INTERACTIVE: The hidden cost of abandoned oil and gas wells in Alberta
There are over 50,000 abandoned oil and gas well sites in Alberta, no longer in production, that need to be restored and cleaned up according to 2014 numbers provided by Alberta Environment and Parks.
“It’s overwhelming” says lawyer Keith Wilson, “You know we’ve had tremendous growth in our oil and gas industry in Alberta. We now have over 400,000 wells in the province and this oil and gas industry has been occurring for a long time. As the growth continues oil wells don’t last forever and many wells that are drilled don’t work out.”
Wilson represents landowners in issues and problems they have with the oil and gas industry operating on their lands. He says more and more companies have “legacy wells” or wells that “were drilled many years ago that either were dry holes, there was nothing found, or they’ve run out of oil and gas.”
WATCH BELOW: The life of a well: From drilling to clean up
The problem, Wilson says, is “rather than clean those wells up… properly seal them, reclaim the land and give it back to the landowner” companies “decide it’s cheaper for them to just pay the annual compensation payment to the landowner than pay the hundreds of thousands of dollars or millions of dollars involved in doing a proper clean up.”
The clean has two main stages. First wells are “abandoned” and safely sealed shut. Then they are “reclaimed” meaning contaminants are removed and the land is restored.
Pat Payne, manager of the Orphan Well Association, is in charge of a small part of that clean up. “I seem to pick up the garbage that gets left behind by defunct [oil and gas] companies.”
But cleanup crews are playing a losing game of catch up with the oil and gas industry. According to Alberta Environment and Parks the province’s oil and gas well drilling rates are increasing while the rate of reclamation deteriorates. Meaning we are building and drilling faster than we are cleaning up.
This is no surprise to Payne, who is on the front line of the issue. “Every site is unique” says Payne “well work is always challenging”.
In 20 years the OWA has managed to abandon just over 700 sites. “In total we’ve abandoned over 700 wells with the program, and we’ve been able to obtain reclamation certificates, which is closure, on over 500 well sites.”
Normally, companies are responsible for cleaning up their own sites. But when they go bankrupt the Orphan Well Association [OWA] tries to pick up the tab.
The OWA’s workload has quadrupled in the last year from 162 sites to a to-do list of 704. Over the next year, the OWA expects to receive 1000 new sites.
Brad Herald at the Canadian Association of Petroleum Producers acknowledges this is a growing concern. “We certainly have some challenges in front of us. Been a pretty precipitous drop in the revenue picture, the oil price as you know a year ago was in the $100 vicinity it’s hovering in the $50 vicinity today. That creates certainly lots of challenges for the industry.”
But he isn’t too worried. He says it’s a boom and bust industry, “It’s a commodity business, like any other and if you sat with somebody in forestry and mining they are subject to the same commodity price swings and that boom bust cycle there are elements to the cycle today.” Herald says most companies don’t walk away from the clean up and are properly abandoning and reclaiming their sites.
For Payne and the OWA, the challenges are more than just financial, she’s short on time.
“Just throwing money at a problem doesn’t always solve it because it does take time to deal with these issues and we do appreciate the landowners caring and being patient to help us address these impacts.”
[SOURCES AND METHODOLOGY: 16×9 used data provided by Alberta Environment and Parks for the annual totals of Wells Drilled, Abandoned and Reclaimed. To estimate the cost of reclaiming an abandoned well we calculated a weighted average based on current regional cost estimates published by the Alberta Energy Regulator in Directive 011 and the current distribution of abandoned wells in ST37. We then applied that weighted average for each year.]
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