Briefing Note
CAMPUT Energy Resources Committee
Aging Infrastructure – An Alberta Perspective
Issue
Aging upstream oil and gas infrastructure gives rise to legitimate concerns on fitness for continued service. The number of inactive but not abandoned and reclaimed wells, pipelines and production sites is increasing. These inactive sites in the eyes of the public represent an unnecessary industry footprint and represent an increasing potential liability.
Background
Two key concerns exist with aging upstream oil and gas infrastructure.
1. Infrastructure Integrity
Much of the existing oil and gas infrastructure, particularly pipelines, has been in service for many decades and will continue to be in use well into the future. Compromised integrity of aging infrastructure may present environmental and public safety risks.
Integrity of oil and gas infrastructure is sustained through appropriate operating and maintenance practices supported by appropriate regulations. Part of the process of revising Alberta regulations involves determining how changed requirements will apply to existing infrastructure including compliance timelines. In the last decade Energy Resources Conservation Board (ERCB) requirements for storage tank integrity, sulphur recovery and flaring, among others have resulted in requirements for operators to assess existing infrastructure and make improvements to address standards. More recently the Canadian Standards Association (CSA) has developed standards related to maintenance of pipeline integrity that will need to be incorporated into Alberta regulation.
2. Closure
At some point in time all upstream oil and gas facility sites will reach their end of life and will need to be properly closed (shutdown, decommissioned, abandoned, remediated and reclaimed). Collectively, these end-of-life activities, along with systems to manage related liabilities, are referred to as “closure” matters.
While abandonment and reclamation standards have been in place for some time, updating is needed.
Information from evaluation of select abandoned wells, as well as other technical assessments, have identified potential environmental and public safety risks that require further assessment and identified needs for upgrading related regulatory requirements.
Surface developments have occurred in close proximity to abandoned wells that subsequently required remedial work that may require removal of houses and other structures. This has raised concern about the need for appropriate setbacks for abandoned wells and other upstream oil and gas facilities.
Informal assessment also indicates that significant recoverable reserves may remain behind inactive wells. Limited regulatory focus, low industry priorities and waning production engineering expertise may be factors in overlooking both good production practices and emerging technologies to access these remaining reserves.
Current regulation lacks effective drivers to cause timely action to abandon, remediate and reclaim inactive upstream oil and gas facilities and wells. The following chart illustrates the challenge associated with growth in abandoned but not reclaimed well sites.
Alberta’s licensee liability rating regulations and orphan fund currently provide means to protect the public purse from closure costs. These measures, however, do not appear to provide sufficient incentive for industry to take timely action.
Current regulatory liability management requirements and the orphan fund do not address the complete range of upstream oil and gas facilities and activities. Gaps exist with respect to ERCB licensed water wells, disposal wells, storage caverns, acid gas disposal projects and pipelines. Further, liability estimating methods and supporting cost data may not be current and may result in inaccurate assessments of individual site, company and cumulative Alberta liabilities.
Current Status
The ERCB has identified the need for greater priority for regulatory improvements to address closure issues. Work by the ERCB has been and is under way to better understand risks, develop improved standards and upgrade liability management systems. In addition, Alberta Environment has work under way to update reclamation criteria.
The ERCB has started an assessment of the broader scope of upstream oil and gas closure issues, with the intent of progressing action on these issues through an appropriately prioritized and sequenced initiative.
The ERCB is completing plans for a pipeline integrity regulatory initiative with respect to CSA standards related to maintenance of pipeline integrity.
Analysis
CAMPUT discussions could consider eight core elements related to management of aging infrastructure and closure issues.
1. Define measures to sustain and verify integrity of pipelines and other upstream oil and gas infrastructure.
2. Evaluate integrity risks and mitigation needs for historic abandoned wells and other facilities.
3. Upgrade well design and abandonment requirements.
4. Define setbacks and land use limitations for abandoned wells and sites.
5. Update remediation/reclamation standards.
6. Define measures that will focus greater effort on review of marginal and inactive wells and implementation of practices to ensure optimum resource recovery.
7. Improve timeliness of inactive site abandonment and reclamation.
8. Enhance liability management policies, programs and information.
The foregoing list is presented in order of priority and the first four items in many ways are prerequisites to effective action on timeliness.
Alternatives/Future Actions
The CAMPUT Energy Regulatory Committee affords one of several opportunities to advance understanding of aging infrastructure and closure issues. It represents an opportunity to create alignment among Canadian jurisdictions.
Next Steps
Does the CAMPUT Energy Resources Regulatory Committee want to include a focus on sustaining integrity of aging upstream oil and gas infrastructure and particularly, management of timely abandonment, remediation and reclamation?
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