Abandoned oil and gas wells causing angst in southern Alberta

Posted on January 23, 2020 by Vauxhall Advance

By Jamie Rieger
Alta Newspaper Group

As the Alberta Orphan Well Association (OWA) makes small strides in remediating abandoned wells and other oil and gas facilities around the province, more sites come into the system and the backlog at the Surface Rights Boards gets longer and longer.

As more and more companies ship out to greener pastures south of the 49th parallel or go bankrupt, the landowners, who have abandoned, and often un-reclaimed wells on their property, grow more frustrated.

Daryl Bennett, director with Action Surface Rights Association, has been listening to the frustrations of the landowners and has been advocating on their behalf.

“We’ve been warning the government for quite some time now about the abandoned wells and bankrupt companies walking away from the reclamation,” said Bennett, who farms in the M.D. of Taber and has wells drilled in the 1940s and 1950s on his property.

Currently, there are more than 150,000 wells waiting to be closed in the province and lots more that have yet to be transferred to the OWA for remediation.

“The Orphan Well Association is doing very well. The problem is with the backlog at the Surface Rights Federation, where there is a three to four year delay,” said Bennett.

A couple of years ago, OWA received a $235 million dollar loan from the provincial government, with the feds contributing $30 million to cover the interest to address the problem. The first loan advance to the OWA was in 2018, and the last advance will be in 2020. The $235 million loan is to be repaid by the oil and gas industry through the annual Orphan Fund Levy starting in 2019, with the last repayment occurring in 2027.

“They received the loan and have a three-year grace period before having to start paying it back,” said Bennett.

The following is the OWA orphan well list as of Nov. 1, 2019. Only assets designated as orphan by the Alberta Energy Regulator are under the management of the OWA: 3,406 orphan wells for abandonment, 251 orphan facilities for decommissioning, 3,531 orphan pipeline segments for abandonment, 2,772 orphan sites for reclamation, 27 orphan wells for suspension, 12 orphan pipeline segments for suspension and 842 orphan reclaimed sites.

Canadian Natural Resources Ltd. (CNRL) has been one of the companies that has taken an active role in reclamation, including paying 25 per cent of the Orphan Well budget.

“CN plans to reclaim 2,000-2,500 wells this year. These aren’t orphan wells, though and CN is paying the majority of the cost for the orphan wells,” said Bennett, adding that there is lots of work to be done before many wells can even be transferred to the OWA.”Over 150,000 wells in the province need to be closed and lots of wells have yet to be transferred to OWA.”

When a well gets abandoned by an oil and gas company, it first must be inspected by the Alberta Energy Regulator, before being transferred to the OWA for designation as an orphan well and remediation.

Action Surface Rights Association started in the M.D. of Taber more than 30 years ago, with a group of landowners, primarily in southern Alberta, who had concerns about property rights and in dealing with pipeline and oil and gas companies. Over the years, the organization has evolved and was reorganized again in 2007, with concerns expanding to include big alternative energy projects. These days, they certainly have their work cut out for them as they continue pushing for the rights of landowners. Not only are they up against the oil companies, but now they must also concern themselves with dealing with the provincial government that have not been dealing in good faith, according to Bennett.

“Landowners are very concerned about the UCP government who are not too concerned about the property rights or the environment. Landowners are worried the government is going to come in and crash and burn everything that’s being done. The government is not too worried about reclamation.”

In addition to the abandoned well situation, landowners are also getting frustrated with not receiving compensation or payments they are owed for having wells on their property.

“They (the provincial government) told the Surface Rights Board to cut back on the annual compensation to landowners and that’s a direct conflict of interest,” said Bennett.

“They’re trying to put limitations on how far they’ll go back for payments and that’s illegal. So, we’re moving to challenge the government. We’ll have to appeal, but there is such a backlog and it’s expensive to appeal. A lot of landowners are getting quite upset. Landowners waiting years for payment decisions. Some companies are struggling, but they are taking advantage of the landowners.”

Bennett had a stern warning for the UCP government that received a solid victory in the last provincial election.

“You better start supporting the landowners or you won’t have their support in the next election.”

There is $81 million still owed to municipalities in the form of taxes. In an effort to combat the situation, the Surface Rights Board has been working with RenuWell, who is leading a pilot project in the M.D. of Taber to install solar at some abandoned sites.

“There’s gravelled access roads with power poles to the sites. The site would be reclaimed, solar plants put up, and it can start generating electricity,” said Bennett. “The distribution is already there. There’s no sense taking agriculture land out of production and they would not build on pivot circles. With the irrigators, they can get cheaper electrical rates and would get solar power credits.”