Funding for orphan oil and gas wells woefully inadequate

A common theme at the Alberta Surface Rights Federation meeting held in Camrose on Nov. 26 was that funding for the Orphan Well Association (OWA) was woefully inadequate.  The OWA is a government agency that deals with the abandonment and reclamation of upstream oil and gas orphan wells, pipelines, facilities and their associated sites.

Speaker, Daryl Bennett of My Landman Group Inc. said there are 82,000 inactive wells and 66,000 abandoned wells in Alberta.  Of those OWA only has 700 abandoned wells and 500 reclamation sites on their books.

Landowners in attendance expressed concern that the Alberta Energy Regulator (AER) has the absolute and arbitrary power when to move orphan wells or abandoned sites into OWA.

The OWA is funded by industry and has been working with a very limited budget of $15M for a number of years.

Landowners in the audience questioned whether a board made up of five industry members and one government member isn’t in a conflict of interest—the people that have created this long-term mess are now the people in charge of approving the cleanup budget.

Patricia Payne, manager of OWA argued that although it can be seen that way, she believes industry is taking this orphan problem seriously.

“They know they are on the hook and that those orphans are going up exponentially,” said Payne.

She also noted that the OWA asked for and received a doubling of contributions this year to $30M.  Industry knows there is not enough money to deal with the mess they have left.  Payne also says she has told the board that she will be asking for $60M annual contributions although there is recognition that over $100M a year will be required.

Every landowner has been concerned about orphan wells for years, this isn’t a problem that has just started. One attendee asked why wasn’t the government collecting more money when oil was $100+ per barrel?  Now oil is $40 per barrel, operators are going bankrupt, companies are phoning landowners to tell them payments will be stopped, OWA is woefully underfunded and its inventory doesn’t reflect the liability that currently defaults to landowners and taxpayers.

“For things to change there has to be political will,” said Payne. “There is an opportunity for change with a new government.”

“Things are changing. Are we perfect? No. We’re trying to do the right thing now,” said Sandra Blais with the AER.  Blais encouraged landowners to use the new 24-hour line manned 365 days a year (1-800-222-6514).  It’s a new call center that goes to field inspectors who are required to get answers back to landowners within 24 hours.

Attendees were also pleased to hear that OWA is now prioritizing private land orphans over public land orphans.

Pat Payne‘s comment that change comes with political will seemed evident in the number of employees who attended from the Farmers’ Advocate, Alberta Energy Regulator, Orphan Wells Board and the Surface Rights Board, their responsiveness to concerns, openness in answers, engagement with attendees and willingness to follow up with individual concerns.

Agriculture and oil made Alberta prosperous.  It is incumbent that the new government fine balance and fairness between industry and landowners.

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