More orphan well funding needed

By Sean Feagan, Local Journalism Initiative Reporter

While recently announced funding to clean up orphan wells is a positive sign, more needs to be done to help the region’s oil and gas industry, according to local politicians.
On April 17, Prime Minister Justin Trudeau announced $1.72 billion in federal funding to clean up orphan wells. These oil or gas wells are licensed to defunct and/or insolvent companies or individuals, meaning no remaining party holds legal or financial responsibility for them.
Alberta has 2,983 orphan wells requiring abandonment, meaning the process by which wells are sealed and removed from service. An additional 3,284 sites require reclamation, which is the returning of the area of the well site to its original state.
In a news release, the government of Canada stated the funding will be allocated across Alberta, Saskatchewan and Manitoba, and will generate 5,200 jobs in Alberta.
According to Bow River MP Martin Shields, the funding is a step in the right direction, but orphan wells will remain a challenge for Alberta.
“The amount that’s coming in is a start, but there’s a lot more to resolving the issue,” said Shields. “It’s a much larger issue than that funding would fix.”
Considering the number of abandoned wells and the per site clean-up cost, fixing the problem will take “multibillions” more, he said.
Orphan wells challenge municipal finances on two fronts, explained Shields.
“Rural municipalities, like the county of Wheatland, are no longer getting revenue from those properties, while they are left with derelict sites that need to be taken care of,” said Shields. “They are going to have to find ways to deal with that huge lack of tax income that they have received in the last few years.”
More support for oil and gas infrastructure in Canada would mean a better market for energy companies, resulting in less bankruptcies and fewer orphan wells, said Shields.
“We would be much better off with energy security within our own country, and (projects) like Energy East pipeline would be part of that.”
The announcement will be welcomed by the oil and gas industry and by producers that have waited “years and years” for wells to be cleaned up, said Chestermere-Strathmore MLA Leela Sharon Aheer.
The provincial government, led by Premier Jason Kenney and Minister of Energy Sonya Savage, have been “working tirelessly” on the orphan well problem, said Aheer.
On March 3, the provincial government announced it was loaning $100 million to the Orphan Well Association, an independent non-profit focused on oil and gas assets, to fund well abandonment and reclamation. It was reported the funding would create 500 direct and indirect jobs.
Some oil and gas companies have taken it upon themselves to clean up legacy wells, said Aheer.
“Many of the companies, by their own hand and their own money, were cleaning up those legacy wells because they felt it was important as part of their environmental responsibility,” said Aheer. “Alberta has the best environmental stewardship in the world for oil and gas.”
But the greatest impact of orphan wells is to rural landowners, according to Wheatland County Reeve Amber Link.
“Orphaned wells create uncertainty and complex surface rights processes that landowners must navigate,” said Link. “When wells are decommissioned but remediation and reclamation is delayed, the land may be considered ‘farmable’ for the purposes of compensation; yet soil contamination and poor soil conditions may still be present that can affect crop yields.”
There are about 50 orphaned wells in Wheatland County, said Link.
While the new funding will help clean up orphan wells, remaining is “a gaping hole in support for our active energy industry,” said Link. “Oil and gas have been part of the foundation of our country, and our federal government needs to recognize that and take significant steps to support the energy sector during these unprecedented challenges, including key components, like market access.”
While seeing funding going to the oil and gas sector is a positive sign, the impact to Wheatland County’s economy will likely be minimal, said county councillor Jason Wilson.
“To be quite honest, how much will the county see? Very little,” he noted. “If the federal government really wanted to help those companies, both in oil and gas, they would be pushing forward with getting our market to access.
“It’s not going to jumpstart the rural economy – what we need in Alberta is a strong business environment that allows that sector to strive and get its product to market.”