The increasing inventory of inactive and orphan wells in western Canada has been in the news over the past couple of years, especially when provincial governments issue an update on the number of such wells that need to be addressed.
In case you’re curious about the industry’s progress to address the inventory of wells needing attention – and we hope you are – here’s an update.
This issue is a concern for all oil and natural gas companies, who are working with regulators, landowners and well service companies to ensure wells, pipelines and facilities are decommissioned and reclaimed in a timely manner.
The industry is always looking for ways to accelerate the pace of well closures, to minimize risk to the public, return well sites to landowners, and protect the environment.
What’s in a name? Inactive, abandoned, orphaned?
Active – a well currently producing oil or natural gas.
Inactive – a well or facility where activities have been suspended. Inactive wells may be re-opened and produce again.
Decommissioned/abandoned – a well that is permanently dismantled: the wellbore is plugged, cut and capped, and left in a safe and secure condition. The well site can be reclaimed.
Reclaimed – the surface and subsurface are treated to ensure the site is free of contamination, vegetation is planted, and the site is monitored to ensure revegetation is successful.
Orphaned – a well in any of the above conditions that no longer has a legally responsible owner that can financially manage the well. This can happen when a company goes out of business.
Approaches to addressing inactive
and orphan wells
In Alberta, the area-based closure program enables companies to focus efforts on clusters of inactive well sites to improve efficiency and accelerate the pace of closure. This program has helped to increase closure activity in Alberta while maintaining flexibility for upstream operators.
Alberta, B.C. and Saskatchewan each have provincial orphan programs funded through levies charged to oil and natural gas operators to ensure all wells will be safely abandoned and reclaimed. Some funding also came from the federal government during the pandemic period, to help keep well service companies operating while also addressing the inventory of orphan wells.
Industry in action
Individual oil and natural gas operators are focused on reducing their own inventories of inactive wells. For example:
- Tamarack Valley Energy spent more than $10 million in 2020-2021 on abandonment and reclamation of inactive sites and facilities including 101 wells in 2021 alone. Tamarack uses an area-based closure approach to address multiple wellbores and sites in a concentrated geographic area. This approach minimizes costs and enables a single crew to apply learnings and efficiencies in successive jobs.
- Birchcliff Energy has active abandonment and reclamation programs to ensure non-producing assets are retired and the surface leases are restored to their natural state. Using an area-based closure approach to efficiently abandon inactive wells, in 2021 Birchcliff successfully complete 19 wellbore abandonments, capped an additional 16 wells and decommissioned 44 inactive assets including pipelines.
- At Crescent Point Energy, once assets reach the end of their useful life, detailed remediation and reclamation plans are developed to safely retire wells and facilities and ensure the continued protection of surrounding communities and wildlife. These closure plans are regularly updated and approved by senior management. The company has safely abandoned more than 500 inactive wells and is on track to reduce its inventory of inactive wells by 30% by 2031.
- Through 2019 and 2020, NuVista Energy spent approximately $25 million on abandonment, decommissioning and land reclamation, bring the total number of safely abandoned inactive wells to 430.
The bottom line
As a positive outcome of various updated closure regulations and closure funding programs, the pace of well closures began to increase in 2017 and accelerated in 2021 after introduction of federal-provincial grant programs.
Alberta’s Orphan Wells Association (OWA) says 982 orphan wells were decommissioned in Alberta in 2019-2020, a 23-per-cent increase from the previous fiscal year. In addition, the overall inventory of orphan wells to be decommissioned declined from 3,128 to 2,983, despite the addition of 848 wells to the inventory. It’s good news that shows the positive impacts of investments by both industry and government to return wells no longer in use to landowners or nature. The work is also boosting employment in western Canada’s oilfield services industry.
That’s Canadian Energy in Action.