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Group warns Alberta oilpatch clean-up costs may fall to taxpayer

by Mark Sabourin
EcoLog, 4/12/2019 12:54:00 PM

A new coalition of former regulators, researchers, and landowners impacted by Alberta’s aging oil and gas wells says the cost of cleaning up Alberta’s unreclaimed oil and gas wells will be between $40 billion and $70 billion – far above the Alberta Energy Regulator’s $18.5 billion estimate.

The group, called the Alberta Liabilities Disclosure Project (ALDP), is calling on all political parties to commit, if elected, to release independently verified estimates of Alberta’s real environmental liabilities as a first step towards solutions. Albertans go to the polls on April 16, 2019, and the issue of environmental liability in the oilpatch has not captured the attention of any of the main political parties.

The ALDP says it is basing its cost estimate on figures provided by the Alberta Energy Regulator in response to freedom of information requests. The $40 billion to $70 billion estimate would be the cost today of closing and remediating all of Alberta’s wells, whether inactive or still producing, Regan Boychuk, lead researcher, ALDP member, told EcoLog News.

“Of those 300,000, about half of them are already sitting idle, just waiting to be cleaned up,” says Boychuk. Another 25% are so depleted that they don’t produce anything of any significance, he says. “There’s only about 23% of those 300,000 wells that still produce any oil and gas of significant volume.”

The Alberta Energy Regulator does maintain a liability management program intended to ensure that oil and gas companies retain sufficient assets to manage their abandonment costs. Boychuk says “it’s an open question” whether that’s sufficient.

Unlike many oil-rich jurisdictions, Alberta does not require that non-producing wells be cleaned up within a certain time. Boychuk says that allows companies to ignore what is a mounting liability problem. He says that unless the pace of clean-up quickens, the vast majority of the liability will fall to the taxpayer.

“There’s only a fraction of the eventual clean-up [cost] that has been set aside,” he says. “The industry only funds clean-up out of current revenue, and [it is] in tough times.”

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