A vast number of inactive wells certainly does challenge Western Canada’s energy sector, but new technologies and process improvements help industry meet the challenge of getting wellsites and associated facilities to full closure.
The Clean Resource Innovation Network (CRIN) recently hosted a workshop in the ‘Novel Land and Wellsite Reclamation’ theme area to explore technologies, software and processes that support active liability reduction programs for legacy oil and gas sites. JWN Energy and InnoTech Alberta led the workshop on behalf of CRIN.
Findings from the workshop and in follow-up interviews point to many opportunities for optimizing asset retirement via technology and process improvement.
Technologies and tools that support asset retirement
Husky Energy, for one, always seeks out efficiency improvements and cost reductions in its reclamation and remediation programs so the company can restore land and habitat more quickly, whether via collaborating with industry peers or service providers.
To this end, Nick Geib, vice-president of Corporate Responsibility, says the company constantly explores new technologies. “New technologies will help us speed things up in the field and just make us even more efficient.”
As an example, he notes methods to cut off a pipe and plug it below surface without excavating, as well as cutting tools that work inside the pipe. Further, he highlights soil-testing methods that can test for contamination remotely on site, rather than the usual method of sending samples off to the lab and waiting several days for the results.
Remote assessment of legacy sites is of interest to Husky for scouting and taking inventory of onsite equipment, so as to understand exactly what the company must remove (i.e. vessels, buildings, risers, et cetera).
Geib says: “As opposed to site visits, maybe we can get the same or better information in a more sustainable way, taking trucks off the roads, reducing the lead time in planning for asset retirement work, and reducing the risk and cost associated with accessing remote sites. We’re looking into things like that.”
As another technology example, Sean Huang of Matidor.com developed software that producers, oilfield service providers and environmental consultants can use to streamline information sharing, clearly displaying operational data, budgets, photos, as well as other files and information with all necessary stakeholders.
“What started off as a geospatial analysis software evolved into a budgeting and project-collaboration platform with direct application to the oilfield legacy asset space.”
There is also discussion of how technologies and tools used in other areas of the energy industry could be explored and applied to the oilfield legacy asset space. Spartan Controls, a Canadian company specializing in process automation, also participated in the CRIN workshop to further this discussion.
Process improvement leads to big wins
As commodity prices started declining a few years ago, Husky realized just how massive the liability challenge would become in Alberta, with companies shutting in more and more wells that were becoming uneconomic.
“Regulations used to require certain suspension work on wells after they’d not produced for a certain time period,” says Geib. “You’d be crisscrossing the province with service rigs trying to catch all these wells scheduled for suspension. Now, with area-based closure [ABC], operators can collaborate with service providers to work much more efficiently. Think about shorter rig moves, shared services and camps.
“All these things just have a huge impact on how quickly we can return a site to its previous state and the cost of doing so. All the money spent suspending wells spread all over the province is now focused in a centralized location. You get way more work done.”
A technology counterpart to the ABC process, Matidor.com supports both coordination and collaboration. “Right now, data and site status are not available to those that need them for planning and coordination — within departments in one company, or between companies,” says Huang, chief executive officer. “Allowing technology to help is key to driving better, faster reclamation.”
The proof is in the numbers, he adds: “In a recent case we helped a company’s HSE manager who was handling 200 land sites on a yearly basis. Now, using our platform, he can manage 600. There’s a 300-per-cent productivity boost simply because of efficiency made possible through the platform, not to mention the associated cost savings.” ESG, closure issues matter for stakeholders
Closure issues in the upstream energy sector are increasingly crucial for external stakeholders, governments and regulators, says Richard Wong, operations manager at Canadian Association of Petroleum Producers (CAPP).
An active liability reduction program is particularly important now for legacy oil and gas sites, he adds, in light of current low commodity prices and the 2019 Redwater decision.
“Proactively and efficiently managing these assets is crucial now that the Supreme Court of Canada ruled the Alberta Energy Regulator [AER] could legally require the trustee for a bankrupt energy company to fulfill abandonment obligations prior to distributing funds to creditors.”
In parallel to the Supreme Court decision, notes Wong, the number of orphan and inactive wells across Western Canada has significantly increased in recent years.
“We as the regulated community are working closely with government, the AER and other stakeholders to identify programs and mechanisms to encourage proactive and timely closure of inactive sites, and in that way really try to lay the groundwork to ultimately reduce the number of inactive sites in Alberta.”
He adds: “It has become more of an issue on the public’s mind. We’ve seen quite a bit more media interest on the issue in the last year or so, really, since Redwater happened. Integrating innovative technologies that support closure, along with policy and a regulatory framework that are protective of people and the environment, will go a long way to supporting the energy sector as a whole.”
Sharing the ‘good news’ of legacy asset management
With a focus on positive innovations in the oilfield legacy asset management and retirement space, Wong says, there are plenty of affirming updates that companies can share with industry partners at technical forums, as well as with external stakeholders and the general public through various other channels.
“Lots of work is happening in this regard. There’s a lot more opportunity for us to talk about what it is that we’re doing, and to tell some of those good news stories.”
For example, he notes, more than 50 companies participate in the voluntary ABC program, representing more than 60 per cent of the aggregate inactive liability of sites in Alberta.
“As a part of the ABC program, there are certain requirements to report information to the regulator — the number of sites closed and associated costs. And so, there’s a really great opportunity to start rolling up some of this activity to start to understand just how much is occurring on the landscape, and the amount of work and funds that industry is putting towards closure reduction.”
He adds: “For us, it’s important to highlight all the positive work already happening in the closure space. It has become an area of significant focus, both for industry but also for regulators, for governments, as well as for external stakeholders. We work hard to identify programs and ways to encourage more proactive and timely closure of sites.”
Along with sharing ‘good news’ with stakeholders, Wong suggests Canada’s industry could share asset retirement technologies and approaches with other countries. He says ABC already receives international interest.
Potential for export
Many jurisdictions have started to see management of inactive liabilities as an area of greater focus in recent years. As industry works through challenges in Alberta and other western provinces, developing best practices and fit-for-purpose technologies may provide an opportunity to export those technologies and services to other jurisdictions. Not only would industry be reducing liability in the energy sector, but it could also potentially grow the clean tech sector.
For its part, CRIN is helping grow and enable the clean technology sector by connecting entrepreneurs, academia, innovators, government, industry and anyone else concerned with ensuring the cleanest possible Canadian oil and gas.
Joining CRIN is easy and free on the network’s website (cleanresourceinnovation.com). Anyone with a possible solution simply signs a social contract reflecting a shared belief of continuously growing a culture of innovation and enabling Canada to be a clean-energy leader.