Alberta Energy Regulator increases industry-wide closure spend target for liabilities by $278 million to $700 million
June 28, 2022 – The Alberta Energy Regulator (AER) has increased the industry-wide closure spend target for liabilities in 2023 from $422 million to $700 million and released forecasted targets through 2027, which are anticipated to increase annually by 9 per cent.
“These increases ensure closure activity is prioritized by companies developing energy in Alberta,” said Laurie Pushor, President, and CEO of the AER. “We are taking action to stop the growth of closure liability in the next five years. With these new requirements, companies will be accountable to decrease inactive well sites across Alberta.”
The AER reviewed recent closure spending, commodity pricing, and market conditions in determining the 2023 target.
“Given the pronounced improvement in revenue and the continued recovery of the oil and gas sector, industry is well positioned to act decisively on closure liability in Alberta while providing a performance model that can be held up as an inspirational example,” added Mr. Pushor.
Industry-wide spend targets support attending to inactive pipeline, facility, and well inventory reduction and are a part of the overall Liability Management Framework set by the Government of Alberta, which the AER uses to guide its work. Closure spend targets increase the amount of closure work that is occurring in the province as licensees are required to spend a minimum amount on closure annually.
“As Alberta’s economic recovery continues, we are building on our promise to take bold and strong action under the Liability Management Framework,” said Sonya Savage, Minister of Energy, Government of Alberta. “The increased mandatory closure spend target upholds our robust regulatory standards by shrinking the inventory of inactive sites across the province and accelerating the timely restoration of land.”
In 2021, industry decommissioned 11,801 wells, 7,713 pipeline segments, and 570 facilities while 2,159 sites received reclamation certificates by the AER.
“It is reassuring to see the AER working with industry to continue to decrease liabilities and clean up the environment. The increase in spend targets continues to demonstrate that our energy sector is a global leader in responsible energy development. First Nations are supportive of economic development; we have always been, at the same time, we must ensure that the land is protected and reclaimed for our future generations. This announcement is another step in the right direction.”
Stephen Buffalo, President/CEO – Indian Resource Council
“CAPP supports the Alberta Energy Regulator increasing the industry-wide closure spend targets to $700 million in 2023. The increase in spending will help maintain the momentum generated over the past few years of closure arising from the Alberta Site Rehabilitation Program and support ongoing work to update and strengthen Alberta’s liability management framework.”
Brad Herald, Vice-President, Fiscal, CAPP
Alberta Oil and Gas Well Status
- Total Well Count: 461,200
- Producing Wells: 155,750
- Fully Reclaimed Wells: 132,200
- Decommissioned Wells: 83,300
- Inactive Wells: 88,900
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