Legal Header

South Calgary residents get a rare view of sour well abandonment

Alberta - November 05, 2017

Calgary’s new communities in the south offer a lot to residents, including scenic vistas and a quick exit to the foothills and mountains. Now residents can add another item to the list: the rare opportunity to witness sour gas (natural gas with hydrogen sulphide, or H2S) well abandonment operations.

Why Abandon a Well?

In the oil and gas industry, an “abandoned well” is one that has been permanently dismantled and plugged, following specific AER requirements.

If a company becomes defunct without having properly abandoned a well, the AER directs any legally responsible or financially viable party to abandon the well. If no responsible or viable party is identified, the AER can designate the well and associated infrastructure as “an orphan.” The Orphan Well Association then takes over the care and custody of the wells and infrastructure.

The South Health Campus, as seen from the well site
The South Health Campus, as seen from the well site.
A crew works to abandon one of two sour gas wells in south Calgary
A crew works to abandon one of two sour gas wells in south Calgary.
Workers ready equipment for well abandonment operations
Workers ready equipment for well abandonment operations.

The Orphan Well Association (OWA) recently abandoned  two orphan sour gas wells near the southeast Calgary communities of Mahogany and Seton. The wells have H2S mixed in with the natural gas. H2S forms when organic matter decays without oxygen. It is often found in natural gas and oil, sewage, or a poorly maintained compost heap. It is colourless and flammable, and it smells like rotten eggs in low concentrations.

Although within City of Calgary limits, these wells are in a rural area and in plain view of nearby residents and businesses. While most Calgarians may not see such operations very often, well abandonment is actually a pretty common practice and is very safe in the hands of professionals such as the OWA. The OWA is an independent not-for-profit organization that manages the abandonment of upstream oil and gas orphan wells, pipelines, and facilities.

“Thousands of abandonments are done every year across the province,” says Pat Payne, manager of the OWA. “There are extensive safeguards in place to protect the public during these operations.”

Here’s what you can expect to see when such a well is being abandoned:

  • Crews and equipment set up shop to remove any remaining sour gas from facilities so they can be safely disconnected from the well.
  • Water haulers fill the well with water to prevent any gas from coming to the surface.
  • Next, crews will safely plug the well with special cement designed to ensure nothing will leak.
  • Once plugged, the well is tested to make sure that gas cannot escape.
  • If necessary, repairs are made.
  • The groundwater is protected by making sure that any section of earth with groundwater that the well goes through is kept separate with cement.
  • Then the wellhead (the part that sticks up above the ground) is removed. In the case of the south Calgary wells, the well casing was removed two metres below the surface and capped.

The south Calgary wells are licensed to Lexin Resources Inc. and were drilled about 50 years ago. The AER’s predecessor had decided that a review would be needed to determine whether existing pipelines and associated infrastructure were affecting urban development; the first review was in 2013 and the next review was scheduled to happen next year. But when Lexin went into receivership earlier this year, the AER received a request to move up the review.

Why the Orphan Well Association?

The AER directed the OWA to provide for the care and custody of these wells, and many others, after it issued a corporate-wide closure order against Lexin. By that point, Lexin had already failed to comply with multiple orders, didn’t have enough staff to manage its sites, and owed more than $1 million in orphan fund levies and administrative fees, and more than $70 million in security deposits.

Other than the two wells and associated pipelines that were abandoned by the OWA, all other Lexin-owned assets are now in the hands of a court-appointed receiver that is selling the rest of Lexin’s assets to responsible parties.

In the Media

Cleanup underway on 2 orphaned sour gas wells near Calgary community just tip of the iceberg
Clean-up of two orphan wells are just two of a startling number left orphaned when a company went into receivership. Gas wells are not something that people expect to have in their communities.
September 25, 2017

Tracie Kenyon, Writer
Luke Spencer, Digital Media