CDN NEWS | 
US NEWS 
Solstice Engineering Ltd. is excited to announce the release of our newest software, PetroScout, an off the shelf solution for calculating AFE ready, accurate ARO estimates. Currently available for all of Alberta with the press of a button, Saskatchewan, B.C. and Manitoba will be coming soon. Visit our website at www.petroscout.ca to download a demo and test for yourself.
The AER recently updated Directive 11 (D-11) estimates for wellbore abandonments based on recent abandonment work financials reported to the AER via OneStop as part of the annual Mandatory Closure Spend Quota reporting requirements. These D-11 changes have resulted in well abandonment estimates increasing on average by about 12.5% which is then reflected in an increase of annual corporate required spend amounts. This means that a company that spends approximately $10MM on closure in 2024 may be required to spend an extra $1.2MM in 2025 if the required spend of deemed inactive liability stays around 6.6%. The impact is significant.
D-11 estimates abandonments based on area, depth and well type and is therefore not accurate on a well-to-well basis. The AER has always used D-11 as a tool to distribute levy fees fairly, it was never intended to be an accurate measure of a Licensee’s remaining liability.
The changes to D-11 are problematic in that most recent abandonment work was completed on older wells or newer complicated wells as industry leveraged the government rehabilitation program which has skewed estimates higher for future abandonments on modern wells. Consider the example of Tourmaline’s, 00/07-21-061-05W6/0, a deep well with 6 open zones and 10 event sequences. The AER D-11 estimate comes in at $803,745 due to the well abandonment base rate and extra events. PetroScout estimates that all 3 casings are fully cemented, multiple zones will be abandoned together with continuous cement plugs, making the abandonment estimate $131,700 or 84% lower than the AER estimate. See Sample PetroScout Wellbore Schematic and End of Life Liability Estimate Report.
The AER D-11 total remaining liability estimate for well abandonments is approximately $18 billion for 235,575 wells or about $76,200 per well. Of these wells, 26% were drilled prior to 1996. The remaining 74% of wells were drilled in 1996 or later, at which point wells were designed to be drilled using better cementing practices and covering groundwaters with surface casing cement. Wells drilled after 1995 should be cheaper to abandon for this reason. PetroScout estimates the remaining liability for these same 235,575 wells to be approximately $12.25 billion or about 32% lower than AER D-11 estimates. These estimates use current industry vendor rates, determine open zones, remedial cementing requirements using nearby historical abandonments as a guide, etc. to provide unparalleled accuracy.
PetroScout has a powerful built-in list system that allows Licensees to more efficiently and accurately calculate ARO, upload latest regulator LLR data, and manage end of life work. By harnessing PetroScout’s Well List tool and Well Abandonment Planning Report, Licensees can now concentrate their minimum spend requirements in a way that remaining inactive deemed liabilities will reduce at a higher rate than the actual spend, meaning the future annual remaining spend will be lower. This is done by concentrating closure dollars more efficiently on:
- Easy /low spend wells: wells ready for cut and cap, can be abandoned rigless, etc.
- Wells that have high deemed liabilities (i.e. multiple events) but are actually significantly lower in cost to abandon (i.e. 7-21 described above)
- Wells that are lower working interest but have high gross deemed liabilities
- PetroScout groups work together based on proximity, to take advantage of campaign savings using area-based closure approach
- PetroScout prioritizes reclaiming leases with high annual carrying costs
- Using PetroScout risk analysis to assist with prioritizing wells, pipelines and facilities to lower corporate risk
Download a demo of PetroScout today to see how your company can optimize its end of life liability reduction and effectively reduce its annual mandatory closure spend quotas.
About PetroScout:
PetroScout is a thorough and comprehensive software solution that provides industry with accurate end of life liability/ARO/A&D estimates, manages regulatory compliance and end of life work (deadlines, inspections, tests, regulatory submissions, etc.), builds wellbore schematics using only government data, provides geospatial representation of their assets, and acts as a hub for all data needs. PetroScout provides everyday workflow efficiencies and tools that simply do not currently exist.
Examples of Tools and Data Analytics unique to PetroScout:
- Geospatial maps with incorporated images populated with unique PetroScout data
- Wellbore schematics for every well ever drilled
- Detailed zone analysis
- Estimated primary cement tops
- Well File Review Form – review wells up to 80% faster
- Detailed liability estimates and mini-programs for every well, pipeline and facility
- Access details
- AFE ready ARO estimates / A&D prospecting (why we put Scout in the name)
- Estimated LLR asset values and liabilities
- Detailed risk analysis and compliance requirements
- Licensee chain of custody history and working interest participants
- Formation top estimates below total depth
- Pipeline connectivity, compliance requirements and dead leg analyses
- Facility data reports, facility ownership analysis
- Industry Summary Reports including top producers, data is updated within 2 days of becoming available in Petrinex
- Built-in engineering tools
Target Users
PetroScout is for anyone who benefits from efficient and automated datasets designed to aid in reducing and cleaning up Western Canada’s Oil and Gas liabilities:
- Oil and Gas Producers
- Private Equity Firms & Financial Institutions
- A&D / M&A Specialists
- Oil and Gas Service Companies
- Environmental Companies & Consultants
- Midstream Oil and Gas Companies
- Regulators
- Insolvency & Regulatory Lawyers
- Individual Consultants
- First Nations leadership groups
- Farmers/Ranchers (understand cost of closure for wells, etc. on land).
About Solstice Engineering Ltd.
Solstice Engineering Ltd. provides petroleum software solutions, acquisition and divestiture liability estimates, LLR evaluations, independent ARO estimates, and petroleum consulting services.
Share This:
COMMENTARY: Carney’s Command of Canada’s Projects: What Gets Built, What Gets Blocked, and Who Decides – Ron Wallace