Alberta aims to speed up orphan well cleanup with $235-million loan

Alberta aims to speed up orphan well cleanup with $235-million loan

The Alberta government will provide a $235-million loan to accelerate the work of cleaning up "orphan" oil and gas wells that have come with a rash of bankruptcies connected to the global crude-price drop.

Premier Rachel Notley and Energy Minister Marg McCuaig-Boyd made the announcement at a site near Carstairs Thursday morning.

The province is sprinkled with old wells, more than 150,000 in varying degrees of decline.

In Alberta there are 83,000 inactive wells, which are no longer producing but not necessarily orphaned. 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 government loan, which will be directed to the association, still abides by the polluter pays principle, the Premier said.

Orphaned Wells Oil and gas Alberta Orphan Well Association

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. Earlier this year, industry said it would double the annual levy it pays to the association, to $60-million, by 2019.

The industry-funded, not-for-profit group manages the shutting and cleanup of oil and gas sites where there is no longer anyone legally responsible for those tasks, often because a company has gone out of business.

The issue of orphan wells has become particularly pronounced with the pivotal Redwater Energy Corp. bankruptcy case, which has seen the successive court rulings come down on the side of federal laws that protect the interests of secured creditors over the cost of cleanup under Alberta's provincial environmental laws. It closed 185 a year ago. "Albertans have been very clear with us". It initially asked Ottawa for $500 million in infrastructure spending, but later amended its request.

"It's a positive step in addressing the problem of orphan wells and we look forward to seeing more proactive rules to ensure that there are adequate funds collected in the future". Alberta has about 180,000 wells now in operation, according to the government, but also counts another 83,000 "inactive" wells - where there is still an owner but activity at the well has stopped due to technical, or economic, reasons.

Orphaned wells like this one can easily pollute groundwater and soil, according to industry specialists and environmentalists.

Notley said those issues will be addressed in an ongoing review of the issue, but suggested the loan is a good start.

A lingering question is how fast the number of orphan wells continues to grow. "It's a win for landowners, a win for the environment, a win for industry and a win for thousands of Albertans who will benefit from the good jobs that we're creating".