Hot on the heels of National Observer’s report last week that clean-up costs in Alberta’s oilpatch could hit C$260 billion, a new investigation by The Narwhal shows how individual Albertans are already facing down the cost of abandoned fossil infrastructure.
“Landowners once promised a fair share for hosting oil and gas infrastructure on their properties say Alberta’s liability management system is broken,” The Narwhal reports. “They’re worried the regulator has long been propping up the industry by exaggerating profits and underestimating the costs of cleanup—often leaving landowners with a tangled mess of wells, rusty pipes, and contaminated soil.”
The news report begins with a profile of an abandoned well near Taber, Alberta, now classified as an orphan site, one of 2,000 left behind by bankrupt fossils and now under the care of the province’s Orphan Well Association that have not yet been sealed. With a farm right nearby, “if there’s a leak and it gets into the potato crop, it’s going right there into the French fry factory,” said Daryl Bennett, director of Action Surface Rights, a group “dedicated to helping fellow landowners understand and navigate the maze of government and industry processes.”
“The problems facing farmers are numerous,” The Narwhal writes, citing Bennett. They must “ensure their irrigation systems can pass over wells without hitting them, farm around the roads that lead to wellsites, deal with the dust and weeds that come with disturbed soil, and worry about contamination of their crops—and they often face long, paperwork-filled fights to claim the annual rent they’re owed by energy companies.”
The article points to a growing movement of Alberta landowners worrying that the Alberta Energy Regulator is “propping up a beleaguered industry without requiring the necessary assurances that wells will be cleaned up in the future. Critics worry not only that orphan wells are already sitting neglected in farmers’ fields across the province, but that a whole new wave of inactive wells is poised to be thrust onto the Orphan Well Association—and that, increasingly, taxpayers may be forced to shoulder the bill.”
“They’re putting the best spin on it,” said farmer and Action Surface Rights chair Ronald Huvenaars. “If you went to an accountant and had it audited, there’s no way an accountant would ever sign off on that.”
“This type of system works well during an oil boom but not so well during an oil bust,” agreed one University of Calgary briefing paper.
At current rates of expenditure, The Narwhal notes, it would take 177 years to remediate the province’s entire inventory of inactive, suspended, abandoned, and orphan wells.
Huvenaars told The Narwhal the situation leaves farmers feeling powerless to deal with the fossil industry’s footprint on their land. Pembina Institute policy analyst Jodi McNeill added that an inactive well where problems develop poses a risk of explosion, soil and water contamination, release of air pollutants—and greenhouse gas emissions.
“When something hasn’t been plugged, it just continually releases greenhouse gases into the atmosphere,” she told The Narwhal.
“The [regulator’s] system is not achieving anything,” added lawyer Keith Wilson. “If anything, it’s creating a false sense of comfort that this problem is being addressed—and we know it’s not.”
Bennett and others are concerned about the upcoming Supreme Court decision in the Redwater case, in which a lower court ruled that creditors’ right to collect on a bankrupt company’s financial obligation takes precedence over their environmental obligations.
“If this decision is upheld by the Supreme Court of Canada, we—and every other regulator in Canada—will no longer be able to hold companies accountable for cleaning up their mess,” the AER said in its intervention with the court last February.
Alberta has about 455,000 oil wells, according to a C.D. Howe Institute report, of which 155,000 are no longer in production. Against that daunting backlog, “the Orphan Well Association brought in just $30 million from the orphan fund levy, collected from industry, in 2017,” The Narwhal notes. Since 2009, the association has received more than $30 million in grants and a loan worth $235 million from the province, with Ottawa kicking in another $30 million. Last year, the association spent $30 million to cap just 232 wells.
