A Closer Look at the LLR

A great piece in The Negotiator on some of the impacts and limitations of the Alberta Energy Regulator's Licensee Liability Rating (LLR) program —

"Licensees who are potentially, immediately and negatively impacted by the LLR program have total liabilities estimated at $1.5 billion while the total liabilities for all licensees are esti- mated at $25.6 billion. This analysis suggests that the updated LLR Program is addressing only 6% of the industry’s liabilities with deposits and that there are more than 80,000 shut-in wells that do not require deposits because the licensee’s LMR is greater than 1.0."

"The industry has abandoned on average 4,400 wells per year in the last ten years. During this same time, over 14,000 new wells have been drilled annually. The resulting annual increase of 9,600 wells per year in future abandonment and reclamation liabilities, combined with the 80,000 shut-in wells whose abandonment and reclamation are being deferred indef- initely, suggests that the industry has a much larger challenge than simply the funds to be collected from small operators. Much more needs to be done to address the total abandonment and reclamation liability in our province." - F. Brian Carnahan, Niven Fischer Energy Services

Read the full article in the June issue of The Negotiator.

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