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Bankrupt Fossil Adds 4,000 Sites to Alberta’s Orphan Well Inventory

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Nearly 4,000 oil wells, facilities, and pipeline segments are about to be added to Alberta’s massive inventory of abandoned fossil infrastructure, with the news that Calgary-based Sequoia Resources Corporation is about to shut down operations.

All of the Calgary-based company’s operating licences were ordered suspended after the privately-held oil and gas company warned the Alberta Energy Regulator (AER) late last month it was ceasing operations ‘imminently’ and, as a result of ‘defaults in municipal tax payments,’ would not be able to afford to reclaim all of its properties,” CBC News reports.

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The company filed for bankruptcy last week and named PricewaterhouseCoopers Inc. as trustee.

Alberta taxpayers are already on the hook for the C$30.5-billion task [2] of cleaning up nearly 450,000 “orphan” wells across the province. Last spring, the Notley government put up a $235-million loan, backed by $30 million in federal financing, to remediate about 700 wells and create 1,650 jobs over three years.

Sequoia holds licences for 2,300 wells, nearly 200 facilities, and almost 700 pipeline segments, according to the AER. But “that list doesn’t include 700 to 800 Sequoia wells where production has been stopped and the wellbore has been cleaned up but the surface hasn’t been restored,” CBC notes, citing Lars De Pauw, executive director of the Orphan Well Association.

“We’re going to get a fairly sizable chunk of those sites when this is all done, but none of them have been designated an orphan (yet),” DePauw said. “We’re anticipating around 75% of those sites are going to come to us.”

The association’s website lists [3] 2,954 orphan wells set for abandonment or suspension, 1,038 sites in need of reclamation, and nearly 2,700 pipeline segments due for abandonment or suspension as of February 28. “With the funding we had received, the surge loan that came from the government that’s being repaid by industry, we were in a good place to deal with our current inventory over the next three years,” De Pauw told CBC. But the Sequoia bankruptcy is “basically going to negate that.”

The AER maintains that Sequoia is still responsible for the sites, even if it’s insolvent. “So basically, it means the company still has to address their (oil and gas well) end-of-life obligations, post security, or transfer the site to appropriate parties,” said spokesperson Ryan Bartlett. “Currently, all the licences are suspended. The company has to ensure the sites are in a safe state, shutting them down or closing them, and they have 30 days to come into compliance with the order.”