An exploration and production (E&P) company was placed into Receivership by an Order issued by the Court of Queen’s Bench with assets including over 2,300 licensed wellbores, over 2,500 licensed pipelines and 28 operated facilities. Prior to the Order, the associated fields had an increasing rate of recordable pipeline incidences (failures) relative to the total in the province. The Receiver engaged Sproule Asset Management to provide strategic advice, infrastructure analysis, infrastructure failure mitigation activity, daily field operations, emergency response oversight, and closure activities to the Receiver and the Regulatory Authority.
Project Highlights
- Junior E&P company in Receivership with daily production of over 1,600 boe/d and 2,385 operated wells.
- Natural gas production with associated water and mud production.
- Large land base encompassing numerous landowners, including Crown, Freehold, and First Nations.
- Environmentally sensitive areas of operations, including Provincial special areas adjacent to a major fresh waterway.
Challenge
- Significant Well and Infrastructure Footprint: Field operations included 28 facilities, 2,385 operated wellbores and a 2,500 pipeline gathering system, which had experienced a high historical rate of failure.
- Regulator & Landowner Concerns: Numerous landowners were refusing access to operations due to pre-receivership historical surface lease issues, and the regulatory authority noted a history of noncompliant operating practices.
- Court and Regulatory Oversight: Strict oversight of Court and Regulatory Authority due to the Bankruptcy and Insolvency Act (BIA).
Solution
- Strategic Direction: Sproule analyzed the physical assets, identified opportunities within the asset portfolio, presented strategic recommendations for the Receiver’s consideration, and ultimately executed the mandate for ongoing production, closure and sale.
- Infrastructure Assessment: Sproule led an assessment of the overall infrastructure, identified the root cause of the failure mechanism, and implemented a fit-for-purpose solution significantly reducing pipeline failure incidences.
- Landowner Relationships: Sproule engaged local landowners and explained the receivership process and go-forward model to reestablish relationships.
- Regulatory Compliance: Sproule supervision engaged local regulatory authorities to establish clear communication and expectations and deliver exceptional compliant operational results along with a strategic and economic evaluation of the assets. Sproule also led numerous historical release remediation efforts and completed associated reporting to achieve regulatory compliance.
Value
- Enhanced Operational Integrity: Comprehensive asset and infrastructure assessments pinpointed and resolved core issues, resulting in a 95% reduction in pipeline failures.
- Rebuilt Landowner Trust: Proactive engagement with landowners restored relationships and secured access to key operational areas, crucial for sustaining production.
- Regulatory Compliance: Sproule’s establishment of clear communication with regulatory authorities ensured ongoing operations adhered to all compliance requirements.
- Emergency Response: Sproule’s operational staff responded to accidental wellhead strikes with agricultural equipment to regain well control and safely cap wells when required.
