From losers to winners

Energy industry & environmentalists form rare united front to explore use of abandoned wells to tap into geothermal energy sources

Gary Park

for Petroleum News

A C$1.7 billion federally financed program to start cleaning up abandoned oil gas wells is underway in three provinces of Western Canada at the same time that unlikely partners are using the opportunity to develop renewable technologies.

As the provinces of Alberta, Saskatchewan and British Columbia go to work on site reclamations, the fossil-fuel industry has also linked up with environmentalists to explore ways of achieving new life from old wells and create a major economic opportunity.

But the initial focus of the Alberta government remains on using the cleanup program to provide jobs for about 5,300 skilled workers in its province.

Energy Minister Sonya Savage said calls from oil service companies have inundated her office since the Canadian government announced in mid-April that its cash allocation to tackle orphan wells would cover between 25% and 100% of total project costs, depending on how much site owners can cover of the estimated C$30,000 budget per well.

The objective is to remove the economic and environmental liabilities posed by wells that are an eyesore across width swaths of the three provinces, including the failure of many oil and gas companies to pay the leases owing to landowners.

The Alberta Energy Regulator, the provincial government’s chief energy agency, has a list of 94,000 inactive wells that qualify for the program.

Clean Energy Canada

The partnership hopes it can attract incentives and investments, with Chief Executive Officer Kevin Krausert, who is also CEO of Alberta-based Beaver Drilling, confident that geothermal energy can create new lines of business.

The process extracts hot water or steam from wells that are several miles deep and generates electricity through large power turbines for delivery of continuous electricity to the power grid.

Krausert told the Globe and Mail that the opportunity “pivots the whole tired narrative of energy versus the environment (and could) build a new energy future for Canada where oil and gas is part of the solution.”

He aims to build “an integrated system where technologies like geothermal can be used to run oil sands operations and reduce their per-barrel (greenhouse gas) emissions.”

Krausert said the alliance could help the oil sands sector achieve its vision of net-zero emissions by 2050.

However, John Redfern, CEO of Calgary-based geothermal company Eavor Technologies, said geothermal could be left behind altogether unless there is a political will to encourage investment or expansion of the green fuel.

Mark Scholz, CEO of the Canadian Association of Oilwell Drilling Contractors, endorses the cooperative effort, but says it won’t save the drilling sector which can only survive if it obtains liquidity and support measures from the Canadian government.

Marla Orenstein, director of the natural resources center at the independent Canada West Foundation, said the abandoned wells are good candidates for a multi-faceted opportunity to repurpose energy uses such as geothermal, micro-solar, hydrogen, recovery of lithium or other metals, or carbon capture and storage.

She said creating new energy lives for the orphan wells “would help diversify the energy sector, expedite a smart energy transition and create new economic opportunities for landholders.”

Orenstein said a multi-stakeholder group is working to identify a pilot program to partially remediate inactive wells for new energy purposes.