Thanks to the extensive drilling associated conventional oil and gas business, Alberta is one of the holiest places on the planet…and I am not talking about our Bible-Belt reputation.
We have become very good at drilling in this province and export that expertise and technological advancements all over the world.
There are serious economic, environmental and regulatory challenges facing these well operators. Low prices, high labour costs, competition from shale oil and surplus supply, market access issues and looming reclamation requirements make this a tough business.
Given these situations, may operators are opting to declare many wells “Non-producing” meaning no oil flows That gives one year grace from regulatory obligations and time to see if conditions or technologies change to make oil production economical again.
After a year, and if nothing changes, the Regulator deems these wells to be “Suspended.” That triggers the legal obligation to reclaim the well site and close down to well permanently. Not only is revenue foregone and costs for reclamation looming these wells will move from the asset side of a balance sheet to the liability side. That will make nervous lenders even more anxious about the security they hold for loans.
There is some potential for some wells to be adapted to generate electricity from the heat of the geo-hydro potential in ground water. Innovators are now at a field test stage for this Alberta-based technology.
This can create so many positive results from a constant reliable renewable energy source independent of wind or sunshine limitations. It can decentralize power generation to local communities without costly transmission and distribution costs. It will create manufacturing, maintenance and operational jobs in Alberta communities. It can even help green the oil sands by using hot water recovered from SAGD operations to power plant services with no increased emissions.
To learn more about geothermal in Alberta – click here.