Addressing Upstream Oil and Gas Liability and Orphan Well Inventory
The Alberta government knows that safety around oil and gas sites that are no longer producing is a concern to all Albertans.
That is why the Alberta government is working on this issue from two fronts: reviewing our existing upstream oil and gas liability management system and providing a loan for the Orphan Well Association (OWA) to speed up work to clean up oil and gas sites.
- Alberta has an estimated 180,000 active wells, 83,000 inactive wells, and 69,000 abandoned wells.
- As of March 2017, the OWA had an inventory of 2,084 orphaned wells to go through closure activities (1,394 to be abandoned, 690 to be reclaimed).
- The OWA closed 185 wells last year.
- The annual budget for the OWA is $30 million and is scheduled to increase to $60 million in the 2019-20 fiscal year. The increase will be covered by industry levies.
†† Reviewing Upstream Oil and Gas Liability
Subject matter experts and key stakeholders are taking part in roundtable discussions on improving the management of historic, current and future liabilities associated with the full life cycle of upstream oil and gas development.
- Indigenous Communities
- Environmental Groups
The review ís focus is on further protecting Albertans and the environment while keeping Alberta a competitive place to invest. The results of these roundtables will help inform policy discussions and operational changes. The review is expected to be complete by the end of 2017.
†† Reducing Orphaned Well Inventory
The Alberta government is going to lend the Orphan Well Association $235 million to accelerate the reclamation of oil and gas well sites that no longer have a responsible owner.
The Association is an industry-funded agency that works to close and reclaim infrastructure from oil and gas companies that no longer exist. This involves removing equipment, sealing wells and ensuring the safety of the site for the public.
- 1,650 new jobs in reclamation work over the next three years,
- The work from both the loan and the annual program will reduce the infrastructure liability facing the OWA by approximately a third.
- The loan will be repaid by industry through the existing orphan fund levy.
- A $30 million dollar commitment from the federal government will cover interest costs.
- The work resulting from this loan will be in addition to the ongoing work of the Association.
† †† Definitions:
Orphan: a well or facility confirmed not to have anyone responsible or able to deal with its closure and reclamation.
Inactive: a well or associated facility where activities have stopped due to technical or economic reasons. Not all sites in this category are orphaned. Many may be reopened and produce again at a later date.
Abandoned: a site that is permanently dismantled (plugged, cut and capped) and left in a safe and secure condition.
Remediation: the process of cleaning up a contaminated well site to meet specific soil and groundwater standards.
Reclamation: the process of replacing soil and re-establishing vegetation on a wellsite so it can support activities similar to those it could have supported before it was disturbed.†