Life Cycle of a Well
Every company that explores for and develops Canada’s oil and natural gas resources is financially responsible for safely managing each well it drills, as well as any associated facilities. This includes all stages of a well’s life cycle: exploration, development and operation, as well as end-of-life activities including abandonment and reclamation.
When an oil or natural gas well is no longer productive, the operating company is required by regulations to remove equipment and reclaim the site.
- Active: A well that is currently producing oil or natural gas.
- Inactive: A well that has not produced oil or natural gas in 12 months.
- Suspended: A well that is not currently producing, has been safely secured, but may produce in the future.
- Abandoned: A well that is permanently shut down, is plugged, has the wellhead removed, and is considered safe and secure by regulators.
- Orphan: A well that no longer has an identifiable owner.
- Reclamation Certified (Rec Cert): Well sites that are remediated and reclaimed to the regulatory standard of the day.
Once a well has been abandoned, the site proceeds through the stages of remediation and reclamation. Companies hire qualified environmental consultants to assess the presence or absence of any soil or groundwater contamination, and produce a report detailing how any contamination has been mitigated and confirming the site has been remediated in accordance with provincial requirements.
Managing orphan wells
Abandoned, inactive and suspended wells have an identifiable owner, the licensee, and are financially managed by the licensee through to end-of-life activities. In Alberta, to protect against licensees whose businesses failed and are unable to cover the costs for abandonment and reclamation, the Alberta Energy Regulator (AER) collects an annual levy (the Orphan Well Levy) from all active oil and natural gas producers and remits these funds to the Orphan Well Association (OWA). The Orphan Well Levy is 100 per cent funded by industry. The OWA, on behalf of industry, conducts testing to determine the work needed to abandon the well safely, and then oversees performance of this task.