Managing oil and gas liabilities has become one of the most critical areas of concern for oil and natural gas companies, landowners, municipalities, provincial and federal governments. In the province of Alberta alone, approximately 258,000 wells are designated to be abandoned in the next ten years. This is an ambitious timeline that can easily be impacted negatively when commodity prices drop.
Across the western provinces, wells have been drilled since 1901 when the Rocky Mountain Development Company began drilling near Cameron Creek using a simple “Canadian Pole” rig crafted from wood. The Lineham Discovery Well No. 1 was the 1st Alberta well to produce oil. Wells of that vintage up to the 1970s are referred to as legacy wells and are still being worked on by companies to be fully remediated. Corey Quirion, Well Integrity and Abandonment Society Executive member with oilpatch abandonment experience has worked on legacy wells in the Waterton and Turner Valley areas from the 1920s and 1930s when wells were drilled with the earliest technologies – cable or percussion drills. He identifies the main issue with legacy wells, whether they are located in Alberta, Saskatchewan, BC or Manitoba is the lack of documentation. For example, it is difficult to find any documentation of the Manitoba wells drilled in the 1950s that are the subject of current abandonment work. Quirion says that even wells from the 1960s to the 1990’s often don’t have documentation either as old logs and records may not have been submitted or the company kept their documents and well files after being sold. When wells get sold multiple times, the records are even harder to locate as the digitization that is now common place was not available and records were simply not transferred to the successive new owners. So companies are faced with doing site assessments and often uncover multiple issues requiring delays and complications because legacy wells were not drilled with API standard equipment. Often equipment has to be custom built for legacy wells.
In terms of regulatory development, sources generally agree that Alberta has the longest history of and most developed regulations. Other provinces that experienced smaller, later oil booms and have much fewer legacy and current wells may have regulatory rulings that are still under development. Rumours exist of companies putting together an abandonment program according to established regulations in provinces with less history, only to have the regulations change by the time the program is submitted.
Changes and updates do occur in Alberta, such as the Directive 20 change that was released in October 2022. According to Mark Taylor of Taylor Energy Advisors, “The recent changes to Directive 20 are focused on clarifying CO2 and geothermal related requirements when it comes to well abandonments. This is one of four Directives that had updates released in October as a result of the broad work that the AER did over the past year to ensure that they were ready for a surge of CO2 and geothermal projects.”
So change can be good, especially when it prepares regulations for new industry initiatives. Some point out that with the new changes to Directive 20, it will cost oil & gas companies significantly more money for area-based closure programs to abandon several wells in a small area without having special permissions as the amount of intervals to be addressed have been increased. They advocate for more input from industry. There still seems to be room for discussion says Corey Quirion.
“Companies can apply for different, nonroutine abandonment procedures or routine abandonment procedures where they can come up with a case in collaboration with the directive to propose different specific approaches or procedures and have the AER review and possibly approve for an area. Every area is a little bit different. An approach that’s not going to work for up in Peace River might not work down in Brooks. So I think that’s something that they are open to talk about.”
One of the changes in abandonment directives is the approach to legacy wells that have no vent flow (so no immediate environmental impact). Companies are now required to re-enter the wells to individually squeeze each formation that doesn’t have cement.
“It’s a huge operational change for a well that doesn’t have any issues and has been sitting there for maybe thirty years,” according to Peter Knight, President of WACORP wireline abandonments. “This turns a one-day event into a five- day event. Each formation in the well is worked on. That’s where costs are rising with frustrations coming from the industry.”
Of course, when costs go up, companies develop new skills and technology.
“It promotes technology and innovation within the service sector,” says Knight. “WACORP just does well abandonments and has designed a tool to eliminate tubing trip time. It’s conveyed by wireline so it reduces GHG emissions. Our technology was considered non-routine and it was heavily vetted before we ever got approval from the board – a process that took six years”
Some say higher costs may be bad for producers but good for service companies. As service companies don’t want to look like they’re taking advantage of producers, they look for better, more cost-effective ways to do government mandated work.
Maureen McCall is an energy professional who writes on issues affecting the energy industry.