Orphan well cleanup gets $1.7 billion from Ottawa

Move to deal with long-standing problem welcomed but bid to use sites for solar arrays may get lost in shuffle

A federal cash injection of $1.7 billion will help clean up Alberta’s mess of orphan oil and gas wells.

“We were already planning to have a very busy 2020, and this is going to help us continue doing the work that we’re doing,” said Lars De Pauw, executive director of the Orphan Well Association.

The funding is part of Ottawa’s effort to help Alberta’s battered energy sector, and about $1 billion of the money will go to oilfield service companies for well site cleanup. (They can get grants of up to $30,000 per site, covering 25 to 100 per cent of the cost.)

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As well, the Orphan Well Association gets a loan of $200 million on top of an earlier provincial loan of $100 million.

“Most of the money we get outside of the loans comes from the oil and gas industry, so this money is really going to offset some of that money we were going to be getting from other sources and allow (oil and gas) producers more time to repay that money,” said De Pauw.

Last year, the association cleaned up about 1,000 decommissioned wells and is on target to double that for this upcoming year. But the funding is more likely to be needed in future years, as record-low oil prices force even more oil and gas companies to shutter their operations.

“We’re going to get more sites. We know that,” he said, adding the association is “pretty much at capacity” for reclaiming well sites this year.

“So the money that we need is not necessarily for this year. We’re well funded for this year. It’s more about 2021 and 2022.”

There are thousands of ‘orphan wells’ in Alberta, many once owned by defunct or insolvent companies.
photo: iStock/Getty Images

But one landowner advocate thinks the money should be going to support the Orphan Well Association directly — not oil and gas companies.

“The Orphan Well Association does a good job — it just doesn’t have enough money to take care of all the companies,” said Daryl Bennett, director of the Action Surface Rights Association. “We have tens of thousands of wells out there that need to be cleaned up. So we need the Orphan Well Association, and it needs to be funded.”

The reclamation was supposed to be financed by oil and gas companies, but “the system didn’t require them to put the money aside, and now a lot of them are going bankrupt,” said Bennett, adding it wouldn’t be “prudent” to give these struggling companies more money.

“We’ve learned we can’t trust a lot of these companies — they’ve learned to game the system,” he said.

“They’re not paying property taxes now, they’re not paying landowner rentals, and now it appears they’re not going to have to clean up their mess. You don’t want to give all these executives who are about to have bankrupt companies golden handshakes as they leave. You want to ensure that this money actually goes to reclamation.”

Solar energy transition

But Bennett said he’s happy the wells will finally be getting needed attention and funding.

“They need to be cleaned up. And if the industry won’t, then the taxpayer has to. Somebody has to clean up the mess. We can’t just leave it sit.”

But one group hopes some of the sites will be left to sit just a little while longer.

RenuWell, in partnership with the Municipal District of Taber, has been working on a pilot pro­ject to convert orphan well sites to renewable solar energy generation. But the window to do that will grow narrower and narrower as more of these sites are reclaimed.

Keith Hirsche.
photo: Supplied

“All these things are speeding up the closure of abandoned infrastructure on landowners’ agricultural land, and I’m very much in favour of land being given back to the farmers,” said project lead Keith Hirsche.

“But there are many sites that are poor-quality agricultural land. These sites would be suitable for renewable energy generation, but things are being accelerated so fast with this job creation program that a lot of the infrastructure that could be reused for solar generation is going to get cleaned up before we have a chance to work with it.”

These sites — about 10 per cent of the leases in the province — are ideal for solar power generation because they already have roads and power lines. But as they are reclaimed, that infrastructure will likely be removed — a costly undertaking not needed if the site is used for solar power generation.

“You’ve already got a road. You’ve already got power lines. You just repurpose it for a different type of energy. It’s a win win for everybody,” said Bennett, who’s also involved in the pilot project.

Conversion to solar offers more than short-term employment, said Hirsche.

“Once those sites are cleaned up, that employment is gone,” he said. “But what we see from this is we get ongoing job creation and ongoing tax revenue for the municipalities, and the money that’s saved by not having to take the roads and power lines out from these sites could instead be used to close off more sites that have better value for the farms.”

‘Up-skilling’ for energy workers

And oil and gas workers are ideally suited to this type of work, said Lliam Hildebrand, founder of Iron and Earth, an organization that ‘up-skills’ experienced workers in solar panel installation.

“Alberta has an incredible inventory of skills and infrastructure that can be leveraged for building new energy economies,” said Hildebrand. “We basically want to help oil and gas workers get back to work by utilizing abandoned or inactive wells for solar energy projects.”

So far, Iron and Earth has conducted three training programs in partnership with others, with plans to launch its own in-house training program this fall, depending on the pandemic.

“We’re not talking about retraining. We’re talking about up-skilling,” he said of the five-day program.

“It’s a huge benefit to workers to know that they now have skills that are relevant to these new and emerging technologies and they can be confident moving forward with their careers.

“It’s also a huge benefit for the economy because, if we can put people through a five-day program and they’re still going to be utilizing their core skills, that’s going to be a lot less burden on the taxpayers.”

Investing public dollars in renewable energy generation could also create a “win win win” for the economy post-pandemic, he added.

“What our economy is going to need right now is as many shovel-ready projects as possible,” said Hildebrand. “There are huge opportunities here, and we want to be a part of that.”

But that will require a shift in thinking from the oil and gas industry and the provincial government.

When asked at the press conference announcing the new provincial program whether Alberta could see a faster transition to renewable energy sources, Premier Jason Kenney shut that down quickly.

“When you talk about the Green New Deal, listen, our focus is on getting people back to work in Alberta — not pie-in-the-sky ideological schemes,” said Kenney. “We are actually not trying to amplify, but fight back against the political agenda of the green left that has been trying to landlock Alberta energy.”

However, in Europe, “oil and gas and renewables have started to work hand in hand,” said Hirsche.

“These companies have basically seen that there’s going to be a transition in the energy world, so rather than fighting it, these large oil and gas companies are looking at how they can have a future for themselves, by being an energy company that does both hydrocarbons and also renewable energy,” he said.

“Unfortunately, the political rhetoric in Alberta has really hardened around this idea of oil and gas against renewables. This kind of rhetoric has really damaged the ability to work together in the province.

“There just needs to be an open discussion about where we want to go as a province and how we’re going to get there. But that gets in the way of talking points about how Ottawa is picking on us.”

About the author

Reporter

Jennifer Blair

Jennifer Blair is a Red Deer-based reporter with a post-secondary education in professional writing and nearly 10 years of experience in corporate communications, policy development, and journalism. She's spent half of her career telling stories about an industry she loves for an audience she admires--the farmers who work every day to build a better agriculture industry in Alberta.

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