Ratio of active to dormant Alberta oil wells is 3:1 – in Colorado, the ratio is 18:1
New research is raising concern about tens of thousands of dormant Alberta oil wells that don’t meet even minimum safety standards.
The Alberta Energy Regulator has begun a program that it says will result in all wells meeting those minimums within five years.
But critics say those standards amount to little more than a locked gate and a few signs. They want firm timelines to force companies to clean up old well sites, some of which have been sitting unused for decades, before the liability winds up with taxpayers.
“Unless timely action is taken to ensure that oil companies deal with their liabilities while they still have the financial capability to do so, the reality will be that either the taxpayer is going to be on the hook or the landowner will be stuck with the problem,” said Keith Wilson, a lawyer who has represented hundreds of landowners against the energy industry.
Since 2007, inactive wells in Alberta must be fenced, locked, signed and tested to ensure they don’t leak. For most “suspended” wells, no cleanup is required.
But in the report, Barry Robinson of the environmental law group Ecojustice points to recent figures from the regulator that acknowledge 37,000 inactive wells in Alberta don’t meet those minimum standards. Of those, at least 3,300 also have wellbore integrity problems.
Alberta has 80,000 inactive wells in total, a number that is increasing as the pace of abandonment outstrips that of reclamation.
Worse, said Robinson, regulations designed to allow operators to bring wells into and out of production as markets require are being used to mothball wells for years and even decades without having to spend the money to clean them up.
“They can keep the well inactive as long as they want. The longer a well sits inactive the more the likelihood that you could have some sort of wellbore issue.
“Some of these wells have sat for 15 or 20 years.”
Besides the environmental risk, the suspended wells are also a risk for landowners.
“The banks want protection that you’re not going to get nailed with a million-dollar cleanup when you buy a property,” said Don Bester of the Alberta Surface Rights Association, which advocates for landowners. “Same as the seller, he has to do an environmental assessment to provide to the buyer.
“If I’ve got a contaminated site on my place, where do you think the buyers are going to run to? Completely away.”
Under the regulator’s new program, operators have to bring at least 20 per cent of their non-compliant wells up to snuff annually.
Many of those wells are non-compliant because the operator hasn’t done the paperwork, said David Hardie, the regulator’s senior adviser on closure and liabilities.
“The well might be just fine, just that the company hasn’t reported it to us.”
The program is to be strongly enforced by inspectors in the field. But it won’t move wells along from suspended to abandoned to fully reclaimed.
“It’s not within the AER’s regulatory authority to create timelines for that,” said Anita Lewis, also a closure and liabilities adviser. “That actually falls under government policy perspective.”
Alberta Environment spokesman Jason Maloney said the government will consider such timelines as part of policy reviews planned in 2015.
“We’re working with stakeholders,” he said. “That will be explored.”
Discussions will include industry, non-governmental groups, academics, First Nations and municipalities, he said.
Other jurisdictions force operators to clean up a well after a certain period of inactivity, said Robinson. In Colorado, a well can only be suspended for a maximum of six months. After that, an operator must explain why an extension is necessary. Unless special circumstances apply, a well must be fully remediated with 18 months after becoming inactive.
Colorado’s ratio of active to inactive wells is 18 to one. In Alberta, the ratio is three to one.
“That seems to be a process that works in some jurisdictions,” Robinson said.
Wilson said Alberta’s current rules only postpone the inevitable, perhaps until it’s too late.
“You have to clean these wells up while the cash is available in the oil companies to do so,” he said. “If they pay out all of their value in dividends and disposing of assets to shareholders without first cleaning up their liabilities, then who’s going to be left to deal with the liability?”
The Canadian Press