Zombie Oil and Gas Wells a $30-Billion Liability in Alberta
Alberta’s taxpayers face up to $30 billion in public liabilities thanks to “among the continent’s most permissive policies on cleaning up inactive oil and gas wells,” Andrew Nikiforuk writes in The Tyee.
Alberta’s governments have allowed the backlog to build as tens of thousands of wells are left in a state of legal suspended animation. They’re not producing. But they’re not shut down, either. And they may be leaking.
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“While most North American jurisdictions require companies to clean up and restore non-producing oil and gas wells in a timely fashion, Alberta doesn’t,” Nikiforuk writes, citing a report by University of Alberta economist Lucija Muehlenbachs. “Most jurisdictions require companies to shut down and clean up wells that have been inactive for specified periods. North Dakota, which has no backlog of inactive wells, requires that wells that been inactive for 12 months be properly plugged and decommissioned immediately, or within a two-year time period.
By contrast, Nikiforuk reports, “Alberta allows companies to say wells are ‘suspended’ indefinitely.” Poorly-sealed inactive wells, he adds, “leak methane and can contaminate soil and groundwater and support invasive weed growth. They fragment ecosystems, devalue property, and prevent farmers making full use of their land.”
“Alberta is one of the more lenient jurisdictions, as it has no limit set on the length of time a well can remain suspended,” explained Muehlenbachs, in a briefing paper released last week for the School of Public Policy at the University of Calgary.
The number of inactive wells in Alberta has tripled in the last 20 years, reaching 81,602 in November. As The Energy Mix reported early last month, the industry-funded Orphan Well Association, responsible for cleaning up abandoned wells, plugged a record 185 of them in the 2015-16 fiscal year.