purchased Intangibles Guideline. There was no impact on theConsolidated Financial Statements as a result of adoption of the new guideline.

ALBERTA ENERGY REGULATORNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2024
Note 4 FUTURE CHANGES IN ACCOUNTING STANDARDSThe Public Sector Accounting Board has approved the following accounting standards, which are effective for fiscal years starting on or after April 1, 2026:
The Conceptual Framework for Financial Reporting in the Public Sector
The Conceptual Framework is the foundation for public sector financial reporting standard setting. It replaces the conceptual aspects of Section PS
1000 Financial Statement Concepts and Section PS 1100 Financial Statement Objectives. The conceptual framework highlights considerations
fundamental for the consistent application of accounting issues in the absence of specific standards.
PS 1202 Financial Statement Presentation
Section PS 1202 sets out general and specific requirements for the presentation of information in general purpose financial statements. The financial
statement presentation principles are based on the concepts within the Conceptual Framework.
Management is currently assessing the impact of the conceptual framework and the standard on the Consolidated Financial Statements.
Note 5 BUDGETThe budget and budget adjustments reflected on Schedule 3 have been approved by the Government of Alberta.
Note 6 ORPHAN WELL ABANDONMENT(in thousands)
The Government of Alberta has delegated the authority to manage the abandonment and reclamation of wells, facilities, and pipelines that are licensed to
defunct licensees to the Orphan Well Association. The AER collects an orphan fund levy and a large facility program orphan levy, and transfers the funds
to the Orphan Well Association through the orphan fund. The AER also transfers funds for first time licensee application fees, including regulator directedtransfer fees, and forfeited security deposits through the orphan fund. During the year ended March 31, 2024, the AER invoiced $135,516 (2023 - $78,090)
in levies and penalties. Additionally, the AER collected and transferred $14,260 (2023 - $1,535) in forfeited security deposits and $465 (2023 - $669) inapplication fees.
Note 7 CASH AND CASH EQUIVALENTS(in thousands, unless otherwise noted)
Cash and cash equivalents are held in an account with a Canadian chartered bank and earn interest calculated based on the average monthly cash
balance. The funds are available to be withdrawn upon request. During the year ended March 31, 2024, the AER earned interest at an annual averagerate of 5.5% (2023 - 3.5%).
Cash and cash equivalents includes restricted funds of $6,411 (2023 - $7,447), as reflected in deferred revenue (discussed in Note 11).
Note 8 ACCOUNTS RECEIVABLE(in thousands)
Accounts receivable are unsecured and non-interest bearing.
2024

Accounts receivable

Gross amount

Allowance for
doubtfulaccounts

$

$

4,091

2023
Net
recoverable
value(1,450) $

2,641

Net
recoverable
value
$

2,927

ALBERTA ENERGY REGULATORNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2024
Note 9 PORTFOLIO INVESTMENTS(in thousands)

Bonds
Other

2024
Book value
19,86933$
19,902$

2023

Fair value
19,621
33$
19,654

Book value$$

Fair value--$

The bonds are intended to be held long term with interest rates from 2.0% to 6.2% and maturity dates between 2026 and 2034. Any declines in market
value below costs are considered to be temporary and therefore no write-downs have been recorded.
Note 10 ACCOUNTS PAYABLE AND OTHER ACCRUED LIABILITIES(in thousands)
Trade and other accrued liabilities
Lease termination payable$

Accrued salaries and benefits$

2024
11,8393,716
9,762
25,317

$

$

2023
9,743
5,820
10,45426,017Note 11 DEFERRED REVENUE(in thousands)
Deferred revenue consists of the following:
Deferred contributions(1)Unearned revenue

$

2024
6,411
177

$

2023
7,447
210

$

6,588

$

7,657

(1) Deferred contributions
2024

Balance at beginning of year

Government ofAlberta$
7,134 $

2023

Other
313

$

Total
7,447

$

Total
11,159Cash contributions received/receivable during year

12,928627

13,555

13,158Less: amounts recognized as revenue(14,185)(311)(14,496)(16,870)

Less: unused amounts returned
Balance at end of year

(95)
$

5,782

$

629

(95)
$

6,411

$

7,447

Note 12 FINANCIAL INSTRUMENTS
The AER has the following financial instruments: cash and cash equivalents, accounts receivable, portfolio investments, accounts payable and otheraccrued liabilities, and payable to the Orphan Well Association.

