Alberta to overhaul clean-up rules for orphan wells
CALGARY Oil and gas companies in Alberta will soon be required to spend money each year to remediate the tens of thousands of inactive and uneconomic wells that pollute the landscape as the province overhauls environmental remediation legislation, according to the province’s energy minister.
Canada’s largest oil- and gas-producing province will announce a new regulatory framework Thursday
to manage environmental clean-up liabilities from old and uneconomic oil and gas wells, marking the first major overhaul of Alberta’s clean-up rules in decades.
The province is now dealing with “a problem that’s accumulated over decades” as a result of a lack of proper regulation and legislation, Alberta Energy Minister Sonya Savage said in an interview. That has resulted in more than 91,000 inactive wells in the province and, as of July 1, 2,992 orphan wells that need to be cleaned up. “We’re going to see a dramatic drawdown of that number over time,” Savage said of the province’s new rules, adding that the magnitude of the problem means Alberta has to “get it right.”
To deal with the backlog of thousands of yet-to-be-cleaned up wells in Alberta, the federal government announced $1 billion in funding in April to help operators plug and remediate old wells. Alberta has also announced loans to the Orphan Well Association for a total of $335 million in two separate announcements in the past year, while promising to introduce a new liability management framework soon.
Chief among the new rules is the province’s requirement that oil and gas producers will be forced to allocate money each year cleaning up a percentage of their environmental liabilities in the province.
Initially, firms are likely to be required to allocate money for remediation comprising four per cent of their total environmental liabilities, but Savage said that target would likely rise over time and would be calculated on a five-year rolling average.
Financial Post