GOVERNMENT OF ALBERTA: SITE REHABILITATION PROGRAM
The Alberta government introduced a program on April 24, 2020 that provides grants to oil field service contractors to abandon Operators wells and pipelines as well as reclamation and remediation work. The program also benefits the oil and gas company by reducing their liabilities and ultimately improving their Environmental, Social, and Governance (ESG) rating.
Although details are still being delivered on the specifics of the program, Codeco-Vanoco Engineering Inc.,along with our subsidiary Keneco Environmental, believe that our organizations can play a major role in the initial grant application with the oil and gas licensee (Operator), organizing and administrating the sub-contractors and providing project management to ensure the work is done as per Directive 20 guidelines.
- Summary of Program
- Key points we have learned of the “Alberta Site Rehabilitation Program” to date:
- How We Can Help
Total Funds to be spent in Alberta are $1.2 Billion (to be spent over 2 years)
- $200 million for a Loan to Alberta Orphan Well Association
- $1 Billion dollars for inactive wells
- 1 billion in federal funding will be issued in phases.
- Phase 1 of funding begins Friday, May 1.
- $30,000 was assigned as the maximum fund allocation per application to the first round of funding so the process can be refined on lower value contracts.
- There is no limit to the number of applications service providers can make during the first phase.
- Applications for first phase can be made until May 31, 2020.
- The program will continue to be adjusted and rolled out in the months to come, and is geared toward oilfield service contractors.
- Service contractors do not have to be Prime to receive funds; grants are awarded directly to applicants.
- While the program is geared towards service providers, it does not exclude engineering company applications.
- The application process begins with a valid and signed contract with no “subject to” clauses for work involved in the abandonment and reclamation process.
- Scope of work MUST BE part of the abandonment and reclamation process.
- A “commitment letter” will NOT be accepted.
- Contracts are to be worked out between the service provider and the Licensee, Operator, or Prime Contractor.
- A contract and application can be made for a portion of the work necessary to abandon a wellsite. For example, applications for three separate contracts: Contractor A for cementing, Contractor B for downhole work, and Contractor C for reclamation, for up to $30,000 each, can be made for work on one abandonment.
- The system will be set up and tracked by UWI to avoid duplication of services on the same site.
- Funds are allocated to successful applicants in phases: 10% for start-up costs (fuel, wages, etc.), 60% for middle instalments after invoices and sign-offs are received, and the reminder once the Licensee, Prime, or Operator receives final sign-off (PEng or PAg).
- For payment to be received by the contractor, the well licensee/Operator must sign off on the tickets/invoices confirming that they are satisfied with the work and that it was completed.
- Available areas will be province-wide to start.
- Contractors will have one login for the application website per company.
- AER will be benchmarking for pricing based on scope of work.
- Pre-application costs are not reimbursable.
- Funding and spend will occur in multiple phases over 2 years.
- Service companies who have valid and executable contract with a producer can apply to obtain 100% government funding for their contract based on a well by well application process (at this time Government will not have an application for groups of inactive wells). The 100% funding will only occur if the contract is fully executable and only to a maximum allocation of $30,000 per well.
- 100% government funding of the program and contracts will change to a different percentage in future rounds.
- 10% advance to service companies and then future payments will be on instalments based on each well contract.
- Abandonment and reclamation can be included in the contracts.
- Producer will have to sign-off completion of work for the service company to get the final payment instalment.
- Producers and service companies are encouraged and expected to work co-operatively on this program. Changes will be made rapidly as concerns or opportunities are presented to this “job creation program”.
- Licensees deemed financially able to pay may be required to contribute a certain amount of the eligible activity's cost, while applications for activities at sites belonging to less financially-able licensees (e.g., licensees who are behind on surface lease payments to landowners) will be granted the full activity cost.
Codeco -Vanoco Engineering Inc. and Keneco Environmental have over 30 years experience in providing abandonment and environmental project management for oil and gas companies. We are also currently acting as the “Prime Contractor” for two Provincial Government Orphan Funds performing the following:
- Wellsite Abandonments
- Pipeline Abandonments
- Facility Decommissioning
- Phase 1 & 2 Environmental Site Assessments
- Remediation and Reclamation
Codeco-Vanoco Engineering Inc., can work with your company on the application to qualify for the Alberta Government Site Rehabilitation Program. Once approved, we can vet and procure 3rd party vendors, perform the required work as per government regulations, administer 3rd party service providers.
If interested please contact Blake Walliser at Walliser@Codeco-Vanoco.com and we can begin discussions on how we can help you!