Oil Mining Assignment Paper.
1. In your own words, provide a short explanation as to what options Pinecone has if Squirrel
decides to abandon the well. What AER directive(s) (Canada) will Squirrel need to comply
with?
In the event that a joint venture ceases to exist, there are other options that one company
willing to continue its operations can pursue. In our case for instance, Squirrel Gas, which was in
partnership with Pinecone Oil decided to abandon the well after years in operation. Since
Pinecone Oil is willing to continue exploiting the well in Canada, they have to meet a couple of
Alberta Energy Regulator (AER) rules. Oil Mining Assignment Paper. For instance, the AER has more than 80 directives that companies need to meet. Pinecone Oil will have to ensure that they meet Liability Management
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Directive concerned with aspects of abandoned well (Semko, 2013). In addition, they have to
undertake a Licensee Liability Rating Program that deal with transfer process. Other directives
include Site-Specific Assessment, Noise Control, Reducing Emissions, Drilling Waste
Management, and Waste Reporting (Kang et al, 2015). The need to ensure public safety is
important as Pinecone will have to ensure safe development and operation of the project
throughout its cycle. Other directives include fencing the site, Monthly Custom Plant Treatment,
and Allowables Handbook (Semko, 2013). Oil Mining Assignment Paper.
2. Describe how Squirrel’s ‘Operations Accounting Team’ would be impacted. What would
they have to do and what would types of issues should they consider during abandonment?
At the end of the Joint Venture between Squirrel Gas and Pinecone Oil, the Operations
Accounting Team will be impacted in a number of ways. For instance, the accounting procedure,
the audit process, and legal considerations must be met. Oil Mining Assignment Paper. Contract negotiations and dispute resolutions will affect them greatly. However they can solve such by sticking to contractual terms of joint ownership. Operations Accounting team should be knowledgeable of the terms that bind joint ownership and should be ready to exercise such incase such cases cannot be resolved
amicably. Oil Mining Assignment Paper.
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During well abandonment, Pinecone Oil will have to fill reclamation certificates that indicate a couple of issues such as contamination reports, surface issues such as soil replacement strategies and explain how revegetation issues will be addressed. Other issues required in abandonment and reclamation of wells such as repairing gas leaks, groundwater zones, checking
instances of corrosion, and conducting gas detection tests amongst other directives meant to
ensure that the workers and the general public are not at risk (Miall, 2013).
3. Describe how Squirrel’s ‘Mineral Land Team’ would be impacted. What would they have to
do and what types of issues should they consider during abandonment?
During well abandonment, Squirrel’s ‘Mineral Land Team’ will also be impacted in a
couple of ways. First, they have to ensure that they follow the rules and regulations put in place
by Alberta Energy Regulator (AER) on matters that touch on abandoning of wells. Oil Mining Assignment Paper. The AER has put in place measures such as identification and creation of an abandonment program indicating integrity issues (Karla, 2003). In addition, they have to meet the execution and implementation strategies explaining how they will clean the wellbore in terms of removing any oil and gas that may cause corrosion, isolation of all porous formations, and ensuring they fill the well with nonsaline water to ensure long-term integrity of the well. Other issues that may affect Squirrel’s ‘Mineral’s Land Team’ include instances of having to ensure that they inform all the affected owners of the impending abandonment in addition to letting the other party in the joint venture
–Pinecone Oil- conduct extensive tests of the abandoned well to ensure that it poses no risks at
all. Oil Mining Assignment Paper.
4. Describe how Squirrel’s ‘Surface Land Team’ would be impacted. What would they have to
do and what would types of issues should they consider during abandonment?
During well abandonment, the ‘Surface Land Team’ of Squirrel Gas would be impacted
on a number of areas. Well abandonment is not an easy task. It is an extensive and tedious
process. It is argued that Mineral’s Land Team of any firm willing to undertake abandonment
procedures must apply a cut-and-cap process. Oil Mining Assignment Paper. This process involves cutting the well casing to depths of a metre below the surface while placing vented caps on top which should be removed after a year (Groben, 2015). The ‘Surface Land Team’ must conduct extensive test to prove that no instances of gas leaks occur once the well has been completely abandoned. In addition, it is
their duty to fence the area completely once the extraction exercise has come to an end so that
the public will feel that their safety has been taken care of. Furthermore, it is the duty of Surface Land Team to handle land disputes, ensure land owners are paid, and also work with the partner
to ensure surface access timing is provided. Oil Mining Assignment Paper.
