Cleanup boost for old oil and gas sites to create jobs

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Alberta Premier Rachel Notley. Photo: CBC. Jobs

Petroleum Services Association of Canada applauds Alberta government for introducing orphan wells program

The Alberta government introduced legislation that would allow it to lend Orphan Well Association (OWA) $235 million to speed up proper abandonment and reclamation of a growing number of oil and gas well sites that no longer have a responsible owner, according to a Alberta government press release.

The announcement comes on the heel of the government committing to a review of abandoned and orphan wells.

It’s estimated this loan would lead to up to 1,650 new jobs in reclamation work over the next three years, reducing the liability facing the OWA by approximately one-third. This budget and its increase will be entirely covered by industry levies.

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“This is about creating jobs and fixing a long-standing problem. Albertans are concerned about the growing number of orphaned oil and gas wells, and the landowners directly impacted deserve a government that takes this issue seriously,” said Premier Rachel Notley.

“We’re proud to work with industry to get orphaned wells cleaned up – it’s good for our environment, good for landowners and the jobs created will help make life better for Albertans.”

If the legislation is passed, the province would finance the loan by using the $30 million provided in the recent federal budget to backstop a loan much larger and at more favourable rates than the OWA could access on its own.

The OWA is an industry-funded agency that works to close and reclaim infrastructure from oil and gas companies that no longer exist. This involves removing equipment, sealing wells and ensuring the safety of the site for the public.

“PSAC is pleased that our advocacy efforts to help get our member companies and their employees back to work have come to fruition and applauds the Alberta government for using federal funds to create more jobs for our beleaguered sector,” said Mark Salkeld, CEO of Petroleum Services Association of Canada.

The loan program would be in addition to the ongoing closure and reclamation operations done every year by the OWA. The loan will be repaid to the Alberta government over a 10-year period. Repayment will be funded through the existing orphan fund levy paid by industry and managed on the OWA’s behalf by the Alberta Energy Regulator.

“This funding will help our sector through these continuing challenging times, providing jobs so that we can retain the skills and expertise needed to ensure responsible development of our energy resources and positively contribute to Alberta’s reputation as responsible stewards of the environment,” said Salkeld.

As of March 2017, the OWA had an inventory of 2,084 orphaned wells to go through closure activities (1,394 to be abandoned, 690 to be reclaimed). The OWA closed 185 wells last year.

“We’re pleased to see the government take a proactive and innovative approach to cleaning up old oil and gas sites while protecting the ‘polluter-pay’ model and employing many hard-working Albertans,” said Daryl Bennett, director, Alberta Surface Rights Federation.

“Speeding up the reclamation process will benefit landowners by preventing contamination, removing obstructions to farming operations and improving the food safety of crops and animals.”

Posted in: Canada

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