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New Alberta Regulation Say Oil and Gas Industry Must Look After Abandoned Wells

abandoned well

Regulators in Alberta have issued new rules targeting the growing problem of inactive and abandoned wells, but critics say the industry should be forced to do more.

The Alberta Energy Regulator calls the new regulations, which take effect immediately, a “major milestone” in Alberta’s oil and gas well liability framework.

“With these new requirements, we’re pushing industry to clean up their sites sooner and ensuring the cost and responsibility of the cleanup rests on the shoulders of industry — where it should be,” said AER president and chief executive Laurie Pushor.

Concerns from landowners, taxpayers and environmentalists about Alberta’s over 95,000 inactive wells led the UCP government to announce changes last year. Over 73,500 Alberta wells have been sealed and decommissioned, but not fully remedied, says the AER.

The new rules require the energy industry to spend $422 million on old well cleanup and remediation next year. This amount rises to $443 million in 2023 and to $443 million in each of the following three years, though targets beyond 2024 are only forecasts.

Each year, slightly more than 4% of the total liability is expected to be addressed with by all these amounts.

Oil and gas companies seeking new well permits will be assessed for their financial health to meet cleanup and closure obligations. The regulator will also assess both companies to ensure the receiving company can safely operate the infrastructure and properly reclaim it when it is no longer needed.

Years to clean up

Critics say the new rules don’t go far enough, especially now that oil prices are high.

Assuming no new abandoned wells are created during that time, it will take 25 to 30 years to fully address the problem, according to Sara Hastings-Simon of the University of Calgary’s School of Public Policy.

Considering that companies are sitting on large sums of cash as a result of this year’s surge in commodity prices, she argues that they should be forced to pay more. “You’re talking about companies that have very strong profits on the back of the recent surge in energy prices. They’re paying out significant dividends to shareholders,”

“And I think that’s a real concern around equity and fairness, with investors around the world getting these dividend payouts while the public in Canada is left holding that liability risk.” she said.

Industry shut down 6,503 wells and 625 facilities, while 2,666 sites were certified for reclamation, according to the AER.

Original source material for this article taken from here

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Written by Olivia Woods

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