ALBERTA ENERGY REGULATORNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2024
Note 12 FINANCIAL INSTRUMENTS (continued)
Financial Risk Management
The AER has exposure to the following risks from its use of financial instruments:(a) Liquidity risk
Liquidity risk is the risk that the AER will encounter difficulty in meeting obligations associated with its financial liabilities. Liquidity requirements of the AER
are met primarily through the collection of funding at the beginning of the year to fund operating expenses and capital expenditures throughout the year.
The AER manages liquidity risk by having established budget processes and regularly monitoring cash flows to ensure the necessary funds are on hand tofulfill upcoming obligations. In addition, the AER maintains a revolving line of credit which provides financial flexibility to allow the AER to meet its
obligations if funding cannot be collected on a timely basis.
(b) Credit risk
The AER is exposed to credit risk from potential non-payment of accounts receivable and from the failure of a counterparty to fully honour its financial
obligations with the AER. A substantial portion of the AER's accounts receivable include balances due from operators in the oil and gas industry, and are
subject to normal industry credit risk. The AER regularly monitors the financial status of operators and assesses the collectability of accounts receivable.
The AER's maximum exposure to credit risk is limited to the carrying amount of accounts receivable presented in the Consolidated Statement of Financial
Position at the reporting date. The AER established a valuation allowance that corresponds to the specific credit risk of operators, historical trends andeconomic circumstances.
The AER is exposed to credit risk associated with the underlying debt securities held in investment funds managed by the Canadian Imperial Bank ofCommerce (CIBC). All of the AER's investments in bonds are with counterparties considered to be investment grade (AAA to BBB-) at March 31, 2024.
(c) Interest Rate Risk
The AER is exposed to interest rate associated with the underlying interest-bearing securities held in the investment funds. Interest rate risk relates to thepossibility that the fair value of investments will change due to future fluctuations in market interest rates. In general, investment returns from bonds are
sensitive to changes in the level of interest rates, with longer term interest bearing securities being more sensitive to interest rate changes than shorterterm bonds. If interest rates increased by 1%, and all other variables are held constant, the potential loss in fair value to the AER would be approximately
6.4% of total investments.
The following table summarizes the terms to maturity of interest-bearing securities held in bond investments at March 31, 2024.

Class< 1 yearBonds-

1-5 years

Average effective market

Over 5 years
4

5

5.4%

Note 13 DEFERRED LEASE INCENTIVES(in thousands)
The AER has entered into various lease agreements which provide for lease incentives comprising reduced rent benefits, rent-free periods and leasehold
improvement costs. These amounts are amortized on a straight-line basis over the term of the lease.
2024

Balance at beginning of year
Amortization
Balance at end of year

Reduced rent
Leaseholdbenefits andimprovement
rent-free
costs
periods$
8,234 $
1,615 $
(1,133)(329)$
7,101 $
1,286 $

