The Alberta Energy Regulator publishes first annual Liability Management Performance Report
In total, more than $1.2 billion spent on closure and cleanup activities in 2022
CALGARY, ALBERTA, JANUARY 17, 2024 – Today, the Alberta Energy Regulator (AER) published the 2022 Liability Management Performance Report. The online report is the first of what will be an annual publication on how the conventional oil and gas sector is managing the closure and cleanup of oil and gas wells, pipelines, and other facilities across the province.
The report aims at improving transparency of industry’s management of conventional oil and gas liabilities as well as to develop performance measure baselines and ongoing assessments of the industry as a whole and licensees specifically.
“The results of this report are a robust and clear indication that the industry is improving in the cleanup of oil and gas wells, pipelines, and facilities,” said Laurie Pushor, AER president and CEO. “While this report is showing significant improvement, continued focus and effort is required to ensure the sustained downward trend in reducing inactive well count in the future.”
The report shows that in 2022, industry spent $696 million on cleanup, exceeding the $422 million spend requirement by 65%.
Additionally, 90% of licensees were compliant with their closure quota, leaving 51 noncompliant licensees with an outstanding amount of $4.2 million in missed closure quota. The 51 companies are listed in the report.
In total, more than $1.2 billion was spent on closure and cleanup activities in 2022. This includes industry spend and closure activities funded by the Government of Alberta’s Site Rehabilitation Program (SRP) and the industry-funded Orphan Well Association (OWA).
Industry operators continue to work on the backlog of inactive infrastructure. In 2022, the inactive well count decreased by 9% – from 91 000 to 83 000.
Industry members are currently submitting closure spend data for 2023, with a deadline of March 31, 2024, to complete their reporting. The 2023 report will be released before the end of 2024.
As part of the new Liability Management Framework, the AER implemented the Inventory Reduction Program in 2022, which includes an industry-wide spend requirement and mandatory closure spend quotas for licensees in the oil and gas sector who have inactive liability (used to determine the licensee’s portion of the industry-wide spend requirement).
Mandatory closure-spend quotas specify the minimum amount a licensee must spend on closure work each year. In 2022, the industry-wide spend requirement was $422 million. The industry closure-spend requirements for 2023 and 2024 were each set at $700 million.
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The AER ensures the safe, efficient, orderly, and environmentally responsible development of energy resources in Alberta through our regulatory activities.
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