Alberta Taxpayers on the Hook for Growing List of Untended ‘Orphan’ Wells
The number of oil wells in Alberta “without an owner financially capable of cleaning them up” almost doubled during 2016, the Calgary Herald reports, after a growing list of junior oil companies walked away from their obligations during bankruptcy.
Some 770 wells had been abandoned in the province at the start of 2016. By the end of the third quarter—with three months still to go—that number had jumped to 1,400, with the addition of another 630 such ‘orphan’ wells.
Like this story? Subscribe to The Energy Mix and never miss an edition of our free e-digest.
Alberta’s oil-friendly laws mean that now “taxpayers will be on the hook to pay landowners annual rents to compensate them for [oil companies’] use of their properties until the sites are returned to a natural state,” the paper reports. And “property owners are seeking compensation in record numbers.”
The Alberta government paid out $1.7 million to landowners in rents owed by oil companies in 2015 alone, the Herald adds, but has “recovered just $121,500 in all of the past seven years.”
The industry-funded Orphan Well Association is responsible for cleaning up abandoned wells, but has been unable to keep up with the growing number. “The association plugged a record 185 wells in the 2015-16 fiscal year after doubling its budget to $30 million,” the Calgary paper reports, “but the inventory still grew in the period.”
“We’re just dealing with the tip of the iceberg,” said Daryl Bennett, director of the Alberta Surface Rights Federation, which represents landowners. “We’re going to be dealing with this for decades.”