7 JUNE 2024 WorldWide Drilling Resource® Progress on Cleaning Up Liability Wells Adapted from Information by Alberta Energy Regulator Recently, the Alberta Energy Regulator (AER) published its 2022 Liability Management Performance Report. The online report is the first of what will be an annual publication on how the conventional gas and oil sector is managing the closure and cleanup of gas and oil wells, pipelines, and other facilities across the province. The report aims to improve transparency of industry’s management of conventional gas and oil liabilities, as well as develop performance measure baselines and ongoing assessments of the industry as a whole, and licensees specifically. As part of the new Liability Management Framework, the AER implemented the Inventory Reduction Program in 2022, which includes an industry-wide spend requirement and mandatory closure spend quotas for licensees in the gas and oil sector who have inactive liability (used to determine the licensee’s portion of the industry-wide spend requirement). Mandatory closure-spend quotas specify the minimum amount a licensee must spend on closure work each year. In 2022, the industry-wide spend requirement was $422 million. The industry closure-spend requirements for 2023 and 2024 were each set at $700 million. The report shows in 2022, industry spent $696 million on cleanup, exceeding the $422 million spend requirement by 65%. Additionally, 90% of licensees were compliant with their closure quota, leaving 51 noncompliant licensees with an outstanding amount of $4.2 million in missed closure quota. In total, more than $1.2 billion was spent on closure and cleanup activities in 2022. This includes industry spend and closure activities funded by the Government of Alberta’s Site Rehabilitation Program and the industry-funded Orphan Well Association. Industry operators continue to work on the backlog of inactive infrastructure. In 2022, the inactive well count decreased by 9% - from 91,000 to 83,000. Industry members are submitting closure spend data for 2023 and the report will be released before the end of the year. G&O Closure looks like:
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