Alberta’s premier has proposed the idea of implementing a pre-drilling deposit requirement for oil and gas companies, a measure that has not been enforced for decades and has faced resistance from the industry. The provincial government is exploring solutions to address the significant number of inactive oil and gas wells in need of cleanup.
During an industry event in Calgary, Danielle Smith suggested that companies should allocate a sum upfront, such as $10,000 per well, to ensure funds are available for reclamation when the well reaches the end of its life cycle. Smith emphasized that the deposited amount would accrue interest over time, ensuring financial resources for future reclamation efforts.
With nearly 250,000 idle wells and infrastructure in Alberta, the Orphan Well Association (OWA) is experiencing a surge in wells requiring cleanup. Smith’s proposal received mixed reactions, with some experts like Shaun Fluker from the University of Calgary acknowledging the merit of the idea but expressing skepticism about its implementation.
While Alberta previously mandated a deposit for new well licenses until 1986, industry opposition led to the removal of this requirement. Critics argue that a $10,000 deposit per well may not be sufficient, including Dwight Popowich, chairman of the Polluter Pay Federation, who advocates for higher annual fees from the industry to expedite orphan well reclamation.
The OWA, primarily financed through an industry levy set by the Alberta Energy Regulator (AER), is bracing for an increased levy to address the escalating number of orphan wells. Regulatory changes and recommendations, including the proposal for pre-drilling deposits, aim to mitigate the orphan well crisis in Alberta.