Alberta government to review orphaned and abandoned wells

wells

Alberta to review orphan and abandoned wells

Currently 152,000 inactive or abandoned wells, 53,000 shy of total active wells in Alberta

The Alberta government announced it’s working with industry and experts through a formal review process to find better ways to protect Albertans and the environment by improving policies for managing old oil and gas facilities, orphaned and abandoned wells, according to a Government of Alberta press release.

“Albertans are concerned about the growing problem of orphaned and aging oil and gas infrastructure. Many landowners are directly affected by this, and it’s a problem that has been ignored for far too long. It’s important we take action and find the best way to improve the system and ensure these sites are managed responsibly,” said McCuaig-Boyd, minister of energy.

The government review will have subject matter experts and key stakeholders who will take part in round-table discussions on improving the management of historic, current and future liabilities associated with the full life cycle of upstream oil and gas development, according to the release.

“The review is a response, in large part, to a number of companies going bankrupt, creating issues around proper reclamation and abandonment of wells. It’s come to head because of recent court decisions, namely, supremacy of creditors vs Alberta Energy Regulator,” said Jennifer Winter, director of energy and environmental policy at the School of Public Policy, University of Calgary, in an interview with North American Energy News.

One concern raised by critics is whether during a time of uncertainty in Alberta’s oil and gas industry a government review  ould have a significant negative impact on investment, similar to when the newly elected NDP government launched a royalty review.

Jennifer Winter, professor, Dept. of Economics, Univ. of Calgary.

“Any time there is announcement of policy change, it impacts investment, certainly when there are no specifics about the change. Companies have an attitude of wait and see,” said Winter, who adds that the orphan well review is probably not as concerning of the royalty review or climate leadership plan because there is recognition of the problem and potential for an improved system that will be better for industry and Alberta.

“The problem with the royalty review, was the perception that it wasn’t a review, but because of recent NDP election, was just going to be an increase in the government’s take,” said Winter.

There was that worry, and it turned out to be not true, in that the royalty review was just tweaking the system. Similarly, this time, it will likely just be a tweaking of the system.”

The Alberta government says there will be diverse perspectives at the table to help inform policy discussions, including representation from industry, landowners, environmental groups, municipalities and Indigenous communities.

The problem of abandoned and inactive wells has been a growing problem in Alberta for decades, with a now estimated 83,000 inactive wells, and 69,000 abandoned wells.

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That’s 152,000 wells, which is only 31,000 shy of current active wells, an estimated 183,000, according to the Alberta Energy Regulator.

“This response is because of many things happening at once, government needs to think about rules not working in the current situation,” said Winter.

Abandoned oil wells State Impact PA photo.

“No time limit for inactive wells, and there are wells that have sat for 50 years. Without a future technology revolution making them (inactive wells) economically feasible, wells are left inactive, and are more costly to abandon than to leave inactive. That’s a concern if companies don’t have financial resources to abandon them, then it falls on the Orphan Well Association(OWA).”

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.

“Rural landowners and municipal districts have many concerns surrounding this issue. We’re pleased to see government is beginning its review and look forward to learning more about how we can address it,” said Al Kemmere, president, Alberta Association Of Municipal Districts & Counties.

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