Province unveils new plan to tackle old wells and environmental liabilities by Chris Varcoe, July 30, 2020, Calgary Herald
Governments of different political stripes have tried for years to solve the Rubik’s Cube of Alberta’s broken oilpatch liability management system that oversees the cleanup of thousands of oil and gas wells.
However, little action was taken.
The number of orphan and inactive wells continues to climb. The tab to remediate them grows larger.
Now, the UCP government is overhauling the web of regulations that govern everything from how a new well is licensed and transferred, to the rules around closures and cleanup.
On Thursday, Energy Minister Sonya Savage will formally release the province’s plan that has been months in the making.
It includes a new test to gauge a petroleum producer’s financial health, mandatory five-year targets for companies to set spending levels for well reclamation work — to reduce the number of inactive wells in Alberta — and a system that allows landowners to nominate problem sites for cleanup.
“This is more than any government has done in 60, 80 years,” Savage said in an interview.
“It’s going to go a very, very long way to cleaning up those inactive sites. It is going to ensure that we don’t have increased numbers and it’s going to chip away very aggressively at cleaning up what is out there.”
It’s an intriguing start, although many important questions will need to be answered in the coming weeks by the province and Alberta Energy Regulator.
Critics will say it’s not enough, and there are several targets here to blast, including the lack of a firm timeline on when an inactive well must be dealt with.
But it’s a beginning.
That’s something that eluded the previous Progressive Conservative and NDP governments after a collapse in oil prices began to compound all these issues.
The new rules are coming forward during a global pandemic and period of financial stress that’s now squeezing the entire sector.
Will it fix a multibillion-dollar dilemma that is expanding? Never, the greedy spoiled rotten industry will never allow it. The UCP, just like NDP, will just keep laundering more money from health and education to give in billions of dollars more in tax cuts and gifts to the public interest raping, law-violating, health harming industry while it ramps up automation, decimating jobs and lying, promising jobs that never come, and continually refusing to clean up, enabled by and with AER blessings and kisses from Kenney and his inhumane, cowardly UCP. If a govt or regulator gave a damn, they would refuse new permits and approvals to all companies, until all messes, frac’d aquifers, etc are appropriately, completely and responsibly cleaned up. Easy Peasy. I’ve laid it out many times before. But, they’re all chicken shit and Harper’s hideous secret trade deal with China would bring on a mega billion dollar lawsuit.
“It might take a number of years, but it will fix the problem,” the minister said.
That’s a big promise and let’s hope she’s right.
There are 91,000 inactive wells in the province and total liability tied to their cleanup stands at more than $30 billion, according to AER data, although there are higher estimates.
Critics have insisted the province must establish concrete timelines on how long these wells can be left inactive, something that exists in some U.S. states — although that won’t happen in this plan.
There is also the growing issue of orphan wells in Alberta, which have increased sharply in recent years.
The recent demise of some producers has boosted the number of wells in the Alberta Orphan Well Association. The industry-funded group is responsible for cleaning up old sites and wells when there’s no owner left to pay for the work.
Its inventory sat at just 74 wells in March 2013. It now has almost 3,000 orphan wells that require abandonment work.
There have also been issues surrounding the sale of old oil and gas wells to buyers that have lacked the financial ability to pay for the end-of-life environmental obligations.
“This legacy liability issue for our oil and gas industry is a daunting, complex problem. Previous governments . . . went into a state of paralysis,” said Keith Wilson, an Alberta lawyer who represents farmers and ranchers with wells on their land.
“This is a very positive (step) and it’s been a long time coming.”
The scope of the problem can be seen by Ottawa’s decision in April to provide $1 billion to the province to clean up inactive wells. While it wasn’t obligated to do so, the feds saw the environmental merits and the benefits of creating work in the oilfield services sector. …
The energy minister said the rules will provide more certainty to landowners and producers, while dealing with environmental liability concerns.
Instead of relying on the regulator’s previous liability management ratio (LMR) system that was used to gauge the value of a producer’s assets against its total liabilities, a new test will be created to assess an oil and gas producer’s financial health.
While the province won’t set firm timelines on when a producer must deal with an inactive well, a new mandatory program will set annual site closure spending targets for companies over a five-year rolling period.
“What that is going to do is require companies to spend a certain percentage of what their active (well) inventory is. They will be able to determine what’s the most efficient way to spend it,” she said.
Savage said this will permit producers to designate which wells are cleaned up first, and allow the regulator’s area-based closure programs to continue, in which firms collaborate and share the cost of cleaning up many wells in a region, driving down expenses.
