3rd edition
Authors:	Duncan Kenyon, Nikki Way, Andrew Read, Barend Dronkers, Benjamin Israel, Binnu Jeyakumar, Nina Lothian
Publisher:	Pembina Institute
Publish Date:	October 2016
PDF Download:	[Landowners' Guide]              [Landowners' Primer]
Initiation Phase
Exploration Phase
Development Phase
Pipelines and Other Infrastructure
Environmental Impacts
Abandonment and Reclamation                 Closing Down and Reclaiming Wells                 Well and Pipeline Abandonment and Related                  Questions                 Reclamation of Well and Other Sites                 Operator Insolvency and Orphan Wells
Compensation, Rights, and Hearings
Appendices

Closing Down Oil and Gas Wells: An Overview

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  Figure 1

Closure is the last stage in the life of an oil or gas well in Alberta. This consists of a number of steps: the well becoming inactive, suspension and abandonment, followed by remediation and reclamation.

Figure 1 shows a general outline of the stages of a well from cradle to grave. Other types of oil and gas infrastructure (such as pipelines) have different life cycles.

Oil and gas activity in the province is regulated by the Alberta Energy Regulator (AER).

Inactive well

An inactive well has not produced any oil or gas, had any fluids injected, or produced any wastewater for six to 12 months (although it may still be flared or vented). Generally, wells are considered inactive after 12 months with no activity (critical sour wells are considered inactive after six months with no activity). No action is required by the company for a well to be considered inactive. According to AER directives, a company has up to 12 months after a well is declared inactive before it must either resume operations or suspend the well (except for critical sour wells). Despite this time restriction, in practice wells may sit inactive for many years.

Suspended well

Once a well has been classified as inactive, if it doesn’t start production again it must be suspended within 12 months. Requirements will vary with the type of infrastructure on the pad. For example, for a well head, the operator must ensure there are no leaks; service and pressure-test the well head after sealing it; ensure all valves are still functional; chain and lock all valve handles; install bull plugs on all outlets (except the surface casing vent); and ensure all wellheads are clearly marked or fenced so they are always visible.

The operator must inspect the site every year and report their findings to the AER. Specific requirements for well suspension and inspection are listed in AER Directive 013: Suspension Requirements for Wells and an overview is available on the AER’s website, under “Regulating Development: Project Closure.”

Abandoned well (decommissioned well)

Also known as decommissioning, abandoning a well involves permanently dismantling and sealing it after it’s ceased production. The AER has guidelines for abandoning the parts of the well below the surface of the land (subsurface abandonment) and above the surface (surface abandonment). Surface abandonment includes wellheads.

Abandonment is necessary before site reclamation. There is no set timeline for when a company must complete abandonment after suspension. Once a well has been abandoned, it still has to go through the reclamation process.

Remediation

Remediation is the management and clean-up of any spills or contamination from a company’s activities or facilities. This is supposed to be done at the time of the incident, even if the facility is still operating, but it’s also an important part of the reclamation process.

Reclamation

Reclamation is the process through which a company returns the land it disturbed to a functionally equivalent state as it was prior to operations. It is the final step in closing a site. For a site to be certified “reclaimed” a company has to apply for a reclamation certificate.

While this life cycle outlines the process that’s supposed to happen in Alberta, there can be significant problems when a company no longer takes responsibility for a well (or other infrastructure). This is referred to as ‘orphaning’ and is explored throughout the primer.

A well is considered orphaned when there is no longer a company that’s legally or financially responsible for it. This can happen because a company has financial issues or the AER suspends the well licence. While the majority of wells in Alberta are not orphaned, an increase in companies declaring bankruptcy has led to an increase in orphaned wells. An orphaned well may be transferred to the authority of the Orphan Well Association (OWA) for suspension, abandonment and reclamation.

Reclaiming Oil and Gas Wells

Landowner Story

A farmer found an area on his newly-purchased land where he had to double-seed because crops would not grow properly. The previous landowner asked whether he had “found the spot where nothing will grow.” It turned out it was a well site that had been reclaimed. The new landowner investigated: “I contacted the company that had owned the well site, because I realized there was something wrong.” The company claimed the new landowner had no rights because it had settled concerns with the original landowner.

How is reclamation supposed to work?

Reclamation is the end of the life of the well (see previous section). Depending on the age of the well, different reclamation criteria will apply. The AER says companies have a duty to:

• reduce land disturbance
• clean up contamination (known as remediation)
• salvage, store, and replace soil, and
• revegetate the area.

A company is eligible for a reclamation certificate when the land is functioning similarly to how it did prior to oil and gas development, and it no longer needs work to be remediated or reclaimed. Even then, the operator remains responsible for the land for 25 years after a reclamation certificate has been issued.

It’s important to make sure your expectations are aligned with the actual reclamation process. Reclamation guidelines require that your land is returned to 85 per cent capacity, not full capacity. (Learn more about this in the in the Landowner’s Guide to Oil and Gas Development).

Issues with reclamation Reclamation can take years, even decades. There are no required timelines for a company to complete reclamation, so the well may sit suspended or abandoned for a long time before reclamation even begins — in some cases, it may sit inactive longer than legislation permits. The process may be further complicated if the well belongs to an operator that’s no longer in business.

In some cases, even if the well is reclaimed, you may not be satisfied with the results. The operator is required to work to address your concerns and should provide you with a Reclamation Certificate Application Package the same day they submit it to the AER. If you feel your worries have not been addressed, you can file a Statement of Concern once the reclamation application has been submitted. If the reclamation certificate is granted anyway and you are still not satisfied, you have one year to appeal the decision. (The form to appeal is on the AER website. The Landowners’ Guide to Oil and Gas Development, the Farmer’s Advocate Office and Action Surface Rights also provide good information on appeals).

The AER may conduct desk based reviews or site visits before issuing reclamation certificates. Although previously the Ministry responsible for Environment aimed to visit 15% of sites, the AER does not have audit targets for reclamation certificates and instead it has been reported that AER field inspectors visit only about 3 per cent of sites given reclamation certificates. The vast majority of reclamation certificates are approved by the AER online, through the OneStop system, which is intended to streamline the application and approval process. This could mean that no AER field inspectors review or examine a site that’s about to get a reclamation certificate. While this increases efficiency and saves costs for the regulator, it may further disadvantage landowners who feel that work has not been done properly.

Landowner Story

“I provided access to the company that did the reclamation work through my yard. They had to cross the field and some large transmission pipelines and they needed to get crossing agreements with the (pipeline) companies, so that was a bit of a nuisance.”

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