Alberta to give $100-million loan to decommission orphan wells

Lauren Boothby

Edmonton Journal

Updated: March 2, 2020

Alberta is offering a $100-million loan to decommission 800 to 1,000 orphan wells, a move that is expected to create 500 direct and indirect jobs in the oil services sector.

The investment to the Orphan Well Association (OWA) will help the non-profit start 1,000 environmental site assessments that aim to return the land to its condition before the wells were built. The details on the loan will be finalized by April 1.

Premier Jason Kenney said the funds will provide a “lifeline” to oilpatch workers hit by layoffs.

“This is a very important announcement about getting oilfield workers back to work right now when we need it, there is more investment coming into the oilpatch. And we believe there’s a path forward through pipelines,” Kenney said at Savanna Well Servicing in Leduc on Monday morning.

In 2017, Alberta gave the OWA an interest-free $235-million loan to clean up orphan wells across the province. The Financial Post reported in December that there are still more than 15,000 wells drilled before 1964 that have not been remediated. The OWA sent a letter to the Alberta Energy Regulator in January, saying the province’s rules around reclaiming abandoned oil and gas wells are inadequate.

Lars De Pauw, executive director of the association, said at the news conference Monday the organization has about 6,500 abandoned sites in its inventory. He said the loan will help speed up reclamation and reduce the impact to landowners hosting abandoned wells.

Energy Minister Sonya Savage said the $100-million loan is an example of how the government is ensuring the oil and gas industry can be successful and responsible.

“Meeting their obligations includes bearing the cost of cleaning up inactive and orphaned wells. Because of recent challenges, orphan wells are becoming a growing concern in Alberta. And to be frank, it’s a situation that needs to be addressed,” she said. “Our government recognizes the pressing need to turn the tide on growing oil and gas liabilities.”

Savage said the funds would also create indirect jobs with suppliers, equipment and service providers, mechanics, and concrete manufactures, as well as local businesses as cleanup crews visit different communities. She also reiterated the government’s plans to release a suite of new laws that would address orphan wells in the next few weeks.

Irfan Sabir, NDP’s critic for energy and natural gas, said he’s glad to see funding to clean up wells, but questions the party’s decision to frame the investment as a job-creating tool.

“It’s not a long-term solution. They’re saying they will create 500 direct and indirect jobs, but since they took office we have lost 50,000 jobs,” he said. “I think they need to invest more in diversification, of creating, refining, opening new markets so Alberta can get back to work.”

Major oil and gas investment to be announced this month

Last week, Kenney hinted the province may invest in a major oil and gas project. On Monday, he said details on that project would be announced by the end of the month that show “the government of Alberta’s commitment to getting pipelines built, the key part of infrastructure for the future.”

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