B.C. not pursuing new federal funding for orphan well cleanup

By Shannon Waters December 5, 2019

Alberta wants Ottawa to fork out funding to clean up orphan oil and gas wells in the province, but B.C. does not seem keen to follow suit.

Late last month, Alberta Finance Minister Travis Toews sent a letter to federal Finance Minister Bill Morneau asking for “new federal funding … to accelerate the reclamation of abandoned wells.”

“This would support your government’s election platform commitment/priorities on the environment, which include giving ‘energy workers … training, support, and new opportunities needed to succeed in the clean economy,’” Toews wrote, suggesting Morneau direct funds to Alberta’s Orphan Well Association and use flow-through shares to encourage investments in well reclamation.

Alberta has an estimated 300,000 orphaned wells. The cost of reclamation is projected at $70 billion, but some estimates peg it as high as $260 billion.

Asked if B.C. might also look for federal help to address the province’s own orphan wells problem, the Ministry of Energy, Mines and Petroleum Resources sent BC Today a statement touting a piece of legislation passed in 2018.

“Our government took action in 2018 to address the growing number of inactive and orphaned well sites in B.C. by passing Bill 15, which gives the Oil and Gas Commission additional tools to protect the environment and improve funding for orphan site restoration,” the statement says.

The Energy, Mines and Petroleum Resources Statutes Amendment Act gives the OGC the power to impose levies on oil and gas permit holders to cover site restoration costs and the authority to require permit holders to clean up inactive sites.

The energy ministry estimated the number of orphan wells in B.C. is about “16 times lower than Alberta” but did not provide a current count of abandoned wells in the province.

“Our regulations, legislative amendments and the industry-funded Orphan Site Reclamation Fund ensures our wells, pipelines and facilities are decommissioned in a timely manner,” the statement concludes.

In March, Auditor General Carol Bellringer estimated there are 326 abandoned oil and gas wells in the province, mostly in north-eastern B.C. The number of abandoned wells increased sevenfold between 2015 and 2018, according to the report, and the funding collected to cover clean-up costs did not keep pace.

“The Orphan Fund, which is funded through security deposits and a tax on operator’s production … was short by $16.6 million in 2016 and $13.1 million in 2017,” Bellringer said.

She recommended the government take a more proactive approach to site maintenance in the industry.

“The full solution is not in just reacting with enough money to clean up, but also to prevent things from occurring in the first place,” she said. “[We] need the oil and gas commission to have the ability to compel operators to do cleanup early in the game, as opposed to waiting until it’s too late.”

The audit did not evaluate the likely effectiveness of the provincial government’s legislation. At the time OGC was still crafting the related regulations that will detail the requirements, including timelines to decommission wells and restore sites.