The new spending targets have yet to be established, but will be determined by the AER.
Under the changes, landowners will also be able to nominate properties that need to be cleaned up, with the AER then reviewing these sites. AER = industry. That means companies – that have for decades intentionally adopted out their messes, frac’d aquifers and pollution to bit players knowing they do not have the resources to clean up – will control the feds’ Billion dollar gift and take the money and run, like Encana/Ovintiv and or double CEO salaries and bonuses with the money and clean up maybe a tiny bit – if there’s any money left out of the $billion.
Anyone, including the energy minister, who thinks AER listens to or cares about harm done to Alberta landowners has their head up their ass.
Think anything will improve after the feds’ near 2 billion in gifts to the polluting, often law-violating, greedy, selfish oil and gas industry in BC, AB, and SK?
“It is a sensible approach overall and will allow jobs to continue while . . . making sure on the environmental liability (issues) that there’s some forward momentum,” said Tristan Goodman, head of the Explorers and Producers Association of Canada.
Taken together, the province is trying to strike a balance, grappling with a growing environmental predicament, but not tacking on mammoth costs that could cause more firms to fail and make the problem worse.
It won’t please everyone. More details need to be hammered out.
But it’s the first serious attempt to tackle a problem in an energy-powered province that should have been dealt with decades ago.
Alberta revamping rules for oil and gas wells to prevent future backlog of orphan, inactive sites by Lisa Johnson, Jul 31, 2020, Calgary Herald
Alberta is overhauling rules around oil and gas wells for the first time in decades in an effort to accelerate site cleanup and prevent a future backlog of inactive and orphan wells.
Under the changes announced Thursday, petroleum producers will be assessed before they get regulatory approval for new wells to make sure they are financially healthy enough to handle liabilities.
The growing problem of orphan wells left behind by bankrupt parent companies has been made worse in recent years…with approximately 6,000 sites now under the care of the industry-funded Orphan Well Association (OWA).
As part of the overhaul, the government also plans to add mandatory five-year rolling targets of spending on well cleanup, and create a new nomination process for farmers and ranchers who want sites on their land cleaned up.
Alberta Energy Minister Sonya Savage said in a Thursday release the new liability management framework will help industry better manage cleanup, and set clear expectations for both industry and landowners.
“By clarifying the rules and improving the process, industry can confidently make long-term investment decisions Con code for massive deregulation and letting companies do whatever the hell they want, landowners and clean up be damned to increase profits for the rich (mostly foreigners), which will help the province’s recovery efforts and create jobs, putting thousands of Albertans and Canadians back to work,” Savage said, who was unavailable for an interview.
However, Opposition NDP environment critic Marlin Schmidt pointed out that the announcement was short on specifics, including cleanup spending targets and exactly how liabilities of companies would be assessed.
Schmidt said the changes could lead to more frustration and hoops for landowners to jump through, since nominated sites would need to be reviewed by the Alberta Energy Regulator (AER) and operators have to justify why a site doesn’t need to be cleaned up.
“The energy regulator doesn’t have the capacity to handle all of the potential landowner requests that they’re going to get, and the regulator generally takes the operators’ side,” he said.
Across the province, there are 91,000 inactive wells that are no longer producing oil, either because they don’t work or don’t make money.
To deal with the growing backlog of orphan and inactive wells, Alberta gave a $100 million loan to the OWA in March. The federal government also announced $1 billion to go towards the Site Rehabilitation Program in April. And, Notley gave a $250 million loan (gift really, it’s assured industry will never pay back these “loans”), the feds made Canadian taxpayers pay for the interest on Notley’s loan, she massively reduced royalities and reneged on stopping frac’ing soon as she became Premier. Kenney keeps giving more and more massive tax gifts to industry to the tune of billions, and free propaganda via his vulgar war room and witch hunt (that appears to be about laundering money from the citizenry by stealing from health and education to give to rich law firm were Herr Steve Harper works, and more.
The total liability tied to inactive well cleanup stands at HUNDREDS OF BILLIONS more than $30 billion, according to the AER.
Schmidt said environmental liabilities need to be taken into account when the regulator is assessing the financial health of oil and gas companies.
“The world financial markets are demanding more action on climate change,” he said.
The Alberta government’s announcement comes as international investors and oil producers continue to warn of pulling out of the oilsands. French multinational oil and gas operator Total announced Wednesday it would write down $7 billion (US) in the value of its oilsands assets, citing climate change ambitions.
In a statement, Savage called the Total decision poorly-informed.
