Alberta’s orphan well problem hasn’t gone away — but it’s got a whole lot better than it was.
“We are going at a high pace of activity for this last year,” said Lars DePauw, executive director of the Orphan Well Association. “We’re probably the most active organization in the closure space in Western Canada, including all the big producers.
“We’re a very busy organization getting lots and lots of sites done on an annual basis.”
In the last fiscal year, the Orphan Well Association decommissioned nearly 1,000 wells and reclaimed roughly 400 sites — 300 more wells than were decommissioned in the previous fiscal year.
That’s the busiest the organization has been in recent memory, DePauw said at the virtual Red-Bow Ranching Conference in early February.
“We’re trying to get everybody’s sites done in an expedited fashion,” he said. “We’ve made quite some improvements over the last year, both in the number of sites we’ve done and (in the number) we’ve transitioned to our reclamation team.
“So we’ve brought down the number of wells that still need to be decommissioned while still also receiving additional wells coming in.”
DePauw credits some internal changes at the organization for that quicker pace, including hiring new staff and contractors and working year round.
“Historically, we may have waited until crops were removed. This would be for sites where the landowner is farming some of the area under a lease,” he said, adding that they still worked with landowners “as much as possible” to accommodate harvest.
The impact of those extra hours and boots on the ground have been felt by rural landowners, said Daryl Bennett of Action Surface Rights, an association of landowners who have banded together to deal with energy companies.
“I deal with a lot of farmers who have orphan wells on their land, and in general, most of them are quite happy with how it’s gone,” Bennett said in an interview. “(The association is) doing a pretty good job. They’re cleaning up in excess of 1,000 wells a year pretty easy the last couple of years.”
Even better, the number of sites slated for reclamation has also shot up with that increased pace.
“Close to 50 per cent of those are either in the final stages of reclamation or in the very final stages of waiting for vegetation to be established and then applying to the regulator for reclamation certificates,” said DePauw. “We’re really plowing through these sites very quickly.”
And this year is likely to be even busier.
Currently, there are a little over 2,700 orphan sites in the association’s inventory that need to be decommissioned and around 4,300 sites ready for reclamation. The association’s target for the year is to decommission 1,900 wells and reclaim 900 sites. Its budget has increased as well, to $217 million (from $200 million), to accommodate the extra sites.
But the association is also monitoring insolvency proceedings among oil and gas operators to know when they might be taking on additional sites.
“Insolvency proceedings will have an impact on the Orphan Well Association,” said DePauw. “These sites are not orphans yet — they’re still with a receiver. It’s a legal proceeding, and we have to wait until that legal proceeding is completed.”
That’s where a lot of producers are noticing delays, added Bennett.
“That’s one of the biggest problems — the delay of transferring these sites to the Orphan Well Association (from the Alberta Energy Regulator),” he said.
“There are thousands — if not tens of thousands — more wells that are going to come on stream to the Orphan Well Association.”
In fact, the Alberta government said last spring there are 97,000 inactive wells and 71,000 abandoned wells in the province.
As new sites come in, any high-risk ones will be dealt with first, but the Orphan Well Association plans to make a large dent in the remainder of the sites to reduce the ongoing impacts to landowners, said DePauw.
“Many landowners have been adversely impacted by these defunct operators as they’re going through this insolvency process,” he said. “So we definitely realize that when we step into a site that has been orphaned that the likelihood of the landowner being adversely impacted historically is a very clear issue.”
Meanwhile, another $400 million is going into the provincial government’s Site Rehabilitation Program. The program gives grants to oil and gas producers (that have been doing cleanup work in the past two years) to cover the rehabilitation of oil and gas sites. (This is separate from the work being done by the Orphan Wells Association.)
Created last spring, the Site Rehabilitation Program got off to a slow start with the province overwhelmed by a flood of applications from oilfield service companies eager to find work for their employees. But the processing of applications has sped up in recent months and the province says it had awarded $310 million in grants as of mid-February.
A second allotment of $400 million was announced on Feb. 12, but that money is part of the $1 billion pledged last year. The money is coming from the federal government but Alberta designed and is administering the program, which is expected to create 5,200 jobs.
– With staff files