The Impact of Lexin Resources’ Wells on Alberta’s Orphan Wells Count

The purpose of this article is to identify the impact of Lexin Resources' well inventory on the list of Alberta orphan wells, as published by the Orphan Wells Association (OWA) in March 2017.

This analysis is prompted by recent articles in the Calgary Herald (up to March 31), which refer to Lexin Resources as being shut down and put into receivership by the Alberta Energy Regulator (AER).

This analysis is a snapshot in time and because the number of wells and their status may change over time, this article refers to the counts in the past tense. Please note the disclaimer at the bottom of this post.

The Context of Alberta Orphan Wells:

  • There were 4948 orphan wells in Alberta as of March 2017. Most of those (4250) were classified as having a next step "To Abandon". This means they are to be permanently cut and capped (sealed).
  • The remaining 698 wells were classified as having the next step "To Reclaim". This means the land surrounding the well is to be remediated and reclaimed.
  • The blue circles on the map above show a broad distribution of orphan wells across Alberta, with pockets of concentration evident.
  • To have a well properly "Abandoned" and "Reclaimed" (in AER parlance) is a good thing; it's like saying the well has been properly decommissioned.
  • The OWA does this work on behalf of the industry when well licensees (companies) become defunct (such as going bankrupt). In other words, the wells have become ownerless and the OWA steps in to guide them through end-of-life.
  • The total number of orphan wells in Alberta increased from 1961 wells in Sep 2016 to 4948 wells in Mar 2017, a 152% increase over that period.

Lexin's Orphan Wells: 

  • The AER stated on March 21  that "care and custody of Lexin’s assets remain with the Orphan Well Association and identified working interest participants."
  • The orange circles on the maps above approximate the location of the wells. This is done by identifying Lexin's wells in each Alberta township and then plotting a circle in the centre of those townships (ie. based on the AB Township Survey). The bigger the circle, the greater the number of Lexin wells in the township.
  • The large increase in Alberta's orphan wells in March was mainly due to Lexin's 2113 wells (representing ~43% of the total amount.)
  • All of Lexin's wells appear to be classified by the OWA as having a next step "To Abandon".
  • The majority of Lexin's wells were located south of Calgary, though there were a few pockets elsewhere in the province.
  • The chart below indicates that Lexin's amount of orphan wells "To Abandon" is significantly more than the next highest, that being 274 wells, once belonging to Canadian Coyote Energy.
  • The Alberta Energy Regulator (AER) has indicated that some of Lexin's wells could eventually be transferred to other operating companies. As in, some of the wells will not remain orphan wells and will take on new owners.

Definitions and Interpretation: 

  • *Orphan Wells" are wells associated with Defunct Companies, which "are licensees that are deemed defaulting working interest participants by the AER pursuant to Section 70(2)(b)(iii) of the Oil and Gas Conservation Act."
  • The OWA provide updates to their data about once a quarter.

Disclaimer: The graphs and statistics above are intended as factual descriptions, without making any judgments regarding the parties involved. The information is offered as educational material only and is not guaranteed to be accurate. The source of the raw data is the OWA.

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To see numerous interactive dashboards on the subject, please see this link.

*All information is provided subject to our Terms of Use, including disclaimer of warranties and limitations on liability. © Fuzeium Innovations Inc. To provide feedback, contact us at info@fuzeium.com


Is the Number of Alberta “Orphan” Wells Growing?

Yes, the number of Alberta “Orphan” Wells has grown by 820 between March 2016 to Feb 8, 2017.

Fuzeium has been looking at the “Orphan” Well Lists published periodically by the Orphan Well Association (OWA)  and has been tracking the changes over time.   From the graph below, one can see the yellow bar starts with 1,467 Orphans to Abandon and to Reclaim, which is then followed by increases and decreases until netting out at 2,287.

Changes to List of Alberta Orphan Wells Over Time

In quoting the number for Orphan Wells,  we recommend using phrases like, “it was about, or it was approximately, 2,200 at the beginning of February 2017.