2023

Total
9,849 $
(1,462)
8,387 $

Total
11,315(1,466)
9,849

ALBERTA ENERGY REGULATORNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2024
Note 14 ENVIRONMENTAL LIABILITIES(in thousands, unless otherwise noted)
The AER has a mandate to protect public safety and the environment. As at March 31, 2024, the AER is administering 30 (2023 – 29) legacy sites onbehalf of the Government of Alberta. Of these sites, during the year ended March 31, 2024, the AER identified one (2023 – one) site as having immediate
public safety and environmental risk, and the AER needed to take appropriate action to mitigate these risks. During the year ended March 31, 2024, the
AER incurred $4 (2023 - $3) in costs to mitigate immediate public safety and environmental risks. Costs to mitigate immediate public safety or
environmental risks are costs where the AER has completed protective or remediation work at legacy sites. Costs for ongoing assessment and monitoringare included.
As at March 31, 2024, the AER is not responsible, nor has it accepted responsibility, for performing remediation and reclamation work at contaminatedsites. The AER has $nil (2023 - $nil) environmental liabilities recorded.
Note 15 ASSET RETIREMENT OBLIGATION
Tangible capital assets are assessed for asset retirement obligations annually. Asset retirement obligations are initially measured as of the date the legal
obligation was incurred, based on management's best estimate of the amount required to retire tangible capital assets and subsequently re-measured
taking into account any new information and the appropriateness of assumptions used. At March 31, 2024, the estimate of the liability is insignificant andtherefore no liability was recognized. During the year ended March 31, 2024, the AER incurred $nil (2023 - $nil) in costs to settle the obligation.
Note 16 EMPLOYEE FUTURE BENEFITS(in thousands, unless otherwise noted)
The AER participates in the Government of Alberta's multi-employer pension plans: Management Employees Pension Plan, Public Service Pension Planand Supplementary Retirement Plan for Public Service Managers. For the year ended March 31, 2024, the expense for these pension plans is equal to thecontributions of $12,357 (2023 - $12,207) and is included in salaries, wages and employee benefits on Schedule 1. The AER is not responsible for future
funding of the plan deficit other than through contribution increases.
In addition, the AER maintains its own defined benefit Senior Employees Pension Plan (SEPP) and two supplementary pension plans to compensate
senior staff who do not participate in the government management pension plans. Retirement benefits are based on each employee's years of service andremuneration.
All the information presented in the note below is related to the AER's defined benefit pension plans.
The effective date of the most recent actuarial funding valuation for SEPP was December 31, 2021. The accrued benefit obligation as at March 31, 2024 isbased on the extrapolation of the results of this valuation. The effective date of the next required funding valuation for SEPP is December 31, 2024.
Pension plan assets are valued at market values. During the year ended March 31, 2024, the weighted average actual return on plan assets was 6.6% (1.9% in 2023).
Significant weighted average actuarial and economic assumptions used to value accrued benefit obligations and pension benefit costs were as follows:
Accrued benefit obligations

2024

Discount rate
Rate of compensation increase

6.0% until March 31, 2024,
3.0% thereafterLong-term inflation ratePension benefit costs for the year
Discount rate
Expected rate of return on plan assets
Rate of compensation increase

2023
5.3%

2.0%
2024
5.4%
5.4%
6.0% until March 31, 2024,
3.0% thereafter

5.4%
4.0% until March 31, 2023,
6.0% until March 31, 2024,
3.0% thereafter
2.0%
2023
4.5%
4.5%
4.0% until March 31, 2023,
3.0% thereafter

ALBERTA ENERGY REGULATORNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2024
Note 16 EMPLOYEE FUTURE BENEFITS (continued)(in thousands, unless otherwise noted)
The funded status and amounts recognized in the Consolidated Statement of Financial Position were as follows:

2024
Market value of plan assets
Accrued benefit obligations
Plan surplus
Unamortized actuarial gains
Pension assets

$

$

2023

90,265 $(72,374)
17,891(4,154)
13,737 $81,577(67,126)
14,451(4,548)9,903

The pension benefit costs for the year included the following components:

2024
Current period benefit cost
Interest cost
Expected return on plan assets
Amortization of actuarial gains

$

$

2023

2,421 $
3,705
(4,549)(280)
1,297 $

3,921
3,277
(3,462)(67)
3,669

Additional information about the defined benefit pension plans is as follows:
Benefits paid
AER contributions
Employees' contributions

$

2024
2,756
5,134
850

$

2023
4,189
9,615
751

The asset allocation of the defined benefit pension plans' investments was as follows:
Equity securities
Debt securities
Alternatives
Other

2024
44.9%
24.6%
19.7%
10.8%
100.0%

2023
45.4%
24.3%
18.5%
11.8%
100.0%

ALBERTA ENERGY REGULATORNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2024
Note 17 TANGIBLE CAPITAL ASSETS(in thousands)

Estimated useful life
Historical cost

2024

Land

Leaseholdimprovements

Furniture andequipment

Indefinite

Term of thelease

3-10 years

(2)

2023

Vehicle (1)Computerhardware andsoftware5-15 years

3-10 years

Total

Total

(2)

(3)

Beginning of year
Additions
Disposals, including write-downs$

Accumulated amortization
Beginning of year$
Amortization expense
Effect of disposals, including writedowns
Transfers and adjustments (4)

