A western Canada think tank is calling on Alberta to lower regulatory barriers that it says discourage businesses from reusing abandoned and unreclaimed oil and gas well sites. Observers say the scheme could allow fossils to hand off many billions of dollars in environmental liabilities.
Making it easier to convert an old well site into anything from a geothermal plant to a municipal park would speed site restoration and help ease the burden of unfunded cleanup costs in the energy sector, said Energy Futures Lab animator Juli Rohl, co-author of the report by the Canada West Foundation.
“We think these wells should be cleaned up, where possible,” Rohl told The Canadian Press. “But where that either isn’t going to happen or where there is a viable new life for them, that should be considered.”
Critics suggest the approach would allow industry to avoid cleaning up the mess it creates.
“It’s a transparent attempt to pass this liability to someone else,” said Regan Boychuk of the Alberta Liabilities Disclosure Project, a group that monitors industrial effects on landowners.
The cleanup liability for those wells has been estimated as high as C$260 billion.
Rohl’s paper suggests at least some of those sites could be reused, more or less as is. Some could generate geothermal power. Others could provide now-valuable minerals such as lithium. Others could house small solar farms.
A few companies in Alberta have repurposed old fossil energy sites for geothermal and solar projects. Allowing more such activity could create jobs and diversify the economy, improve the energy sector’s outlook and keep new industry off undeveloped land.
But Alberta law requires a fossil energy company to fully clean up a site before it can be transferred. Concrete pads or roads must be removed, even if a new user wants to keep them.
The Calgary-based foundation, a think tank on western issues, suggests a company should be allowed to defer its cleanup responsibilities and transfer them to a new operator. “This would allow transfer of the remaining surface infrastructure and reclamation liability to the repurposer,” the report says.
Rohl acknowledges only about 10% of orphan wells are suitable for geothermal or solar development. Greenhouses or even municipal parks could be considered. “We decided to leave it open for any uses.”
Boychuk said repurposing would allow an industry that has taken billions of dollars out of the ground to walk away from its environmental responsibilities.
He said the effect would be to move environmental liabilities off the books of oil companies and move them to new ones. How many greenhouses, he asks, can afford to pay the $100,000 the C.D. Howe Institute says is the average cost to reclaim a well?
“Hurray! We got solar panels,” he said. “But the contamination sits there.
“The only real issue in the industry is escaping a very, very large liability and this is the latest attempt.”
Nigel Bankes, dean of resource law at the University of Calgary, said it’s a good idea to favour the reuse of old industrial sites instead of creating new ones. But, he added, much more work needs to be done to ensure the public believes cleanup costs aren’t just being kicked down the road.
“It’s going to take a lot of work to put together a liability regime that makes sense (for) existing licensees, the people who will inherit that liability, and to convince the public that the deal offers better assurance,” and “that remediation issues will be adequately dealt with.”
Start small, advised Bankes, who suggested transfers of unremediated sites should be initially restricted to between energy companies.
“Maybe it makes sense to start with a narrower focus.”
This report by The Canadian Press was first published April 26, 2021.