Upwards of 1,300 oil wells have ceased operations following the closure of Houston Oil and Gas earlier this fall.
The Orphan Well Association (OWA), an organization that deals with abandoned oil wells throughout the province, has warned that the repercussions of southern Alberta natural gas operator, Houston Oil and Gas, shutting down its operations could leave them with hundreds of new wells to look after.
An October 15 affidavit from OWA Executive Director Lars De Pauw states that Houston Oil and Gas failed to comply with orders from the Alberta Energy Regulator (AER) to “seal, lock, and chain all wells listed in the order by September 20.”
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De Pauw states that he was made aware that Houston had told the AER that “it did not have the ability to provide the custody and care of its oil and gas operations in accordance with the regulatory requirements,” and that the AER was notified on October 9 and 10 that Houston had “ceased operations” and “no longer has any employees.”
It was also noted that Houston had been responsible for at least 1,264 wells, 41 facilities, and 251 pipelines — assets that will cost an estimated $81.5 million in abandonment and reclamation obligations, a cost that will likely fall on OWA, according to the affidavit.
Hardie and Kelly Inc, a Calgary-based insolvency firm, had been appointed the receiver and manager of Houston’s business as of October 29.
De Pauw stated that if all of Houston’s wells became designated as orphans, “the orphan inventory of wells requiring abandonment will increase by nearly 30%.”
It is hoped that at least some of the assets will be “sold and placed into the hands of responsible producers, to avoid situations in which saleable producing assets are designated as orphans,” De Pauw said in the affidavit.