282
282

$

47,623
1,477
49,100$12,902 $257(660)
12,499584
584$

140,256 $
11,796(4,275)
147,777

201,063 $14,114(4,935)210,242

197,386
12,808(9,131)
201,063-$

26,9892,646$

10,029941

74$

107,373
8,287$$

144,391
11,948

139,943
13,114(4,185) $379 $111,854(4,775)955
152,519
57,723-

29,635

$

(590)
576
10,95674

Net book value at March 31, 2024

$

282

$

19,465

$

1,543

$

510

$

35,923

Net book value at March 31, 2023

$

282

$

20,634

$

2,873

$

-

$

32,883$$(8,666)
144,391$

56,672(1) A new tangible capital asset class has been added effective April 1, 2023 prospectively for purchased vehicles.
(2) The estimated useful lives for furniture and equipment, and computer hardware and software have changed to 3-10 years following a policy review. These changes inaccounting estimate have been accounted for prospectively, effective April 1, 2023.
(3) Historical costs include work-in-progress at March 31, 2024 totalling $12,055 (2023 - $6,381) comprised of: computer hardware and software of $10,896 (2023 -$6,369) and leasehold improvements of $1,159 (2023 - $12).
(4) Transfers and adjustments solely relate to accounting policy alignments and reclassifications between capital asset categories.

Note 18 ACCUMULATED SURPLUS(in thousands)
Accumulated surplus is comprised of the following:
2024

2023

Net investment in tangible capital assets (1)Investments intangible capital Unrestrictedassets (1)net assets$
48,438 $26,497 $
5,211
2,184
(2,184)

Balance at end of year$

Balance at beginning of year
Annual operating surplus

50,622$

29,524(1) Excludes leasehold improvement costs received by the AER as a lease incentive and related amortization.

$

Total
74,935
5,211
80,146$$

Total
73,587
1,348
74,935ALBERTA ENERGY REGULATORNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2024
Note 19 CONTRACTUAL RIGHTS(in thousands)
Contractual rights are rights of the AER to economic resources arising from contracts or agreements that will result in both assets and revenues in the
future when the terms of those contracts or agreements are met.
During the year ended March 31, the AER collected the following amounts for its contractual rights under operating subleases:
2023

2024
Contractual rights from operating subleases

$

592

$

543

$

433
439
182
1,054

As at March 31, 2024, estimated amounts that will be received or receivable for each of the next five years are as follows:
2024-252025-262026-272027-282028-29

Note 20 CONTINGENT LIABILITIES(in thousands, unless otherwise noted)
The AER is involved in legal matters where damages are being sought. These matters may give rise to contingent liabilities.
Accruals have been made in specific instances where it is likely that losses will be incurred based on a reasonable estimate. As at March 31, 2024,
accruals totalling $25 (2023 - $1,312) have been recognized as a liability. The AER has been jointly named with the Government of Alberta in Athabasca
Chipewyan First Nation claim that has a total amount claimed of $500 million in March 2024, the outcome of which is not determinable.
The AER has identified various sites where contamination may exist and the level of contamination is unknown at this time. As at March 31, 2024, noliability has been recognized for these sites as the AER is acting as an administrator on behalf of the Government of Alberta. No liability for remediation onother sites has been recognized as the AER becoming responsible for these sites is unlikely. The AER’s ongoing efforts to monitor contaminated sites
may result in environmental remediation liabilities related to newly identified sites, change in the assessment or intended use of existing sites, or change in
responsibility. Any change to the environmental liabilities will be accrued in the year in which they are assessed as likely and measurable if they are
deemed to be the AER’s responsibility.

