Premier Brad Wall recently pitched an request for federal funding for well reclamation. Now, the Petroleum Services Association of Canada has also presented a proposal to the federal government that will put oil and gas services companies back to work while benefitting the environment.
“We asked for $500 million in infrastructure funding for well decommissioning operations in Alberta that will create jobs, retain expertise and skills, and provide economic and environmental benefits,” said Mark Salkeld, president and CEO of PSAC.
“It’s a win-win for all stakeholders involved.”
“Our member companies — the leading services, supply and manufacturing companies within the upstream petroleum industry — do not typically ask for or want funding from government. They want competitive royalties, taxes and regulations so their customers the exploration and production companies can continue the responsible development of Canada’s valuable oil and gas resources while contributing billions of dollars to Canada’s GDP every year.”
But, these are not normal times. Investment by E&P companies dropped 40 per cent in 2015 leading to drastically reduced activity levels, and more cuts are underway in 2016.
The result is tens of thousands of oil and gas services workers have been laid off and many oilfield services companies already have or are in danger of closing down forever.
“That’s why it’s the perfect time to put our member companies and their people back to work while addressing a growing challenge,” said Salkeld.
As of January 2016, Alberta had more than 75,000 inactive wells on record requiring downhole wellbore abandonment and surface reclamation, a process called well decommissioning.
Assuming the average cost per well for acceptable well decommissioning ranges between $100,000 and $300,000, then the investment for all current inactive or suspended wells would range between $8 and $82 billion.
Current industry cash flow for 2016 is estimated at $26.5 billion (ARC Financial Corp.) “While we absolutely agree well decommissioning is the responsibility of the licensee, economic circumstances and steadily increasing costs due to ever-improving regulations are causing this work to be delayed or postponed and regular activity has almost come to a standstill,” said Salkeld.
“Well decommissioning will help keep the expertise and intellectual capital that we have worked so hard to find and develop in Alberta so we’re prepared when the turnaround comes.”
