Page 8 - NorthAmOil Week 04 2022

NorthAmOil INVESTMENT NorthAmOil

Federal report estimates Canadian

orphan well clean-up costs

CANADA A new federal report from Canada’s Parliamen- could fall short if Alberta continues to allocate
tary Budget Officer (PBO) has estimated that the federal money to firms that are still financially
cost to clean up the country’s orphaned oil and gas viable.
wells could reach CAD1.1bn ($865mn) by 2025. “If that trend continues, it’s possible that
The estimate is based on roughly 225,000 the funding set aside would not be sufficient to
inactive and plugged wells in Alberta and Sas- clean up all of the inactive orphan wells into the
katchewan – the two largest energy-producing future,” Giroux said a conference call. He noted
provinces – currently, around 11,000 of which that the federal funding had been set up to clean
are orphans. Offshore wells in Eastern Can- up inactive wells – which are not necessarily
ada and oil sands operations in Alberta are not orphans – and that it was up to Alberta to deter-
included. mine which companies received funds under
Wells are orphaned when their operator goes this programme.
bankrupt or ceases to exist, which happened to a An Alberta government spokesperson, Jen-
large number of oil and gas companies owing to nifer Henshaw, was cited by Reuters as saying the
the commodity price downturns of recent years. funds went directly to oilfield services companies
Indeed, the number of orphan wells in Alberta specialising in well clean-up, rather than to the
alone has risen from 700 to more than 8,600 over operators of the wells in question.
the past 10 years. Most of the growth occurred in The PBO’s report was criticised by the
the last five years, according to the PBO. Alberta Liabilities Disclosure Project (ALDP).
The Canadian government agreed in 2020 A researcher from the group, Regan Boychuk,
to allocate CAD1.7bn ($1.3bn) to help clean up told the Globe and Mail this week that the report
inactive wells across Alberta and Saskatchewan, failed to account for remediation costs, and also
as well as British Columbia. However, the PBO, underestimated the number of inactive wells
Yves Giroux, warned this week that the funding likely to become orphans.™

Hess anticipates higher

production, spending in 2022

GLOBAL US-BASED Hess said this week that it expected for the quarter totalled 316,000 boepd, down
to raise its capital expenditure budget to $2.6bn slightly y/y on 321,000 boepd.
in 2022, marking a 37% year-on-year increase on Hess’ production from North Dakota’s
$1.9bn in 2021. Bakken play accounted for 159,000 boepd of
This comes as US benchmark crude prices its fourth-quarter output. This marked a y/y
remain strong, rising above $87 per barrel by decline from 189,000 boepd in the fourth quar-
January 27 and emboldening oil and gas pro- ter of 2020. Hess attributed the decline to several
ducers to ramp up spending. The US oil and factors, including lower drilling activity caused
North Dakota’s Bakken gas industry’s focus has been on financial disci- by a reduction in the rig count from six to one
play is one of Hess’ core pline over the past few years, and all the more so during the first half of 2021, lower natural gas
areas of operation. since the onset of the coronavirus (COVID-19) liquid (NGL) and gas volumes received under
pandemic, but as prices continue to strengthen, percentage of proceeds contracts and the sec-
producers seem increasingly likely to raise ond-quarter of 2021 sale of its Little Knife and
budgets. Murphy Creek interests.
In its latest results, announced on January 26, At the same time, it saw output rise in the US
Hess said its net income for the fourth quarter Gulf of Mexico, offshore Guyana and in South-
of 2021 had reached 265mn, or $0.85 per share, east Asia.
up from a net loss of $97mn or $0.32 per share a The company said that 80% of its capex
year prior. The company produced 295,000 bar- budget for 2022 would be allocated to the Bakken
rels of oil equivalent per day (boepd) in the latest and Guyana. It expects its Bakken production
quarter, not including output from its operations this year to rise to 165,000-170,000 boepd, while
in Libya, which remains limited amid a volatile its overall output, excluding Libya, is anticipated
political situation. Including Libya, its output to increase to 330,000-340,000 boepd.™

P8 www. NEWSBASE .com Week 04 27•January•2022