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IS THERE A NEED FOR NEW POLICIES FOR INACTIVE AND ORPHAN WELLS?

Is There a Need for New Policies for Inactive and Orphan Wells?

Study Released October 11, 2017

Natural Gas Report - August 2017

The 2014 downturn in the energy sector hit the profitability of oil and gas companies, pushing some into survival mode. The insolvency rate increased, leading to an increased amount of assets, specifically wells, being inactive or orphaned. However, even in a high oil price environment, oil and gas companies may go bankrupt, which requires policies and procedures in place to deal with leftover assets. In February 2017, the question of orphan wells was raised as the Alberta Energy Regulator (AER) “has suspended all licenses of Lexin Resources Ltd. wells, facilities, and pipelines, requiring the company to cease all production” [6] which resulted in adding over 1,000 oil and gas wells and other properties to the orphan wells pool in the province [16]. These recent events highlighted the issue in Western Canada, not only in Alberta, but also in Saskatchewan and British Columbia. This article presents the current situation with orphaned wells in Western Canada and describes existing regulations..... Download full report.

August 2017