City Announces Accelerated Abandonment and Reclamation of Uneconomic Gas Fields
After an extensive four-year process to find efficiencies and new opportunities in a depressed oil and gas market, the City of Medicine Hat (CMH) has decided to accelerate abandonment and reclamation of uneconomic gas fields.
In 2015, CMH commenced a Growth Strategy to improve profitability of the Natural Gas and Petroleum Resources (NGPR) division. The strategy involved the exploration for new oil assets, the disposition of non-core assets, and the evaluation of alternate revenue streams – primarily helium and lithium. Some early success was experienced with the Growth Strategy, but oil and gas discoveries were not found in the quantities required, low gas prices impacted the sale of natural gas assets, and the financial risk associated with the production of helium was too significant for a municipality to take on.
As a result NGPR will commence an accelerated abandonment and reclamation of its uneconomic gas fields over the next three years beginning this fall. By the end of 2022 it is expected that over 2000 currently producing wells will be abandoned.
As activity decreases, there will be a staffing impact in NGPR. CMH is working to redeploy affected staff where possible. Over the next few years, remaining NGPR staff will focus on reclamation efforts and continuing oil field production as well as the still-profitable Northeast gas field. A small commercial team will continue to explore options for additional financial improvement.
The decision to roll back activity was not taken lightly by city officials. The matter will be discussed further at the next City Council meeting on September 16 at 6:30 p.m.