“This highly-hypocritical decision comes at a time (when) international energy companies should, in fact, be increasing their investment in Alberta, rather than arbitrarily abandoning a source of a stable, reliable supply of energy,” said Savage. ROARING LAUGHTER. TOXIC ALBERTA TARSHIT IS STABLE? FINANCIAL INDUSTRY PLAYERS ARE MUCH SMARTER THAN ALBERTA POLITICIANS; THEY’RE WISENING UP TO THE FAKE PROMISES AND BIG LIES.
Also Wednesday, the Alberta government announced exemptions to the federal carbon tax for dozens of industries like potato processing facilities and wood product facilities because they can be regulated will now be regulated under the provincial Technology Innovation and Emissions Reduction (TIER) program.
About 100 small industrial facilities and about 20 medium-sized industries will become eligible for relief from the federal carbon tax, the Alberta government estimated in its release.
Refer also to:
FOUR AND A HALF YEARS AGO:
Set-up extraordinaire to burden Canadians with cleaning up billion-dollar profit-taking oilfield’s dirty underwear? Alberta landowners fight for enforcement by “No Duty of Care,” legally immune (even for Charter violations, gross negligence, acts in bad faith) regulator. Law violations ignored by AER, as usual.
U.S. oil bankruptcies spike 379%
THREE AND A HALF YEARS AGO:
BNN Interviews Alberta Oil Patch Consultant Brent Nimeck on Lexin and AER’s Orphan Wells: “This problem is 30 years in the making. … I would call it a Ponzi Scheme…. This is an orchestrated fraud from multiple angles: Industry, CAPP and the Alberta Energy Regulator have enabled this to happen. … Through our independent analysis and we’ve confirmed this at multiple sources within the energy regulator, the liabilities are over $300 billion. That’s what’s on the hook for Alberta taxpayers right now – $300 billion.”
ONE YEAR AGO:
ALDP a Synergy Group? Mark Dorin synergizing for the AER? Study not needed of the 100s of billions of dollars in oilfield liabilities. Complete overhaul of petroleum ownership and its structure is needed, and to send AER, Synergy groups, CAPP, CSUR etc packing!
What AER & Synergy Hanky Panky this time?
This “news” was already reported in the media more than three months ago.
AER and its vile Synergy trying to deflect from the huge spill/leak/frac hit? at an abandoned sour gas well in Frac Frenzy Fox Creek, only 6 km from the town and near busy campground?
Why regurgitate old news? And why now?
Study is not needed! Action is needed! Simple solutions abound! Here’s one: Immediately require bonds are paid upfront, in full, to be held in trust, before any new approvals are given, especially to notorious bullies/law violating aquifer frac’ers like Encana. Another: disallow the big brute companies from selling off their polluting, aging wells/facilities to little nothing players sure to bankrupt themselves soon as they finish sucking a few million out. Make the brutes produce their wells/facilities til they are done, especially in all the formations they soured by hydraulic fracturing and water injection for enhanced recovery. And make the brutes clean up. The big companies are sitting on billions in cash, and are causing most of the liabilities by selling off their no longer massively profitable assets to fly by night junk operators who fully intend to walk from clean up. These actions could be quickly and easily implemented by any govt that gave a damn.
Once a well/facility is appropriately cleaned up, reclaimed, landowner satisfied and signs off on it, company gets their money back. Easy peasy.
All landowners forced into enduring the abusive, polluting industry on their private properties must also be fully paid in advance sufficient funds to be held in trust to fully deal with the inevitable clean up with additional emergency funds for the many things that go wrong, eg frac quakes damaging a driveway, home or barn foundation; aquifer gets contaminated; water well is destroyed; spills, on or off lease; health and or soils/crops harms; etc. Problem solved. The endless crooks will not be able to operate under appropriately protective measures, and will leave, good riddance. Alberta will be much better off without them. Grossly over paid CAPP and other industry lobby groups will cry like the spoiled babies that they are. Let them cry.
Most important must do! Stop funding and get rid of Synergy Alberta and all it’s gunky evil tentacles and groups. Stop funding so called environmental, but really just enabling “controlled opposition” NGOs. Stop the mega millions given to Lies & Propaganda funding (notably Kenney’s new sinister 30 Million dollars annually to propagandize and croon for the polluting oil and gas industry and Steve Allen’s flake of a witch hunt to intimidate and threaten ordinary citizens – tax payer funed mafia for the oil and gas industry). Use the money to start cleaning up. So Super Simple.
The biggest con ever? Millions of abandoned wells enabled by politicians, regulators & courts. Oil, gas ‘n frac industry rapes, profits ‘n runs, hangs the public with clean up, a climate menace & endless health harms & cruelty