Recent changes to the Canadian Oil & Gas Evaluation Handbook (COGEH) consider it a best practice to incorporate abandonment, decommissioning and reclamation costs into reserve evaluation reports. Not only is including environmental liability estimates the right thing to do, but increasingly it is being demanded by investors throughout the world. Sproule does an excellent job of explaining this best practice in their report entitled “Reserves Reporting Best Practice” available here.
Historically, determining Asset Retirement Obligation (ARO) Estimates has been a nuisance, usually requiring petroleum companies to lean on people within their organizations that would be better served project managing end of life work. It required using industry experience to come up with average gross well abandonment, pipeline abandonment, and reclamation estimates for each area in which the company operates, vetting these estimates against actual work completed and multiplying them by net well counts. From there, auditors would question the logic and competency of the people providing the estimates, requiring companies to constantly work at building trust between themselves and the auditors.
More recently, petroleum companies have started utilizing regulator generated deemed liabilities which were never intended to be used for this purpose. At their root, the LLR programs are primarily used as a method for allocating levy payments and they are useful for doing this fairly. They were not designed to be a fully inclusive calculation as substantiated by the lack of pipeline estimates and remediation estimates.
Solstice Engineering Ltd has been providing 3rd Party ARO Estimates and A&D liability evaluations to the petroleum industry since 2008. We guarantee accurate, AFE-ready end of life estimates regardless of inventory size. Our expertise with oil and gas ARO estimates, allows us to provide detailed cost estimates for individually operated and non-operated wells, pipelines and facilities equal to that of a human manually doing each estimate. Our approach reassures auditors understand the logic and process are robust, fulsome and deliver highly accurate reports.
Some of the key benefits of the Solstice ARO report are:
Solstice Engineering Ltd. has painstakingly developed this system over 12 years and is quickly becoming the industry leader when it comes to third party independent ARO estimates, A&D Evaluations and LLR Evaluations. This innovative solution is unique to industry and the methods used to create the evaluation reports are without competition. Why continue to waste money on poor allocation of your workforce, or third party companies doing this work the old fashioned way, when the future of these evaluations is here now?
If you are interested in receiving via email a sample of the Solstice ARO report, if you are interested in knowing what your company’s current liability actually is, if you are interested in truly understanding the impact of acquiring or divesting assets on your company’s liability, and if you are interested in optimizing your LLR to avoid posting security deposits, contact Solstice Engineering right now to find out how we can be of service.
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About Solstice Engineering Ltd.
Solstice Engineering Ltd. provides petroleum software solutions, acquisition and divestiture liability estimates, LLR evaluations, independent ARO estimates, and petroleum consulting services. SolComp, Solstice Engineering’s regulatory compliance management system, provides petroleum companies with the most complete and intuitive compliance software system available to industry.
For further information:
Phone: 403-462-2863
Email: info@solsticesolutions.com