The UCP government is praising the progress of cleaning up abandoned and orphaned oil and gas wells after the Alberta Energy Regulator (AER) reported industry had managed to clean up more than 8,000 sites in 2022.According to the AER’s inaugural Liability Management Report, industry spent about $700 million to reduce the number of inactive wells to 83,000 from 91,000 — a reduction of around 9% — and exceeding legal requirements by about 65%.In total, the report said more than $1.2 billion was spent on cleanup and closure work including grants to service sector companies under the Alberta Site Rehabilitation program and other sources, it added..Since 1947 nearly half a million wells have been drilled in Alberta, with 170,000 considered inactive, abandoned or ‘orphaned’ — when companies went broke without cleaning them up..In 2022, the AER introduced a mandatory closure spending quota requiring industry to spend at least $422 million collectively on closure and cleanup work. At the same time, the Alberta Site Rehabilitation Program provided grants to service sector companies to conduct closure work and the Orphan Well Association continued its cleanup of orphan sites..“Industry is doing its part,” said Energy and Minerals Minister Brian Jean. “The regulator’s first performance report shows how Alberta’s promise to take bold and strong action under the liability management framework to clean up inactive oil and gas sites is making a big difference.”.“This report shows more sites reclaimed, more funds invested into more cleanup work and more action being taken with industry at sites across the province. Our government has made this a priority, and we will keep building on this momentum,” added Environment Minister Rebecca Schulz..In the coming weeks the UCP government will roll out two new pilot projects: the Well Site Reduction Pilot and the Reclaiming Peatland Pilot that will begin testing ways to make the current reclamation certificate issuance process faster, clearer and more effective. Since 1947 there have been nearly half a million wells drilled in Alberta, with as many as 170,000 considered inactive, abandoned or ‘orphaned’ — when companies went broke without cleaning them up. Some estimates suggest as many as 22,000 of those could be leaking oil or fugitive gas emissions, or both.Some unreclaimed wells may have been plugged and sealed without being reclaimed. Under AER rules, it is legal for operators to leave inactive wells on their leases unreclaimed for extended periods or even indefinitely..Alberta’s oldest inactive well has been dormant and unreclaimed since 1918. Some of the legacy sites were in operation in the 1920s and have no known operator to cover cleanup costs..After the May election, Premier Danielle Smith instructed Jean to develop “a strategy to effectively incentivize reclamation of inactive legacy oil and natural gas sites and to enable future drilling while respecting the principle of polluter pay.”.When operators go bankrupt or simply cannot be relocated, landowners are left holding the bag for aging wells, with little or no recourse. By 2001, there were about 59,000 farms with at least one well on their property, according to Alberta Agriculture.In 2019, the Intergovernmental Panel on Climate Change (IPCC) warned that methane leakage from inactive well sites posed a serious risk to climate change and governments, including Alberta’s were required to monitor them.That’s about the time well abandonment became a contentious political issue in Alberta. Although oil companies have been required to pay reclamation funds to organizations such as the Orphan Well Association since the early 2000s, critics have claimed it to be “grossly inadequate.”In 2018, the AER estimated the total cost to clean up every abandoned and orphaned well in Alberta to be about $58 billion, but critics claim the number is too low. That’s not including $268 million in unpaid taxes to rural municipalities, as per the RMA.After the May election, Premier Danielle Smith instructed Jean to develop “a strategy to effectively incentivize reclamation of inactive legacy oil and natural gas sites and to enable future drilling while respecting the principle of polluter pay,” including offering up to $100 million in royalty incentives.
