Alberta’s oil and gas industry, with help from the government, spent nearly $900 million on cleaning up and capping abandoned and inactive oil and gas wells by 2022, the first year its regulator has reported on the performance and remediation responsibilities of the well site in Canada’s fossil fuel energy production center. .
Under an accountable management framework, energy sector companies spent $518 million directly on cleanup, exceeding the $315 million spending mandate set by Alberta’s energy regulator, which tracks shutdown spending of wells since 2019. The total of unrepaired wells fell by 9% to 83,000. of 91,000 by 2021, its report said.
The province’s Orphan Well Association, an industry-funded non-profit created in the 1990s to manage well closures, as well as a provincially funded cleanup program, covered the remaining costs of closure and recovery in 2022.
Canada ranks fourth in global oil production and sixth in global gas production, both largely centered in Alberta, but only a third of its estimated 466,000 provincial wells are active and 10% are only minimally producing, it said. say the energy regulator.
The provincial liability management program allows eligible applicants to propose for closure a well or installation site that has been inactive or abandoned for five years or more. Mandatory fees specify the minimum amount of money that licensees must spend on oil and gas shut-in each year.
In 2022, Calgary-based Amethyst Petroleums Ltd. spent $1.6 million on well recovery, or 375% more than the mandatory requirement, according to the report. It also said 51 licensees who failed to comply with the closure mandates were missing a total of $3.13 million.
In dispute
Alberta energy regulator CEO Laurie Pushor said the report’s findings are “a strong and clear indication that the industry is getting better at cleaning up oil wells, pipelines and facilities and gas”. Provincial Energy Minister Brian Jean said in a statement that the cleanup under the accountability management framework “is making a big difference.”
But Martin Olszynski, an associate professor of environmental law at the University of Calgary and a frequent witness at regulatory hearings, said the record on repairing orphan wells “is much worse than this report suggests.” He said the measures taken by the regulator “have been totally inadequate”.
Under the 2020 framework, the regulator said the cleanup spending requirement would increase to $740 million.
But Olszynski said the regulator has now chosen to cap the industry’s required spending this year and next at $515 million, ending the scale “because it was based on limited data inputs and used a lot of assumptions that give rise to a hypothetical scenario.”
Olszynski also questions the Alberta government’s reliance on the regulator’s estimate of the industry’s total liability for abandoned wells at $33 billion, stating that “even with this conservative estimate it would take more than 40 years to close the responsibility gap”.
