GrainsWest Winter 2021

Winter 2021 grainswest.com 21 ith oil prices in the gutter and its last boom a faded memory, the cleanup of inactive or orphan oil and gas wells has become a political concern in Alberta. The province has 91,000 inactive wells of varying age. In good times, a well site lease can be a steady source of income for farmers. But if the well site operator goes bankrupt or ceases payment, the site they leave behind remains an eyesore and a sometimes-costly inconvenience for farmers. Sites can leak dangerous hydrogen sulfide gas or methane, a powerful greenhouse gas. Alberta farmers do have options to address this fallout from the failing oil sector. If working with well site operators doesn’t solve the problem, they can turn to the province’s Site Rehabilitation Program (SRP) or the Orphan Well Association (OWA). The OWA is industry funded, with a mandate to decommission and reclaim orphan oil and gas wells. This year the OWA is on track to decommission 2,000 orphan wells, with reclamation work to follow, said executive director Lars DePauw. Out of the 2,400 orphan wells currently in the OWA’s inventory, only 50 are classified as high-risk to human safety and health, said DePauw. However, all of those 50 sites have now been decommissioned. W In 2017, OWA received a $235 million interest-free loan from the province, a further $100 million loan this April and a $200 million loan from the federal government this summer. The loans have helped the OWA ramp up its well closure work. “It’s helpful to those individual landowners to get those sites cleaned up faster but it also provides fiscal stimulus and jobs to the economy in general,” said DePauw. The OWA’s 2019 report states that on average it costs $29,000 to decommission a well and $25,000 to reclaim the site and restore it to usable condition. Alberta’s SRP, funded by $1 billion from the federal government, provides grants to oilfield service providers to clean up and reclaim inactive well sites. The provincial Farmers’ Advocate Office provides help and assistance to farmers looking for information about their rights regarding well sites as well as the processes involved in addressing these sites. Farmers can apply to the Surface Rights Board for recovery of rental payments, among other services. “I think people’s best option if they’re not getting paid, is followup with the Surface Rights Board,” said DePauw. The OWA deals exclusively with orphan wells. It can take years for a well site to be declared an orphan by the Alberta Energy Regulator, as it first has to go through a lengthy court- administered receivership process. In June, the province announced a new liability framework to help address the problem of oil and gas wells licensed to defunct or bankrupt companies. It includes an expanded mandate for the OWA and new rules to ensure companies can meet their requirements before gaining regulatory approval. As part of this new approach, the OWA now carries out orphan well rehabilitation in an “assembly line” fashion, completing all of one step in the remediation process in dozens of sites in one area before moving on to the next step. It takes longer for individual sites to be completed, said DePauw, but maximizes overall efficiency. The problem of inactive or orphaned oil and gas wells has been building for a long time, said DePauw. “It doesn’t need to be dealt with instantaneously, it can be dealt with over a number of years.” The best option for landowners not receiving rental payment for oil and gas sites is to contact the Surface Rights Board. “I think people’s best option if they’re not getting paid, is followup with the Surface Rights Board.” —Lars DePauw Photo:Shutterstock