Alberta oil companies have abandonment issues

Thousands of wells sit orphaned on people’s land

Rural landowners are angry at the rate that abandoned oil wells are accumulating on their land. Without legislated timelines for industry to clean up well sites once production has stopped landowners and environmental groups say the legacy of this side of the energy industry is already a major burden on the land.

“Abandoned” is one of several technical designations for a well that is no longer producing oil so the actual number of such sites and their condition is hard to pin down. Alberta Energy statistics put the number of “uncertified wells” meaning those that are out of use but not yet capped on land that has not been reclaimed at 50417. Some of those oil wells were drilled over 100 years ago and the companies that should be liable for their reclamation have long since ceased to exist.

The Alberta Energy Regulator (AER) has extensive rules governing well abandonment but Red Deer area rancher Glenn Norman also a vocal member of the Alberta Surface Rights Federation says there are big loopholes in the regulatory framework and that the AER does not enforce its rules adequately.

“What’s currently wrong with the regulatory framework is it’s not getting the job done. The amount of wells that are sitting suspended is absolutely huge” says Norman.

He says one of the biggest problems is the lack of a legislated timeline to dictate when an oil company must cap a well it is finished with and perform environmental reclamation on the site.

“Within five miles of me there are probably 12 14 wells that have been sitting not doing anything nothing’s being produced — some of them nothing has ever come out of them and they’ve been sitting there since the ’70s” he adds.

Norman says it is often cheaper for an oil company to continue to pay the lease on abandoned wells in perpetuity than to perform the required abandonment and reclamation procedures. He also says oil companies will do this until they go out of business after which time the old wells become the Orphan Well Fund’s responsibility.

In Alberta all oil companies pay a levy to the Orphan Well Fund to cover the costs of the Orphan Well Association (OWA) which reclaims well sites that belonged to now-defunct companies. An Alberta Surface Rights Federation resolution wants oil company levies to be tripled and the fund to be raised to $250 million. In 2012 the fund was raised to $15 million from $12 million per year. According to OWA manager Patricia Payne that is just enough to handle its current inventory of 540 orphan sites.

“At that rate they’ll finish getting rid of the orphan wells just about the time the Earth spirals into the sun” says Norman.

Payne says the association’s greatest challenge is co-ordinating reclamation work for wells scattered across the province and an additional funding increase would help. She says that because there is no timeline dictating how quickly a well site must be cleaned up the OWA makes an effort to deal with the ones that appear to present the greatest risk to the environment or nearby communities.

Norman says the Alberta Surface Rights Federation and other landowner advocacy groups have been bringing their concerns to the provincial government for decades with little success.

In 2013 a project by the Edmonton-based Environmental Law Centre seemed to finally resonate with the AER and industry. Jason Unger a lawyer with the centre says his work arguing for a legislated well-site reclamation timeline made it into a government report and eventually led to discussions about making the timeline a reality.

“There are lots of regulations there that offer the energy regulator the opportunity to enforce if there’s non-compliance issues or that type of thing” says Unger. But “there’s a lot of discretion for operators to abandon and reclaim when they kind of feel it’s right for them which is understandable in terms of economic reasons and that type of thing. But at the same time if we’re seeking environmental outcomes obviously we need to factor those in as well…. We’re seeing an ever-escalating amount of abandoned sites that aren’t reclaimed and the related environmental issues that might cause” says Unger.

Unger says it will require detailed analysis but suggests the amount of time well-site operations could be temporarily suspended should be limited to two years after which a company should be forced to justify its practices or be given 12 months to get abandonment certification and reclaim the site.