XI Technologies: liabilities and claims in 2021
Each week, XI Technologies analyzes its unique combination of enhanced industry data to provide trends and insights that are valuable to professionals doing business in the WCSB. If you would like to receive our Wednesday message to the wise in your inbox, subscribe here.
Over the past two weeks, we’ve provided an update on Western Canada’s oil and gas sector in 2021, focusing on the production of new wells and existing wells. This week we wanted to look at another part of the E&P landscape and see how WCSB handled liabilities in 2021.
For this, we wanted to look at liability values and reclamation totals from January to December 2021 to get an overview of the state of oil and gas liabilities. We then compared these totals with those for 2020.
The information was compiled using XI’s ARO Manager and AssetSuite well and plant data. Pipeline information has been specifically excluded from this compilation, as provincial LLR calculations do not currently include these assets.
Comparing 2021 numbers to 2020 numbers shows liability values have been reduced in the WCSB by more than $3 billion, with Saskatchewan accounting for most of the decline by reducing their liabilities by more than $2.5 billion. of dollars. Alberta reduced its liabilities by more than $500 million, while British Columbia and Manitoba each saw their liabilities increase from 2020.
For an overview of the five major differences between XI’s proprietary third-party cost model and the regulator’s LLR costs, download this case study. The biggest difference noted here is due to regulators underestimating remediation costs and not accounting for remediation costs.
Refurbishments in Western Canada
Now let’s look at the number of site remediations completed in 2021. This data is based on the change in license status for a site, i.e. it does not necessarily reflect when the work was performed, but when the status changed according to regulators (i.e. when the site was officially “rehabilitated”). Cost calculations are performed using LLR numbers.
Above is the total refits in 2021, broken down by province. The four western provinces combined 4,363 reclaimed well sites at an expenditure of approximately $224.6 million.
On the right are the operators that were the most active last year in terms of reclamation, led by Canadian Natural Resources Limited, Cenovus Energy Inc and Imperial Oil Limited. Note: This list does not include refurbishments performed by the Orphan Well Association.
Digging a little deeper into the data can show where refurbishments are being made. In 2021, the highest reclamation spending was in central Alberta at $26.5 million, followed closely by Fort McMurray and the Athabasca/Cold Lake region. If you want to dig deeper into the two recovery graphs, click here to access interactive dashboard versions.
This data was calculated using the Accountability software module of XI AssetBook ARO Manager. ARO Manager is the only standardized tool for estimating and tracking asset retirement obligations in Western Canada’s oil and gas industry. To learn how XI’s ARO Manager can help with liability management planning and reporting, visit our website Where contact us for a demo.