Alberta may return $170 million in unspent oil well reclamation funds to Ottawa: report

Alberta Premier Danielle Smith attributed the late start of the cleanup program and extended periods of frigid weather to the unspent money, adding the federal program 'stimulated a huge amount of activity [and] wants to see that continue.'

Alberta may return $170 million in unspent oil well reclamation funds to Ottawa: report
THE CANADIAN PRESS/Jason Franson
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Alberta Premier Danielle Smith and her UCP government may have to return $130 million in unspent funds for oil and gas well cleanup as part of a $1.7 billion program split between Alberta, B.C. and Saskatchewan.

The federal government divided the money between B.C. ($120 million), Alberta ($1 billion) and Saskatchewan ($400 million). Alberta's Orphan Well Association also received a $200 million loan to aid the cleanup efforts of wells belonging to bankrupt companies.

Of the $1 billion provided to Alberta, Smith confirmed the UCP had spent $870 million since 2020.

Tens of thousands of inactive oil and gas wells pose an environmental risk because of potential soil and water contamination and the release of methane gasses. 

Initially, Alberta's program received a flood of applications. Eventually, the Alberta Energy Regulator (AER) approved 37,589 applications, although 3,445 of those still needed to be completed, according to the government's website.

Alberta's Energy Ministry confirmed that final invoices from oilfield service companies are still being received.

"A few other ministers and I have written to the federal government to keep the leftover funds here in Alberta. We are still awaiting a response," said Energy Minister Peter Guthrie.

"It would have been great if we'd been able to have the factors aligned to spend all of it, but I'm hopeful that we'll be able to have a constructive conversation with the federal government because there's such good work here that we want to make sure it continues," said Smith.

According to the federal government, the $1.7 billion in funding created 7,135 full-time jobs in B.C., Alberta, and Saskatchewan and supported the reclamation of over 49,000 wells.

"The Department of Finance is in contact with all participating provinces as they wind down their respective well closure programming," said spokesperson Benoit Mayrand, in an email, about whether the federal government will allow Alberta to keep the leftover funds.

Smith attributes the late start of the cleanup program and extended periods of frigid weather to the unspent money, adding the federal program "stimulated a huge amount of activity [and] wants to see that continue."

According to the CBC, Alberta is expected to return about $130 million — a fair estimate, says the province.

However, the Indian Resource Council (IRC), representing more than 100 First Nations with oil and gas reserves, lobbied Guthrie and Alberta's Environment Minister Sonya Savage for the province to spend the $130 million on First Nation well reclamation. 

"It's a challenge," said IRC President Stephen Buffalo, as the federal funding included a specified timeline that noted unspent money afterwards had to be returned.

Buffalo said the group met with the province's environment and energy ministers to lobby for the $130 million spent on the continued remediation of wells on First Nation land. Ottawa allocated over $100 million for cleanup projects for First Nations as part of the funding.

"It was very beneficial and very positive. So, we're doing what we can to keep that program going," said Buffalo, noting that about 350 community members received skills training.

He added remediating the aging wells and pipelines can free up land for First Nations to use for housing and other purposes.

"Our community land mass is not getting any bigger, but their populations are. So we have to start looking at protecting the land, cleaning it so that we can use it for the needs of our communities."

A recent report by Alberta's Auditor General accuses the UCP and the province's energy regulator of failing to design and effectively mitigate risks associated with the closure of thousands of abandoned and inactive wells and kilometres of pipeline remaining on the landscape.

"There are obvious things that can be done, and they refuse to do those things," said University of Calgary resource law professor Martin Olszynski who acknowledged the Alberta Energy Regulator is reforming the cleanup of old energy sites.

Wylie stated the rising number of abandoned "legacy sites" remains a growing concern for the province, as these problem sites may not receive the spending good closures get.

"Licensees have focused more on low-risk and lower-cost sites," according to the auditor general, with 74% of reclamation certificates issued for sites that never produced.

"We recommend that the AER determine how much security needs to be collected, when it will be collected, and how the collection will be enforced," said the report. 

"We recommend that the AER evaluate compliance assurance activities for suspended wells and routine abandonments," said Wylie, adding, "[the regulator should] ensure there is evidence of review of remedial action plans." 

In its response, the province didn't indicate whether it would accept and adopt Wylie's nine recommendations.

"The auditor general’s report shows that we are making significant progress addressing the cleanup of oil and gas sites," said Alberta Energy spokeswoman Gabrielle Symbalisty. "We appreciate their review and recommendations about the new framework, and we will continue to work collaboratively with the [regulator] to improve the process.”

Smith added her administration brought in new initiatives, including a 3% liability payout — to increase by 9% each year — to help with well cleanup moving forward.

 

 

*An earlier version of this article incorrectly referred to a quote by Auditor General Doug Wylie and has since been updated. 

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  • By Ezra Levant

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