5. Describe how Squirrel’s ‘WAM Team’ would be impacted. What would they have to do and
what would types of issues should they consider during abandonment?
During the abandonment process, Squirrel’s ‘WAM Team’ will be impacted on a number
of ways. It has been reported that individuals tasked with the abandoning process have at one
time or the other been injured or died during the process of abandonment of different wells
across the globe (Lambrecht, 2014). For this reason, Squirrel’s ‘WAM Team’ has to take a
couple of precautions to avoid that. The need to invest in better equipments is a necessity. Safety
precautions should be the first priority for this team as poor methods of execution may result in
injuries and deaths.
6. Describe how Squirrel’s ‘JV Team’ of Company C would be impacted. What would they
have to do and what would types of issues should they consider during abandonment?
As we may know, joint ventures sometimes end. For our case study, the partnership
between Squirrel Gas and Pinecone Oil did come to an end when one party –Squirrel Gas- pulled
out. Studies have indicated that Joint Venture teams are impacted incase a given partnership
collapses or comes to end (Arnold, 2015). In our case, the ‘Joint Venture Team’ of Squirrel Gas
will be impacted in a number of ways. For instance, the team will be tasked with handling and
ensuring distribution agreements are adhered to fully. Oil Mining Assignment Paper.Termination conditions will have to be provided way earlier before the proposed date of ending the joint venture reaches. However, long before well abandonment date reaches, Joint Venture teams of Squirrel Gas have to ensure that several aspects are well spelt out. For instance, they should decide on how shared intellectual property issues will be unbundled, how confidential information of the other company will be protected and who should pay for any continuing liability once they decide to leave the venture. Oil Mining Assignment Paper.
Other instances that the Joint Venture team will have to look at include aspects such as which
party will continue to deal with particular customers and so on. In short, before abandoning the
well, Joint Venture teams of Squirrel Gas have to negotiate for a friendly separation.
7. In your own words, summarize the basic steps that would be involved in preparing for the
abandonment. Oil Mining Assignment Paper.
We live in an era where partnerships are common. Majority of firms across the globe
have come together and formed Joint Ventures for a couple of reasons. However, in some cases,
once one of them feels like they have done their part, they can always end the partnership like in
our case where Squirrel Gas decided to end its agreement with Pinecone Oil. However, during
abandonment, there are some important steps that need to be followed by either party. Oil Mining Assignment Paper. First, prior notice must be put across months or even years before the end of the partnership so as to give the other party time to prepare and adjust. Secondly, the company which wants to leave has to make sure that its staff will either be absorbed by the other party or assisted to find jobs elsewhere. Oil Mining Assignment Paper. In addition, pension schemes should be well planned for incase some workforce may decide to retire. After that, the issue of asset division has to be well thought out as leaving at once may affect the other party. The protection of goodwill then has to be considered before the final process of ensuring that environmental concerns are taken care of so as not to endanger other people. Oil Mining Assignment Paper.
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References
Arnold, B. (2015). Joint Venture/Joint Exposure. Internal Auditor, 72(2), 57-61.
Graben, S., & Sinclair, A. (2015). Tribunal Administration and the Duty to Consult: A Study of
the National Energy Board. University Of Toronto Law Journal, 382-433.
Karla, B.,Howard, B., & Jonathan B (2003). Accounting Procedures, Audit Process, and Legal
and Practical Considerations. 40(3), 174-181. Oil Mining Assignment Paper.
Kang, M., Baik, E., Miller, A. R., Bandilla, K. W., & Celia, M. A. (2015). Effective
Permeabilities of Abandoned Oil and Gas Wells: Analysis of Data from Pennsylvania.
Environmental Science & Technology, 49(7), 4757-4764.
Lambrecht, K. N. (2014). Constitutional Law and the Alberta Energy Regulator. Constitutional
Forum, 23(2), 33-49. Oil Mining Assignment Paper.
Miall, A. D. (2013). Geoscience of Climate and Energy 10. The Alberta Oil Sands: Developing a
new regime of environmental management, 2010-2013. Geoscience Canada, 40(3), 174-
181.
Semko, J. (2013). Alberta's new energy regulator." Business In Calgary 23, no. 2: 101-102. Oil Mining Assignment Paper.