Note 21 CONTRACTUAL OBLIGATIONS(in thousands)
As at March 31, 2024, the AER had contractual obligations totalling $146,267 (2023 - $125,189).
Contractual obligations are obligations of the AER to others that will become liabilities in the future when the terms of those contracts or agreements aremet.
As at March 31, 2024, estimated payment requirements for obligations under operating leases and contracts for each of the next five years and thereafter
are as follows:
2024-252025-262026-272027-282028-29
Thereafter$$

54,57524,762
18,23814,122
11,704
22,866146,267

ALBERTA ENERGY REGULATORNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2024
Note 22 ASSETS UNDER ADMINISTRATION(in thousands)
The AER administers security deposits in accordance with specified acts and regulations. Security deposits are held on behalf of depositors with no powerof appropriation and therefore are not reported in these Consolidated Financial Statements. The AER does not have any financial risk associated withsecurity collected. Security, along with any interest earned, will be returned to the depositors upon meeting specified refund criteria. Security may be
forfeited and transferred to the Orphan Well Association for the cost of suspension, abandonment, site decontamination and surface land reclamation.
As at March 31, assets under administration included the following types of security deposits:
2024
Letters ofcreditCash
Liability Management Rating
programs and landfills
Mine Financial Security program
Other programs$$

107,155
118,461
11,869237,485$$

319,472
1,007,981
13,523
1,340,976

2023

Surety Bond$$

Note 23 COMPARATIVE FIGURES
Certain 2023 figures have been reclassified, where necessary, to conform to the 2024 presentation.
Note 24 APPROVAL OF CONSOLIDATED FINANCIAL STATEMENTS
These Consolidated Financial Statements were approved by the AER Board of Directors on May 16, 2024.

561,4225,628
567,050

Total$

426,627
1,687,864
31,020$ 2,145,511

Total
$

384,328
1,559,734
21,984$ 1,966,046

ALBERTA ENERGY REGULATORENERGY REGULATION EXPENSES - DETAILED BY OBJECTYEAR ENDED MARCH 31, 2024

Schedule 1

2024

2023
(in thousands)

Salaries, wages and employee benefits
Consulting services
Computer services
Buildings
Amortization of tangible capital assets
Administrative
Travel and transportation
Equipment rent and maintenance
Loss on disposal and write-down of tangible capital assets$$

155,370
23,38020,66819,056
12,903
2,798
2,511
298
148
237,132$$

147,068
22,60817,801
18,848
13,114
1,703
1,640
296
418
223,496

ALBERTA ENERGY REGULATORSALARY AND BENEFITS DISCLOSURE
YEAR ENDED MARCH 31, 2024

Schedule 2

2023
Restated (4)

2024
Base
salary (1)Othernon-cashbenefits (3)Other cash
benefits (2)

Total

Total

(in thousands)
Position
Board Members (5)President and Chief Executive Officer
Chief Hearing Commissioner (4)Chief Operations Officer (4)Executive Vice-President, Law and General Counsel (4)Vice-President of Finance and Chief Financial Officer (4)Vice-President of People, Culture and Learning (4)

$

500
341
247
285
281
252
241

Former Executive Vice-President, Law and General Counsel

$

-

36
12
15
12
10
5
-

$

34
88
64
88
98
92
74
-

$

534
465
323
388
391
354
320

$

498
465
301
374
328
338
316

-

(1) Includes retainers and per diems for Board Directors and regular salary and acting pay for Executives.
(2) Other cash benefits include payments in lieu of vacation, pension and health benefits, as well as vehicle allowances and other cash reimbursements.
There were no bonuses paid in 2024.
(3) Other non-cash benefits include contributions to all benefits as applicable, including employer's share of all employee benefits and contributions or
payments made on behalf of employees, including pension, supplementary retirement plans, health care and payments made for professional
memberships, tuition fees, parking and other taxable benefits.
(4) The 2023 figures have been restated to include the retroactive application of salary increases.
(5) As at March 31, 2024, the Board of Directors consisted of seven members.

72

ALBERTA ENERGY REGULATORSALARY AND BENEFITS DISCLOSURE
YEAR ENDED MARCH 31, 2024

Schedule 2 (continued)

SEPP AND SRP RETIREMENT BENEFITS(in thousands)
The costs detailed below are only for those employees, included in Schedule 2, who were employed during the years ended March 31,
2023 and 2024, and participated in the SEPP and SRP maintained by the AER. The SEPP and SRP provide retirement benefits tocompensate senior staff who do not participate in the Government of Alberta's management pension plans.
2024

Position
Executive Vice-President, Law and General Counsel
Vice-President of Finance and Chief Financial Officer
Vice-President of People, Culture and Learning

Current
service cost
$
22
29
21

Prior service
and other costs
$
(5)
(2)
(2)

