AER reports significant growth in closure work spending
CALGARY, AB, April 27, 2023 – Preliminary results indicate that the energy industry spent about 40 per cent more in 2022 than required under the annual minimum mandatory closure spend to close oil and gas sites.
“I am thrilled to see that the new liability framework that we put in place to clean up oil and gas liability is making a difference around the province,” said Pete Guthrie, Minister of Energy. “It’s encouraging to see that industry is going above and beyond the spending targets to prioritize this important work and allocating the appropriate resources.”
In 2022, the AER introduced minimum mandatory closure spend that specifies the amount that industry must spend on closing oil and gas sites annually, including decommissioning and reclaiming wells, pipelines, and facilities. The minimum mandatory closure spend for 2022 was $422 million.
“Based on initial information, approximately $600 million was spent by industry to close oil and gas sites in 2022, which is $178 million above the minimum amount required,” said Laurie Pushor, President and CEO of the AER.
Throughout 2022, the mandatory spend was communicated broadly to industry as a baseline, minimum requirement. The $600 million spend did not include amounts funded by the Government of Alberta’s Site Rehabilitation Program. Final results are expected to be available later this year.
The minimum mandatory closure spend for 2023 is $700 million and is forecast to increase 9 per cent annually through 2027.
In 2022, the energy industry decommissioned about 11 000 wells, 170 pipeline segments, and 440 facilities. The AER issued reclamation certificates for about 2900 sites. The number of inactive wells peaked at around 97 000 wells in 2020, decreasing to 81 561 today.
In early April 2023, the AER introduced the closure nomination process, a second initiative under the Inventory Reduction Program, which allows for the nomination of oil and gas wells and facilities that have been inactive or abandoned for at least five years, for closure. Eligible requesters can submit a nomination form on aer.ca.
Additional information
Alberta oil and gas well status as of December 31, 2022:
- 463 927 total well count
- 156 005 active/producing wells
- 1416 new wells drilled
- 82 837 inactive wells
- 90 460 abandoned/decommissioned wells
- 133 209 fully reclaimed wells