Province promises $400M for next round of oil and gas well cleanup

·4 min read
An abandoned oil well awaiting removal. Critics say the number of orphaned and abandoned wells is growing faster than resources to clean them up.
An abandoned oil well awaiting removal. Critics say the number of orphaned and abandoned wells is growing faster than resources to clean them up.

(Orphan Well Association)

The provincial and federal governments have announced the next round of project funding to kick start a nearly year-old program to clean up Alberta's abandoned and orphaned oil and gas sites.

The $400-million funding commitment announced Friday is part of Ottawa's $1.7 billion reclamation and remediation plan, which was announced last year for old oil and gas sites in B.C., Alberta and Saskatchewan.

Alberta was promised $1 billion of that and has since created what it calls the Site Rehabilitation Program.

Energy Minister Sonya Savage announced Friday that $300 million will be given to oil and gas producers who have already done similar work in the past two years.

Monty Kruger/CBC
Monty Kruger/CBC

The remaining $100 million in Friday's announcement will go toward site cleanup on First Nations and Métis settlements.

Canada's Minister of Natural Resources, Seamus O'Regan, who called in from his home in Newfoundland, joined Savage for the announcement.

"It's well documented that there are some areas where the Alberta government and the federal government haven't always seen eye to eye. But in many areas, such as this one, we are in perfect alignment," she said.

Patrick Butler/Radio-Canada
Patrick Butler/Radio-Canada

The program provides grants to oilfield service contractors to perform well, pipeline and oil and gas site closure and reclamation work, according to the province.

When the program was announced last April, it promised to create 5,200 jobs in Alberta. By the end of last year, the majority of the money hadn't been spent.

The provincial government is in charge of dispersing the funds, but has said it was overwhelmed when tens of thousands of applications came pouring in.

So far, nearly 42,400 applications have been submitted with less than half of those — 17,000 — being approved. The government says two-thirds of those are for abandoned work, while one-third is for remediation and reclamation.

The government says that so far, $310 million has been allocated to 633 Alberta-based companies — creating 1,500 jobs.

What hasn't been made public yet is just how many well sites have been cleaned up under the program.

'A few hiccups along the way'

Savage says that while she is pleased with the rollout, improvements were made after her department put together an advisory committee with industry to iron out the wrinkles.

"Have there been areas to improve and ways to get funding out quicker? Absolutely," she said.

The industry says there were some early growing pains.

"With any pilot program … there are always a few hiccups along the way, a few wrinkles," said Elizabeth Aquin, the interim president and CEO of the Petroleum Services Association of Canada.

"I think that the Alberta government and the department officials, we saw them work tirelessly to resolve all of these wrinkles. And I think it has paid off. We've got folks working," said Aquin.

The government has directed more staff to administer the program and made other changes, but still the private sector is discouraged by the little noticeable impact there is on jobs, spending and overall activity.

Subsidy for oil and gas companies

Critics have described the program as a taxpayer-funded subsidy for oil and gas companies and a violation of the principle of making polluters pay for the mess they create.

Regan Boychuk is a researcher with the Alberta Liabilities Disclosure Project, a coalition of academics and landowners pushing for more transparent government data on liabilities.

According to public estimates from the Alberta Energy Regulator (AER), it would take about $30 billion to clean up those wells. However, Boychuk's group suggests that number could be as high as $70 billion.

Boychuk says the government needs to be more transparent about how the $310 million has been spent so far.

He says Albertans should know exactly how many well sites have been reclaimed.

"It would be an incredible boon to our understanding of this problem. If we had this flow of real world costs from all this publicly supported spending, if we knew what it was being spent on and how much it costs to do really specific things on really specific types of wells," he said.

Boychuk says the "free" money for industry resulted in many companies putting their own remediation programs on hold while they waited for government to pay for the cleanup.

"That came to a grinding halt when a billion dollars was announced. That meant no new jobs were being created, and nothing extra was getting cleaned up," he said.

"We've simply replaced what was already being spent by industry with public dollars. And that's an insult to the polluter-pays principle, which we pay lip service to."

The program will continue to accept applications until the end of March 2022. Contractors have until the end of 2022 to complete their work.

Bryan Labby is an enterprise reporter with CBC Calgary. If you have a good story idea or tip, you can reach him at bryan.labby@cbc.ca or on Twitter at @CBCBryan.