According to a recent University of Calgary report, there are up to 80,000 inactive oil and gas wells in the province. Within 100 kilometers of Medicine Hat, there are currently as many as 36,000 uneconomic wells. Even conservative estimates to abandon and reclaim well sites amounts to a billion-dollar opportunity for the Medicine Hat area alone.
With no regulations on how long a well can remain suspended, wells can theoretically remain in that state indefinitely. That could change as the University of Calgary’s School of Public Policy report is calling for time limits on how long a well can remain suspended before the process of abandonment and reclamation takes place. Should that happen, it would represent an enormous opportunity for those in the abandonment and reclamation business.
Although there’s no way of knowing if or when these regulations will be announced, some members of the City of Medicine Hat’s Natural Gas and Petroleum Resources (NGPR) division that I have spoken with see a growing issue that will be addressed in the near future.
For oil and gas producers, it could prove to be a costly initiative. For companies in this space, new regulations could present a big opportunity to prove they can provide any or all the required services in a timely manner. A coordinated effort will be required to pull all the services together and ensure that costs remain low for the well owners.
Medicine Hat businesses are certainly familiar with the oil and gas sector, positioning them to be early movers on what could be a large opportunity. A company’s ability to quickly and inexpensively abandon and reclaim well sites will become tremendously valuable under these new regulations, and coordination will be key. Currently, well abandonment and reclamation service companies that coordinate all the required activities are very few and far between.
It is an opportunity that could flourish in Medicine Hat, thanks to access to idle wells and an experienced labour force.
Invest Medicine Hat is the City’s economic and business development initiative whose role is to uncover and promote business opportunities in Canada’s sunniest city.
This article originally appeared in the Medicine Hat News on Wednesday, February 15, 2017.