January 2024
We estimate liability using calculations outlined in Directive 011 and through site-specific liability assessments. These estimates, called estimated deemed liability, have changed over the last 20 years due to both changing operational practices and varying costs for closure work. Total estimated deemed liability includes decommissioning and reclamation liabilities associated with wells and facilities and sites with site-specific liability assessments. Figure 5 provides the total, active, and inactive liability estimates. These estimates will continue to improve over time as more closure spend data is collected.
Figure 5. Deemed liability estimates, 2019–2023
We use a holistic assessment to understand a licensee’s ability to meet its regulatory and liability obligations across the life cycle of energy development (see Directive 088 and Manual 023 for details). Two factors this assessment looks at is magnitude of liability and level of financial distress. Figure 6 shows the combined estimated liabilities and closure spend broken out by these criteria. Most of the liability (76%) is held by licensees that are in low financial distress, whereas 8% of total deemed liability is held by licensees in high financial distress.
Figure 6. Licensee liability by magnitude of liability and level of financial distress
