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Failure of Houston Oil & Gas expected to create up to 1,400 orphan wells

CALGARY — Alberta’s Orphan Well Association is warning that the receivership of junior producer Houston Oil & Gas Ltd. could add more than 1,400 wells to its inventory of orphaned petroleum assets.

The organization that steps in when operators of oil and gas facilities can’t or won’t meet their obligations says the total estimated abandonment and reclamation bill from Houston’s assets is $81.5 million.

In an affidavit, OWA executive director Lars De Pauw says the association is likely to inherit those obligations after Hardie & Kelly Inc. was appointed as Houston’s receiver on Oct. 29.

The OWA reports more than 3,400 wells scheduled for abandonment on its books as of Nov. 1 thanks to a string of recent failures among Alberta oil and gas companies.

The Alberta Energy Regulator suspended all of Houston’s licences for wells producing natural gas containing toxic hydrogen sulphide on Aug. 30 after the company warned it was shutting down all of its oil and gas operations due to its financial distress.

Last month, the AER ordered all of Houston’s licences suspended and noted it hadn’t paid $1.34 million in levies it owed to the orphan well fund. It said Houston had advised it no longer had any employees.

Last year, private Sequoia Resources Corp. ceased operations, leaving 2,300 wells, almost 200 facilities and nearly 700 pipeline segments to be sold by its bankruptcy trustee or handed over to the OWA.

This report by The Canadian Press was first published Nov. 6, 2019.

The Canadian Press

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