Important Updates to ARO Manager

July 17, 2024

We are writing to inform you about a significant update regarding our AssetBook ARO Manager’s XI LLR cost model, which aligns with the recent release of Alberta Energy Regulator’s Directive 011: Licensee Liability Rating (LLR) Program.

XI takes pride in being nimble, accommodating AER changes immediately into our ARO cost model.

As outlined in AER’s recent communication, Directive 011 has been updated to reflect current industry parameters and liability costs, replacing the previous version issued in 2015. This revision primarily focuses on updating liability cost estimates related to well abandonments under the new Liability Management Framework. The key updates include:

  • Revised regional well abandonment cost tables, now detailed in section 5 (previously section 6), reflecting updated depth ranges and liability costs for categories such as Empty not perforated, Empty perforated, Tubing Only, and Tubing & rods across different well depths.
  • Updated parameters for vent flow repair and gas migration to ensure more accurate cost assessments.
  • Addition of a new appendix containing previous regional well abandonment cost tables, continuing to support the LMR until its phase-out in fall 2024.
  • Implementation of new liability values in the OneStop Liability Assessment report, effective July 6, 2024, enabling licensees to access specific liabilities based on the updated directive.
  • Moving forward, Directive 011’s estimated liabilities will undergo annual reviews incorporating closure costs submitted by industry stakeholders. This includes costs associated with facility abandonment, as well as remediation and reclamation for both wells and facilities.

We anticipate further updates to Directive 011 in the fall, with plans to phase out the LMR and its associated programs, More detailed information regarding these updates will be shared as it becomes available..

For your reference, the revised edition of Directive 011, a comprehensive history of liability estimation, and a detailed presentation outlining the methodology behind these updates can be accessed on the AER website.

 

Should you have any questions or require clarification on how these updates may impact your operations, please do not hesitate to reach out to your account manager or our customer support team.

Thank you for your attention to this important update. We remain committed to providing you with the tools and information necessary to navigate these regulatory changes effectively.