Signalta Resources Limited, a privately-held exploration and production company, was part of that transition as the collapse of natural gas prices continued. After a few years of lower prices, it was obvious that growing abandonment and reclamation liabilities were overwhelming cost-cutting efforts. “A&R liability had become a monster that was eating the industry alive,” says president Rob Chad. “We brought it in-house to reduce consulting fees, but the process was slow, and the numbers kept growing.” As well, the company identified numerous concerns related to the timespan from inactive well status to reclamation certificate. Why were full-cycle costs so high? Why did the process take so long? Signalta is a small company focused on its assets. The principals knew there must be a better way: enough was enough.
An extensive review showed that a lack of discipline, iron, internal expertise, and a coordinated approach slowed every step and increased costs. AER rules were unclear; consultants were unproductive; using multiple service providers, regardless of how individually good they were, produced redundancy, downtime and waste. The review showed that 71% of funds invested in reclamation never made it to the field.
Frustrated by the status quo, Signalta chose a new approach. The company offered funding, operator experience, and a portfolio of wells to two independent owner-operated companies to catalyze a new holistic, modern approach to an age-old problem.
Terra-Sano and Terminis Downhole Services accepted Signalta’s challenge. They developed an integrated working model to take assets from inactive through downhole abandonment to a reclamation certificate. Within two years, they proved the concept thoroughly, providing consistent and demonstrable reductions in time and investment along the value chain. The approach was simple:
- review the client’s portfolio to identify and prioritize targets;
- provide a bird’s eye view of options and must-dos in relation to priority list;
- aggressively plan how to pursue targets to straighten the learning curve and success rate;
- apply a disciplined and focused capital program to consider full-cycle job costs, optimize performance, and efficiently sweep a tight service area; and
- maximize the closure/certificate rate while eliminating the constant re-learning process and redundant consultant efforts that are typical industry experience.
