The Alberta government is directing a C$235-million loan to the Orphan Well Association to clean up a share of the nearly 450,000 abandoned oil and gas wells across the province.
“The number of orphaned wells in Alberta is a growing problem, a problem that has been made much worse by the collapse in oil prices,” Premier Rachel Notley said last week at an event in rural Carstairs. “We’re here today to help fix the growing orphaned well problem and create good jobs for Albertans at the same time.”
The Alberta Energy Regulator pegs remediation costs for the entire inventory of orphan wells at $30.5 billion.
The provincial plan, backed by $30 million in financing from the federal government, is expected to create 1,650 jobs over three years. The industry-funded Orphan Well Association, which has devoted $30 million per year to its work but recently doubled that amount to $60 million, is to repay the loan over 10 years.
Notley said the loan would enable the association to get more work done faster “at a time when the costs are lower and people are looking for the work”, both due to an oil price crash that now dates back nearly three years. “It’s a win for landowners, a win for our environment, a win for industry, and a win for thousands of Albertans who will benefit from the good jobs that we are creating,” she added.
“We applaud the Government of Alberta for leveraging the federal funds to allow a greater number of sites to be decommissioned sooner rather than later, thereby creating more jobs,” said Mark Salkeld, president and CEO of the Petroleum Services Association of Canada, which originally floated the idea.
“These orphaned wells pose a significant environmental risk,” said Pembina Institute analyst Nikki Way. “We’re hopeful this effort will ensure that these liabilities don’t continue to grow and these wells are reclaimed before they become orphaned.”