Alberta’s oil and gas producers spent $769 million cleaning up old wells in 2023, a $73 million increase from the prior year, according to a new report.
The report released Thursday by the Alberta Energy Regulator aims to track the industry’s performance when it comes to addressing the backlog of thousands of old and inactive wells in the province.
Between 2000 and 2020, the number of inactive wells in the province grew at a rate of five per cent annually but has been trending downward since, in part due to a suite of new rules aimed at tackling the problem.
In 2023, the number of inactive oil and gas wells in Alberta decreased by five per cent to 79,000 from 83,000.
“This is a positive trend, but continued effort and focus are essential to maintain this trajectory,” the report states.
The regulator said there is more work to do, as the total outstanding liability associated with the cost of cleaning up the remaining wells sits at $33.1 billion.
Get daily National news
That’s down from $33.3 billion in 2022 and $33.6 billion in 2021.
The aim of Alberta’s oil and gas liability management program is to see all old infrastructure and energy development sites decommissioned, then assessed. Any contaminated soil or groundwater is treated before the land is restored to its previous condition. The province requires all companies to spend a certain amount of money yearly cleaning up old sites.
According to the regulator, the amount of money spent by industry on oil well cleanup in 2023 was 10 per cent higher than companies were required to spend under provincial rules. The report states 91 per cent of oil or gas well licensees met their mandatory spending requirements, leaving a total of 54 non-compliant licensees.
Alberta also has an industry-funded Orphan Well Association, which looks after well closure costs when an energy company has gone bankrupt or otherwise cannot meet its obligations to close its oil or gas project safely and responsibly.
The Orphan Well Association spent $149 million on closure-related activities in 2023. Nevertheless, the backlog in the Orphan Well Association’s inventory continues to grow, hitting an all-time high in 2023 of 11,000 orphan wells still needing reclamation.
Comments