Study says easing rules on transfer of unreclaimed oil wells could speed cleanup

Study says easing rules on transfer of unreclaimed oil wells could speed cleanup

CALGARY — Alberta should lower regulatory barriers that discourage businesses from reusing abandoned and unreclaimed oil and gas well sites, says a report from the Canada West Foundation.

Making it easier to convert an old well site into anything from a geothermal plant to a municipal park would speed site restoration and help ease the burden of unfunded cleanup costs in the energy sector, said co-author Juli Rohl.

“We think these wells should be cleaned up, where possible. But where that either isn’t going to happen or where there is a viable new life for them, that should be considered.”

Critics suggest the approach would allow industry to avoid cleaning up the mess it creates.

“It’s a transparent attempt to pass this liability to someone else,” said Regan Boychuk of the Alberta Liabilities Disclosure Project, a group that monitors industrial effects on landowners.

Alberta has more than 7,700 orphan wells — abandoned and unreclaimed by formers owners, often during bankruptcy. Another 95,000 wells are inactive.

The cleanup liability for those wells has been estimated as high as $260 billion.

Rohl’s paper suggests at least some of those sites could be reused, more or less as is. Some could generate geothermal power. Others could provide now-valuable minerals such as lithium. Others could house small solar farms.

A few companies in Alberta have repurposed old energy sites for geothermal and solar projects. Allowing more such activity could create jobs and diversify the economy, improve the energy sector’s outlook and keep new industry off undeveloped land.

But Alberta law requires an energy company to fully clean up a site before it can be transferred. Concrete pads or roads must be removed, even if a new user wants to keep them.

The Calgary-based foundation, a think tank on western issues, suggests a company should be allowed to defer its cleanup responsibilities and transfer them to a new operator.

“This would allow transfer of the remaining surface infrastructure and reclamation liability to the repurposer,” the report says.

Rohl acknowledges only about 10 per cent of orphan wells are suitable for geothermal or solar development. Greenhouses or even municipal parks could be considered.

“We decided to leave it open for any uses.”

Boychuk said repurposing would allow an industry that has taken billions of dollars out of the ground to walk away from its environmental responsibilities.

He said the effect would be to move environmental liabilities off the books of oil companies and move them to new ones. How many greenhouses, he asks, can afford to pay the $100,000 the C.D. Howe Institute says is the average cost to reclaim a well?

“Hurray! We got solar panels,” he said. “But the contamination sits there.

“The only real issue in the industry is escaping a very, very large liability and this is the latest attempt.”

Nigel Bankes, dean of resource law at the University of Calgary, said it’s a good idea to favour the reuse of old industrial sites instead of creating new ones.

But, he added, much more work needs to be done to ensure the public believes cleanup costs aren’t just being kicked down the road.

“It’s going to take a lot of work to put together a liability regime that makes sense (for) existing licensees, the people who will inherit that liability, and to convince the public that the deal offers better assurance … that remediation issues will be adequately dealt with.”

Start small, said Bankes, who suggested transfers of unremediated sites should be initially restricted to between energy companies.

“Maybe it makes sense to start with a narrower focus.”

This report by The Canadian Press was first published April 26, 2021.

— By Bob Weber in Edmonton. Follow @row1960 on Twitter

The Canadian Press

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