Alberta energy company told to abandon hundreds of wells after ongoing care problems

Click to play video: 'Premier asks energy minister to prioritize oil well cleanup'
Premier asks energy minister to prioritize oil well cleanup
WATCH ABOVE: (From July 11, 2023) Premier Danielle Smith is telling her energy minister to focus on oil well cleanup. She wants Brian Jean to look into incentives for oil companies to clean old oil wells and she wants that plan to respect the polluter pay principle. Some aren't sure that's possible. Saif Kaisar explains. – Jul 11, 2023

A Calgary energy company has been ordered to abandon close to 2,000 wells, pipeline sections and other facilities over concerns about care and maintenance of the sites.

But questions remain about whether Tallahassee Exploration will be able to pay for the multimillion-dollar reclamation plan the provincial regulator has ordered the company to submit. Phone numbers for the Calgary company’s office were not in operation Monday.

In a release issued Monday, the Alberta Energy Regulator told the company it has 60 days to complete the first stage of cleanup for 817 wells, 964 pipeline segments and 77 facilities.

“Abandonment work, including surface abandonment and removal of cement pads, debris and produced liquids associated with the wells, must be completed in accordance with (regulatory) requirements,” the order says.

The company also has 30 days to submit a detailed plan for how it will complete remediation.

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“Tallahassee has not demonstrated it is capable of providing reasonable care and measures to protect public safety and the environment and is unable to meet its regulatory and end-of-life obligations,” says Monday’s order.

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The Parliamentary Budget Office estimates the average cost of cleaning up a well at $78,000 — although some experts consider that figure low. Still, that figure would put the cost of remediating Tallahassee’s wells at nearly $64 million, not including the pipelines or other facilities.

The regulator first issued an order in September for to the company to clean up its sites.

Another order was issued in November, demanding the company provide financial information and forbidding company officials from being on its site without approval from the Orphan Well Association.

The association is an industry-funded group that cleans up wells for which no solvent owner can be found. As of June 1, it had 2,647 sites in its inventory, which didn’t include Tallahassee assets.

Tallahassee will remain the owner of those assets although the Orphan Well Association will take control of their care and custody.

Tallahassee has a long history of regulatory and financial problems.

In 2019, the Alberta Energy Regulator rated its liability-to-asset ratio at less than half of what it considered stable. Still, the regulator approved its purchase of assets from other troubled energy companies the following year even as the Northwest Territories was blocking Tallahassee’s purchase of wells in its jurisdiction.

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Tallahassee failed to pay its regulatory levy and its orphan well levy in 2020, payments required of all energy operators in Alberta. Also, it did not meet the mandatory reclamation spending targets the regulator set in 2022.

Earlier this year, British Columbia’s regulator fined the company $40,000 for improperly managing gas wells, and Alberta fined it for failing to report its emissions of methane, a potent greenhouse gas.

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