2023

Total
$

Total
17
27
19

$

23
32
28

The SEPP and SRP accrued obligation for each executive employed by the AER during the years ended March 31, 2023 and 2024 isoutlined in the following table:

Position
Executive Vice-President, Law and General Counsel
Vice-President of Finance and Chief Financial Officer
Vice-President of People, Culture and Learning

Accruedobligation
April 1, 2023
$
198
93
70

Changes in
accruedobligation
$
46
46
30

Accruedobligation
March 31, 2024
$
244
139
100

Accruedobligation
March 31, 2023
$
198
93
70

ALBERTA ENERGY REGULATORCONSOLIDATED ACTUAL RESULTS COMPARED WITH BUDGETYEAR ENDED MARCH 31, 2024

Schedule 3

Budget(Note 5)
Revenues
Administration fees
Orphan fund levies and transfers
Government of Alberta grants
Information, services and fees
Investment income$

Expenses
Energy regulation
Orphan well abandonment

217,419
135,000
12,356
1,299
2,700
368,774$

231,274
135,000
366,2742,500

CapitalCapital investment
Less: Amortization of tangible capital assets
Net loss on disposal and write-down of tangible capital
assetsProceeds on disposal of tangible capital assets

833
665
7,039
4,422
12,959$12,294665
12,959-14,500(12,000)

2,500

Net capital investment
Surplus(1)

Adjustments
Adjusted budget(in thousands)

$

-

$

-

218,252
135,665
19,395
1,299
7,122
381,733

Actual$243,568
135,665
379,233
2,500

237,132
150,241
387,373
5,211

14,500(12,000)

14,114(12,903)
(148)
(12)
1,051

2,500
$

218,234
150,241
14,1852,701
7,223
392,584

-

$

4,160

(1) Adjustments reflect changes to the original budget approved by the Treasury Board. The adjustments reflect the utilization of grant funding received in 2023 toaccommodate work completed in 2024 related to mandate expansion activities, higher investment income resulting from the AER issuing the levies earlier thaninitially planned and rising interest rates, adjustments to reflect administration fee penalties issued, along with projected first-time license fees which were transferredto the Orphan Well Association.

ALBERTA ENERGY REGULATORRELATED PARTY TRANSACTIONSYEAR ENDED MARCH 31, 2024

Schedule 4

The AER, in the normal course of business, entered into various transactions with entities consolidated or accounted for on the modified
equity basis in the Government of Alberta's Consolidated Financial Statements. These entities are considered to be related parties of the
AER. Related parties also include key management personnel and close family members of those individuals in the AER. In 2024, there
were no amounts or transactions, other than compensation, between the AER and its key management personnel. Key management
personnel compensation is disclosed in Schedule 2.
Related Party Transactions with Government of Alberta Entities
The AER recognized the following transactions with Government of Alberta entities in the Consolidated Statement of Operations and theConsolidated Statement of Financial Position at the amount of consideration agreed upon between the related parties:
Entities in the
Ministry of Energy
2024
2023

Other entities
2024(in thousands)
Revenues
Government of Alberta grants$

Information, services and fees$

14,185346
14,531$$(in thousands)
16,754333
17,087

$

$

$

$

414
414

Receivable from$

Prepaid expenses and other assets

700
700

$

Entities in the
Ministry of Energy
2024
2023
(in thousands)
ExpensesComputer services
Buildings
Administrative
Consulting services

2023

$

671
671

$

Other entities
2024

2023
(in thousands)

$

$

341
341

$

$

3,006
505
476
182
4,169

$

3,441
433
515
174
4,563

145

$

130

$

14

$

13

$

-

$

-

$

38

$

36

Payable to

$

-

$

-

$

1,216

$

1,987

Deferred revenue

$

5,782

$

7,134

$

133

$

200

Contractual obligations (1)

$

-

$

-

$

6,210

$

3,869

(1) Contractual obligations are obligations of the AER to related parties that will become liabilities in the future when the terms of

those contracts or agreements are met.

ALBERTA ENERGY REGUL ATORAER.CAALBERTA-ENERGY-REGULATOR

442023/24 ANNUAL REPORTAER.CA/RSSABENERGYREGULATOR@AER_NEWSABENERGYREGULATOR