In April, the Alberta Liabilities Disclosure Project (ALDP) released the overall results of our completion of an internal study of well reclamation costs by the Alberta Energy Regulator (AER). The results of the AER’s internal study suggest even conservative estimates were multiples of the costs assumed in Alberta’s regulatory program managing aging and depleted oil and gas infrastructure. These same flawed AER under-estimates are used for accounting purposes by ~nine out of ten oil and gas companies.
Using AER methodology and estimates it commissioned from experienced oilfield service companies, the ALDP has made almost one million cleanup estimates public – three for each well site in Alberta: the AER’s public estimate and two private sector estimates for the cost of both plugging wells and reclaiming well sites.
A relatively detailed explanation of the ALDP’s methodology can be found on this page, and most of the ALDP’s data is available to share upon request.
In this latest release, the ALDP is making public the results of mapping its well cleanup estimates and sorting them according to the company operating each well. The top ten list of companies with the most accumulated well cleanup liabilities were in the ALDP’s July 18th press release and the full list of ~1,500 companies is available below.
It is important to understand exactly what the ALDP is counting with these well cleanup cost tallies. These are not complete cleanup liability estimates for any of these companies; these estimates are limited to the costs of plugging, remediating, and reclaiming oil, gas, and bitumen wells and well sites in Alberta. Most companies will also have additional cleanup liabilities related to the oil and gas facilities and pipelines, as well as operations outside the province.
The well data ALDP utilized to sort Alberta oil and gas wells into hundreds of different cost scenarios came from a private sector data provider (circa June 2018) and did not include ownership details. In the absence of complete ownership data, the company operating each well was assumed to hold at least part of the cleanup liability.
To be clear, operating a well does not equal full ownership. Oil and gas well ownership in Alberta is incompletely understood. Even the AER’s list of well ownership, accessed through a freedom-of-information request, lacks data on more than 100,000 wells. The AER often only requires updating working interest partner (WIP) data upon bankruptcy, leaving actual ownership of many wells unknown to the regulator.
So, while it is likely that a company operating a well is very often at least part owner of that well, it is also likely in many instances that the company operating a well will also have a number of co-owners to share the cleanup cost with. Sorting by operator is not a perfect proxy of well ownership, but serves as a reasonable first measure of distribution.
And to clarify the difference in well cleanup cost totals between the ADLP’s April and July releases, the two exercises measured slightly different sets of wells.
In April, the ALDP’s estimates of well cleanup costs excluded bitumen wells and offered a range between two estimates. Bitumen wells were not included because the AER’s internal study did not differentiate between oil or gas or bitumen wells in cleanup estimates and typical oil and gas well estimates were not considered representative of bitumen wells, which operate under higher sustained pressures than most conventional wells and for which we have little experience reclaiming given the relatively recent development of in-situ production and the relatively long lives of in-situ projects.
For simplicity, bitumen wells were included in the July release and the average well cleanup cost for each well and well site was used. This explains why the ALDP’s two tallies of the same data resulted in slightly different totals. Assigning oil and gas well cleanup estimates to bitumen wells likely results in an under-estimate of their eventual cleanup cost.
Well Reclamation Costs by Company (July 2019)