Industry group gets Alberta gov’t loan to clean up abandoned wells

abandoned wells

On Thursday, Alberta Premier Rachel Notley announced the province would loan millions to an industry-funded association to clean up abandoned wells in Alberta.  Alberta government photo.

Number of abandoned wells spiked in 2014

The government of Alberta will loan the industry-funded Orphan Well Association (OWA) $235 million to clean up abandoned wells in the province.

Premier Rachel Notley said the loan could help create up to 1,650 new jobs in reclamation work in the coming three years and reduce by about one-third the liability facing the OWA.

“This is about creating jobs and fixing a long-standing problem,” said Notley. “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.”

The OWA is an industry-funded agency that reclaims infrastructure from oil and gas companies that no longer exist. The agency removes equipment, seals wells and ensures the safety of the site for the public.

Brad Herald, chair of the OWA says the loan will “go a long way to return Albertans to work and accelerate returning orphaned properties to their original state.”

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Alberta’s Minister of Energy, Marg McCuaig-Boyd, said along with reducing the backlog of orphaned wells, the loan will also maintain the province’s polluter-pay principle.

The OWA will use the government loan along with existing funds to continue work done yearly by the group.  The loan will be repaid to the government over a 10-year period and will be funded through the existing orphan fund levy paid by industry.

Mark Salkeld, president and CEO of Petroleum Services Association of Canada welcomes the move.  He says the funding will help those in the industry struggling through difficult times as well as keep skilled workers in Alberta who may have left the province to work elsewhere.

Salkeld adds the program will “positively contribute to Alberta’s reputation as responsible stewards of the environment.”

The Pembina Institute also applauds the move by the Notley government.  Nikki Way, analyst for the environmental group, says “orphaned wells pose a significant environmental risk for communities and the landowners who have inherited these impacts with no responsible owner.”

The province will fund the loan by using the $30 million earmarked in the recent federal budget to backstop a much larger loan at more favourable rates than the OWA could get on its own.

 

 

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