Definition and Interpretation:  

  • “Orphan Wells” are wells associated with Defunct Companies, which  “are licensees that are deemed defaulting working interest participants by the AER pursuant to Section 70(2)(b)(iii) of the Oil and Gas Conservation Act.”
  • The OWA provide updates to their data about once a quarter.
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To see numerous other dashboards on the subject, please see this link.

Is the Number of Alberta Inactive Wells Growing?

Yes, the number of Alberta Inactive Wells has grown by 3,439 between May 2016 to Jan 29, 2017.

Fuzeium has been looking at the Inactive Well List published daily by the Alberta Energy Regulator (AER)  and has been tracking the the changes.   From the graph below, one can see the yellow bar starts with 79,574 Inactives, which is then followed by increases and decreases until netting out at 83,013.

In quoting the number for Inactive Wells,  we recommend using phrases like, “it was about, or it was approximately, 83,000 at the end of Jan 2017”.

Definition and Interpretation:  

  • An *Inactive Well ” according to Directive 13, has not reported any volumetric activity in the last year for normal wells and in the last 6 months for critical sour gas wells.
  • Some of the Inactive Wells at any point in time can be re-activated to produce gas and oil.  No stats of that nature are offered in our analysis.

Note: Orphan Wells  are usually Inactive Wells too and occur when the producer / operator (the well licencee) has become defunct.  We have a separate post explaining that number.

To interact with the specific dashboard above and see the values change, please see this link. To see numerous other dashboards on the subject, please see this link.

How Many “Orphan” Oil & Gas Wells Does Alberta Have?

At the end of 2016, there were about 2,000 wells in Alberta deemed to be “Orphan”* Wells. Those wells have been plotted against the Alberta Township System.  The mapping of Orphan Wells at that time shows a sparse distribution across the province.

In quoting the number for Orphan Wells,  we recommend using phrases like, “it was about, or it was approximately, 2,000 at the end of 2016”.

Definition and Interpretation:  

  • *Orphan Wells” are wells associated with Defunct Companies, which  “are licensees that are deemed defaulting working interest participants by the AER pursuant to Section 70(2)(b)(iii) of the Oil and Gas Conservation Act.”
  • The graph provided differentiates between the two types.
    • Orphan Wells, which are to be Abandoned (the well to be cut and capped) are showing in light blue.  And are usually counted in the total Inactive Well number.
    • Orphan Wells, which are to be Reclaimed, (the land restored) are showing in dark blue.
  • The OWA provide updates to their data about once a quarter.
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To interact with the specific dashboard above and see the values change, please see this link. To see numerous other dashboards on the subject, please see this link.

*All information is provided subject to our Terms of Use, including disclaimer of warranties and limitations on liability. © Fuzeium Innovations Inc. To provide feedback, contact us at info@fuzeium.com

How Many “Inactive” Oil & Gas Wells Does Alberta Have?

At the end of 2016, there were about 83,000 wells in Alberta deemed “Inactive”*. Those wells have been plotted against the Alberta Township System and the mapping shows a dense distribution across the province.

In quoting the number for Inactive Wells,  we recommend using phrases like, “it was about, or it was approximately, 83,000 at the end of 2016”.

Definition and Interpretation:  

  • An *Inactive Well ” is a well that has not reported an operation (production or injection) to Petrinex in the last” 12 calendar months”;   this quote is from AER Directive 006 – Licensee Liability Rating (LLR) Program and Licence Transfer Process.  Published February 17, 2016.
  • The original data source related to this post is the: AER Inactive and Forecast Data File for Dec 30, 2016.  The file is republished daily.
  • The Inactive Well number changes marginally on a daily basis (as reported by the AER).
  • Some of the Inactive Wells at any point in time can be re-activated to produce gas and oil.  No stats of that nature are offered in our analysis.

Note: Orphan Wells  are usually Inactive Wells too and occur when the producer / operator (the well licencee) has become defunct.  We have a separate post explaining that number.

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To interact with the specific dashboard above and see the values change, please see this link. To see numerous other dashboards on the subject, please see this link.

*All information is provided subject to our Terms of Use, including disclaimer of warranties and limitations on liability. © Fuzeium Innovations Inc. To provide feedback, contact us at info@fuzeium.com