(Adds comment from AER spokeswoman, OWA comment, details on
By Nia Williams
CALGARY, Alberta Feb 15 The Alberta Energy
Regulator (AER) suspended licences on all oil and gas well
facilities and pipelines belonging to Lexin Resources Ltd on
Wednesday, nearly doubling the number of orphaned wells in
Canada's main crude-producing province.
The provincial regulator ordered privately-held Lexin to
cease all production, saying it failed to comply with multiple
orders and lacked enough staff to manage its more than 1,600
Calgary-based Lexin also owes more than C$1 million to
Alberta's orphan fund and more than C$70 million in security for
its obligations to clean up its oil and gas facilities at the
end of their producing life.
"The closure order is the result of a year of trying to work
with the company to come into compliance," said AER spokeswoman
Cara Tobin. "With the number of non-compliances and the debt
that was owed we felt it was important to take these steps."
Lexin did not immediately respond to a request for comment.
Alberta's Orphan Well Association (OWA) is responsible for
cleaning up wells that have no owners financially able to deal
with abandonment and decommissioning costs. It is overseen by
the AER and funded by levies from the oil and gas industry.
The enforcement action by the regulator means the 1,380
wells belonging to Lexin are now in the care and custody of the
OWA, taking the total numbers of ownerless wells in Alberta to
Tobin said that at this time there is no abandonment order
on Lexin's wells, and she did not have any estimate of how much
crude Lexin had been producing because the company stopped
reporting output last summer.
Brad Herald, chairman of the OWA, said he expects a number
of Lexin's wells that are commercially viable will eventually be
bought by other companies, but that process could take up to six
"This is quite an unusual situation," Herald said, adding
that normally wells came to the OWA via a court appointed
receiver process following a company going bankrupt.
There are 1,590 other orphan wells in Alberta that are
awaiting abandonment and clean-up, an issue that prompted the
Alberta government in the past to say it could ask the federal
government for help in covering the costs.
Fully reclaiming a disused oil well can cost between
C$60,000 and C$300,000 depending on factors including well depth
(Reporting by Nia Williams; Editing by Tom Brown)