Oil Well Cleanups Could Cost Alberta Taxpayers $8 Billion
Alberta taxpayers could be on the hook for up to C$8 billion in clean-up costs if the province doesn’t change the obligations it puts on fossil companies to clean up their own abandoned oil and gas wells, the C.D. Howe Institute concludes in a new study.
And that cost is modest, compared to the $44.5 billion in tailings pond cleanup costs the industry had accumulated by the end of last year, according to the Natural Resources Defense Council and Toronto-based Environmental Defence.
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The more recent C.D. Howe report applies a financial stress test to future well clean-up costs and recommends options for the provincial government to get a handle on the problem. “The recent downturn in energy prices has shone a spotlight on the issue of cleaning up orphaned and inactive oil and gas wells,” study co-author Benjamin Dachis said in a release. “Continued low energy prices and growing company insolvencies could worsen the problem.”
With more and more fossils going out of business, the number of “orphaned” wells in Alberta grew “from fewer than 100 to 3,200 in the past five years,” JWN Energy notes, citing the report. “With low energy prices, that list of wells risks growing longer. The authors estimate the cost to clean up currently orphaned wells at between $129 million and $257 million.”
More than one-third of the province’s 450,000 wells—about 155,000 of them—are no longer producing, and have not been remediated. “These wells impose potential risks and costs not borne by those who benefitted during the productive phase.”
The Calgary Herald notes that only 60 out of 650 square kilometres of tar sands/oil sands mines, tailing ponds, and other facilities had been reclaimed as of 2015. One of the people responsible for the process admitted companies are learning on the job.
“The major challenge is the complexity of what you’re trying to do,” said Jenna Dunlop of Canada’s Oil Sands Innovation Alliance (COSIA). “It’s the reverse engineering of a system when you don’t actually have a complete understanding of how things work together, putting back a large ecosystem and expecting not only to have that sustainable and work as an integrated system, but you’re going to create the same functionality.”