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Industry waifs pose a problem Western Canadian governments take different stances on ‘orphan’ wells; Saskatchewan federal assistance; BC, Alberta corporate answers GARY PARK For Petroleum News
Western Canada’s oil and gas industry has a problem with “orphans,” but no consistent means of handling them.
They are wells that have been abandoned over the last four decades, with more being added almost daily to the list in these times of exploration and production companies being forced into receivership and bankruptcy.
Saskatchewan Premier Brad Wall has lobbied the Canadian government for C$156 million to accelerate a program to clean up abandoned or suspended wells, creating 1,200 direct and indirect jobs in the process.
Alberta wants nothing to do with that approach, with Alberta Environment emphatic that the industry should continue covering costs related to remediating the wells.
A spokesman for the department said that although the government would welcome federal assistance to deal with orphaned wells, its greater priority is “investing in infrastructure to create jobs and stimulate the economy through the downturn.”
Energy Minister Margaret McCuaig-Boyd said Alberta will examine “all possibilities (for the wells) ... we’ve got a lot of good ideas.”
British Columbia estimates it has about 10,000 unremediated well sites - compared with Alberta’s listing of 66,500 abandoned wells, 76,500 rated as “inactive” and 104,500 as “reclaimed” - but so far has only clarified its own rules by broadening its definition of what equipment must be removed from dormant sites. Close to 450,000 wells have been drilled in Alberta.
35 sites assessed The David Suzuki Foundation, after traveling 2,400 miles on back roads to assess 35 sites, said it found “very few are what we consider properly restored. Well heads have been removed, but all the casings were there. The ponds to collect process water were still on site. Entire pumpjacks were left in the field and some had been there for 30 or 40 years.”
The foundation said that fewer than 6 percent of the sites appeared to have been cleaned up, even partially, while others were still releasing poisonous hydrogen sulfide gas.
A spokesman for the British Columbia Oil and Gas Commission said ongoing efforts were underway to “address the residual environmental concerns,” but the Suzuki Foundation said the cleanup regulations can be waived if they are judged not “reasonable practicable.”
Since April 2015, the Alberta Energy Regulator has directed the industry to bring 20 percent of “inactive, non-compliant” wells into compliance each year and has so far added 6,800 wells to the AER’s list of “safe and secure” sites.
An industry-funded program administered by the AER constantly compares assets of about 796 companies against the projected clean-up costs.
It requires security deposits if the liabilities exceed the value of a company and currently holds C$204 million in trust.
Orphan Well Association A not-for-profit Orphan Well Association, established in 2002, is a collaborative effort by industry and government to deal with wells, pipelines and facilities that are not financially able to meet abandonment and reclamation obligations.
The industry levy doubled to C$30 million in 2014 as the well industry increase to its current level of 705 wells, having already closed 651 wells and reclaimed 489 sites, with plans to remediate more than 100 wells this year.
Brad Herald, a vice president with the Canadian Association of Petroleum Producers, agreed that federal assistance would bring jobs to smaller communities affected by the collapse of oil prices, given that the service sector is reeling from the slowdown in well drilling activity.
Progressive Conservative interim leader Ric McIver said it would be valuable to keep Alberta’s high-skilled oil and gas workers employed until there is an industry recovery, and reduce the demands on social programs.
Liberal leader David Swann said any government would be “setting a very dangerous precedent” by paying for oil patch cleanup work that is the industry’s responsibility.
“I would call it a slippery slope to the point where we’re no longer honoring out commitment to the philosophy that the polluter pays.”
But Wall is not ready to give up on a positive response from Prime Minister Justin Trudeau, arguing that “no program is going to be perfect.”
He said it would be a major contribution to the wider society to introduce a program to conduct environmental site assessments, remove and dispose of old equipment, remediate oil and salt water spills and re-vegetate the land.
However, Wall holds out limited hope given Trudeau’s reluctance to champion TransCanada’s Energy East pipeline.
“If you sift through some of (the federal government) rhetoric, they just don’t like oil. But I don’t think that’s a good enough reason to hold up a pipeline that will benefit all of Canada,” he said.
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