January 16, 2019
A number of clients have asked if we could utilize XI’s ARO Manager data and cost model to do a comparative analysis of provincial oil and gas liabilities for Alberta, Saskatchewan, and British Columbia. While we don’t currently have ARO data for mined oil sands, pipelines, or Oilfield Waste Liability (OWL) data, we do have everything else (including SAGD), so we thought we’d give it a shot. Here are the results.
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According to our data and the standardized 2019 cost model in ARO Manager, oil and gas asset retirement obligations (ARO) for Alberta wells and facilities now totals $44,772,959,877, not including mined oil sands, pipelines, or Oilfield Waste Liabilities (OWL). This number appears to corroborate with the AER’s most recent publicly stated estimate of $58.7 billion which we believe included mined oilsands and OWL, and discredits speculative estimates of $260 billion that appeared in media reports late last year.
XI’s 2019 estimate for Saskatchewan comes in at $10,214,310, 342 and the estimate for British Columbia sits at $4,129,506,471.
The analysis was performed by XI’s data specialists using the enhanced public data and tools available in their AssetBook ARO Manager software. Liability costs in the estimate included all well and facility licenses in each province, except Alberta mined oilsands and Oilfield Waste Liability (OWL). Calculations were made using XI’s recently released 2019 ARO Cost Model, which reflects the current reality of abandonment and reclamation costs in each of the three provinces.
We ran the same analysis using our new 2019 cost model AND our previous 2018 cost model. Alberta’s total liabilities increased by just over $8.7 billion for 2019. Saskatchewan’s total cost increased by just over $2 billion, while B.C.’s total liabilities estimate increased by just under $448 million.
XI originally launched the ARO Cost Model in 2017 as a simple calculator for land and business development professionals to more reliably estimate the end-of-life costs of potential acquisitions. The only commercially available basin-wide ARO cost model was created based on a study of actual abandonment and reclamation costs for wells and facilities across every area of the Western Canadian Sedimentary Basin (WCSB). In 2018, XI Technologies Inc. renamed the tool AssetBook ARO Manager and expanded its capabilities to enable companies to use it as an internal ARO estimating, tracking, scenario analysis, and decision-making tool that helps monitor ARO for individual assets or for an entire portfolio.