Alberta Insider: $1-billion spent on inactive well cleanup

Todd Korol/The Globe and Mail

A report released this week shows that between the oil and gas sector, the Alberta government’s site-rehabilitation program and the industry-funded Orphan Well Association, more than $1-billion was spent in 2023 on cleaning up inactive wells in the province.

Obviously, with a spend as large as that, it must have made a massive dent in the approximately 80,000 inactive wells in the province, right?

Well, according to the Alberta Energy Regulator’s annual liability monitoring report released Thursday, only about five per cent of Alberta’s inactive wells were rehabilitated.

Just an oil drop in the bucket.

Each year, the AER requires the oil and gas sector in Alberta to spend a certain amount on cleaning up inactive wells and pipelines. Last year, that figure was set at $700-million.

But one expert says not nearly enough is being spent by the industry to deal with the massive environmental liability, and he wants to see the AER force the sector’s hand.

“The point is the AER has no plan to get that money for those liabilities from profitable companies,” said Martin Olszynski, an associate professor and Chair in Energy, Resources and Sustainability at the University of Calgary Faculty of Law.

Speaking with The Globe’s energy reporter, Emma Graney, Olszynski pointed at Canadian Natural Resources Ltd., a company that he said is “making money hand over fist” right now, and is responsible for about 20,000 of the province’s inactive wells.

While the AER says the cost of cleaning up the hundreds of thousands of oil and gas wells in the province is about $33.3-billion, Olszynski believes that number is low. And internal AER documents themselves suggest the environmental liability could be nearly triple that estimate, coming in closer to $88-billion.

Thursday’s AER report comes just a week after the Canadian Association of Energy Contractors, projected a 7.3-per-cent increase in the number of oil and gas wells being drilled in 2025.

“Hope is making a comeback in the oil patch,” said association CAOEC chief Mark Scholz last week in Calgary.

Of course, all good news in the industry these days is tempered by the shadow of the looming oil and gas emissions cap proposed by Ottawa and the 25-per-cent tariff U.S. president-elect Donald Trump has threatened to impose on imports.

Premier Danielle Smith has promised that her government intends to fight Ottawa over the proposed cap, which would limit emissions from the oil and gas sector to 35 per cent below 2019 levels.

Last week she announced a legal challenge and a sweeping list of proposed actions intended to press Ottawa into scrapping the emissions cap, including seizing data that Alberta oil and gas companies collect about greenhouse gases at their facilities, barring entry to energy facilities by federal officials and ensuring that no provincial entity helps Ottawa implement or enforce the cap.

This is the weekly Alberta newsletter written by Alberta Bureau Chief Mark Iype. If you’re reading this on the web, or it was forwarded to you from someone else, you can sign up for it and all Globe newsletters here.

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