Public concerns have arisen as of late regarding the proper abandonment of wells in Alberta, with a recent AER report highlighting the estimated liability for well cleanup here and shedding light on the need for a meticulous approach to well abandonment. With approximately 83,000 suspended wells needing to be abandoned in Alberta and another 50,000+ that could be suspended if commodity prices drop, accounting for a staggering 35 percent of all wells in the province, the stakes are high for companies tasked with the responsibility of proper well abandonment.
According to the report, oil and gas producers in Alberta spent 65 percent more than required in 2022 to abandon inactive wells, facilities, and pipelines. This raises questions about the efficiency and cost-effectiveness of the current abandonment process.
So, what can companies and their abandonment groups do to mitigate skyrocketing costs and improve efficiency? Well servicing veterans and experts, like Central Optimization, may just have an answer. And it lies in the pre-abandonment phase.
THE CRITICAL ROLE OF THOROUGH PRE-ABANDONMENT TESTING
Not only is pre-abandonment testing the linchpin of a successful and cost-effective well abandonment program, it is also crucial for keeping liabilities off the balance sheet. Unfortunately, this vital step is often rushed or not given the attention it deserves, leading to potential financial pitfalls for companies.
The process of truly comprehensive pre-abandonment testing involves meticulous examination and identification of potential issues like equipment status, soil contamination, but most importantly, and often the most costly, gas leaks.
THE (COSTLY) CONSEQUENCES OF POOR PRE-ABANDONMENT
Comprehensive pre-abandonment testing, as advocated by industry experts like Central Optimization, can save a company hundreds of thousands of dollars in abandonment costs. This detailed process can be the difference between a well abandonment costing $100,000 or skyrocketing to well over $1 million.
And that is just during the abandonment process itself. After a well has been abandoned, it remains the responsibility of the company that owns it, meaning any future leaks and/or contamination issues remain their financial burden to resolve.
A SECRET TO COST MITIGATION – IDENTIFYING THE REAL GAS LEAK SOURCE EARLY ON
One of the key elements of a successful pre-abandonment testing process is the ability to accurately trace and identify the source of gas leaks. This is where companies can either hemorrhage unnecessary funds or adopt a strategic approach.
Identifying the actual source early on can eliminate the costly and time-consuming process of dealing with multiple gas pockets. Proper pre-abandonment should always involve conducting a “source of the leak” trace test, an innovative approach that allows for the identification of the actual source of the gas leak, not merely the many gas pockets, by recognizing the unique “fingerprint” of each rock layer containing gas in the earth.
This early identification helps streamline the abandonment process and reduce expenses significantly, by eliminating the need for the time-consuming and costly process of perforating and squeezing cement in multiple spots, a practice typical in the industry.
WHAT TO LOOK FOR IN A PRE-ABANDONMENT SERVICE PROVIDER
Quite simply, smart companies will mitigate their liability risk and seek only expert well abandonment service providers who:
- Are capable of conducting a “source of the leak” trace test, accurately pinpointing the origin of any leak and eliminating the costly, lengthy process of perf and squeeze in multiple spots.
- Provide essential well monitoring, like surface casing vent flows, for years after addressing the leak source. This allows for a more cost-effective final abandonment of the wellbore by eliminating multiple workovers and moving directly to the typical “cut & cap” after the flow/leak has been proven to subside to zero.
- Provide thorough assessments of all well equipment, surface site inventory and spill/contamination reports and make recommendations or raise potential flags immediately, preventing future complications or costs.
- Always follow AER rules and guidelines to guarantee client compliance
- Ensure their clients are booking pre-abandonments early each year, helping the entire process go smoothly and even better, as cost-effectively as possible.
YOUR NEXT STEPS ARE NOW
As the energy industry faces increasing scrutiny and the need for responsible environmental practices intensifies, companies must prioritize proper well abandonment now more than ever. For those energy companies with abandonment plans in 2024 and beyond, the critical time to start your pre-abandonment planning is now.
Early booking for pre-abandonment services is crucial to ensure a seamless and cost-effective process, highlighting the critical need for companies to plan ahead and avoid unnecessary financial strain. Those looking for a trusted partner to navigate the complexities of well abandonment in 2024 would be wise to consider the expertise and innovation that a leader like Central Optimization brings to the table.
For more information on Central Optimization or to learn more about their comprehensive pre-abandonment testing and services, CLICK HERE.