The abandonment of inactive (suspended) wells has taken centre stage in Western Canada over the past several years. There are currently over 83,500 inactive wellbores in the province of Alberta, with approximately 2,900 wells residing within the Orphan Well Association inventory. As shown in the figure below, industry has consistently been abandoning approximately 2,500 wells per year (3% of the total inventory). Thus, there is currently a 33 year backlog of wells to abandon at current industry rates.
The abandonment challenge for companies of all sizes is to ensure assets which can be abandoned are done so responsibly, expediently and at low cost, while minimizing the impact on resources that should be focused on growing production and reserves. Given that best practices in the abandonment decision making process can be repetitive, involve many disciplines and will have an increasing impact on corporate performance – these processes are prime candidates for workflow automation. Independent international studies have found innovative methods of delivering abandonment activities can save 30-80% of current projected abandonment cost Our work, focused specifically on Western Canadian well abandonment, has identified costs savings of 65% in technical planning and approval of abandonment via the application of workflow automation to the abandonment process.
Join Cougarstone Solutions Inc, on May 30, 2018, to learn more about Abandonless, an innovative automated abandonment workflow solution used to reduce time and cost impact in the technical planning, approval and execution of abandonment programs. The solution is based on step outs from existing production solutions, thus providing a high degree of certainty in the delivered product.
Through the application of Cougarstone’s Value Vanguard assessment, the ability to more than double a technical team’s productivity has been identified. Additional value will be created by the solution through comprehensive and repeatable well potential evaluation (reducing the need to abandon while adding production and reserves); assurance in communication both internally, and externally with Joint Venture (JV) partners and regulators; and allowing internal resources to focus on the organization’s core business of adding production and reserves . An automated workflow solution will capture cost savings, while adding value through better use of resources, complete evaluations and reliable processes.
Cougarstone is proposing the formation of a Joint Industry Project (JIP) to develop a cloud based abandonment workflow automation system. JIP members will form a consortium to provide funding and direction for the timely development of the system. Additionally, members will provide customization requirements and data to inform the build out. There are multiple possibilities for JIP execution including a stepwise build out or full solution.
Wayne Jackson, P. Eng., President of Cougarstone Solutions Inc.
- Why Abandonless?
- What is Workflow Automation?
- Size of the Prize
- How do we know?
- Project proposal
- Technology Platform
Who Should Attend
Decision makers for organizations looking for innovative ways to reduce well abandonment liabilities (both to the balance sheet and on organization resources) and in reducing the cost of well abandonment should attend. Suggestions include:
- Operations Executives and Engineers
- Development and Asset Managers
- Completions and Well Integrity Engineers
- Information Systems Managers
- Orphan Well Association Members
During the recent commodity price downturn, concerns regarding industry well abandonment have taken centre stage. From high profile insolvency cases like Redwater Energy and Lexin Resources to media reports investigating impacts on landowners, taxpayers and industry, the timely abandonment of wells has become a politicized and volatile subject. Given the current 33 year backlog of inactive wells and increased inventory in the Orphan Well Association, there is and will continue to be pressure placed on industry to increase the rate of well abandonments, to reduce the number of non-producing wellbores across Western Canada and to ultimately reduce the Asset Retirement Obligations associated with the industry. While inventory will increase in a commodity downturn and decrease in an upturn, the current inventory is viewed as unsustainable and regulators are actively investigating methods to increase the rate of well abandonment and to decrease potential future liability of the industry within the province. Since mid-2017, the Alberta government has been in discussions with industry stakeholders around potential regulatory changes to incentivize increasing the rate of well abandonment. While there have been no definitive measures put in place to date, possibilities exist around extending the Inactive Well Compliance Program to include prescribed abandonment, making changes to the Licensee Liability Rating (LLR) Program and prescribing bond requirements to cover Asset Retirement Obligations amongst others. It is clear that industry will have to take action in the coming years to increase well abandonment activities, and this will place further cost pressure on the industry.
Abandonment costs vary according to well type, well depth, completion configuration, age and location. Best practice processes involved in well abandonment are fairly standard across industry – including an evaluation phase, a decision point, and execution of the abandonment. The process used must protect viable assets, or assets which could potentially have future value in a higher commodity price environment, while adhering to regulations, maintaining a strong balance sheet and protecting stakeholders through holding minimal unproductive assets in inventory. Completing the abandonment process typically involves input from many disciplines and impacts many stakeholders and as a result, there is significant data management, information sharing, technical evaluation and stakeholder input required. Cougarstone Solutions provides an innovative method to manage this complex process more reliably, minimizing human error, while saving direct costs and freeing up expert resources to add value to a company’s core business.
University of Calgary SPP Briefing Paper: Inactive Oil Wells