Industry gets loan to clean up Canada orphan wells

Premier Rachel Notley announces the loan to the Orphan Well Association at a farm near Carstairs.
Jeff Mc Intosh  
The Canadian Press

Premier Rachel Notley announces the loan to the Orphan Well Association at a farm near Carstairs. Jeff Mc Intosh The Canadian Press

The Alberta government will loan an industry group $235 million to accelerate the cleanup of oil and gas wells left behind by bankrupt producers after a prolonged downturn crippled many operators.

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

There are almost 450,000 oil and gas wells across Alberta, with nearly a third now considered "abandoned" or "inactive" by industry.

"The number of orphaned wells in Alberta is a growing problem that has been made much worse by the collapse in oil prices", Alberta Premier Rachel Notley said at a rural property north of Calgary. "It's called the polluter pay principle".

The province said there are an estimated 180,000 active wells, 83,000 inactive wells and 69,000 abandoned wells in Alberta - and as of March 2017, the OWA said they had an inventory of 2,084 orphaned wells to go through closure (that's 1,394 to be abandoned, and 690 to be reclaimed).

Notley said $30 million earmarked in the recent federal budget will cover the interest costs of its loan, which it expects to be repaid over 10 years.

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Orphaned wells, which are no longer producing and haven't been properly sealed, are the biggest concern because they no longer have a company responsible for them and could pollute groundwater and soil. "This repayable loan will further help to accelerate the abandonment and reclamation of orphan wells in Alberta".

Notley noted that the group had already agreed to double their annual contribution to $60 million, starting in 2019, so that money will instead be used to pay back the province's loan.

"I think it's well understood in industry that given the economic slump, and the uncertainty created by the Redwater bankruptcy case, the list of orphan sites was going to increase and the levy to pay for this work would grow apace".

The move helps address the major environmental risk that comes with having so many neglected wells, said Nikki Way, an analyst at the Pembina Institute, an environmental think-tank.

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

Last week, the province announced that it would work with industry and others to find ways to better protect Albertans and the environment by improving the policies for the management of old oil and gas facilities. "Pembina is encouraged by this effort in parallel with the ongoing efforts to review and reform the existing inadequate rules in place to address root causes of this problem and ensure that liabilities for cleanup are not transferred to Albertans". "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".

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