The Watch
LATITUDE
SOMETIMES THEY NOD, SOMETIMES THEY DON’T Orphan wells in Alberta number over 3,000, and the courts have ruled against insolvency being a justifiable abdication of cleanup responsibility.
GOING BANKRUPT NO LONGER AN EXCUSE TO ORPHAN YOUR WELL Drive around rural Alberta and you’ll see pump jacks scattered across the farmland that continually rolls into view. Some will bob up and down as you pass. Others, perhaps 90,000 province-wide, are sitting idle. Most of these sites are no longer in operation but still under lease from energy companies. A growing number have been orphaned, which usually means they’ve been abandoned by companies that became insolvent and may not even exist anymore. The Orphan Well Association (OWA)—an industry- funded not-for-profit that cleans up abandoned oil and gas wells—says there are currently 3,127 orphaned oil and gas wells in Alberta, needing to be plugged up for the health of the environment and landowners. This is a huge increase from the 200 reported in 2014, and
not surprisingly, it represents billions of dollars in remediation costs. In Alberta, the companies responsible for polluting land are obligated to take care of the cost of reclaiming it. In cases of insolvency, wells are sometimes abandoned, leaving the expensive cleanup to the OWA. But a new Supreme Court ruling means that going under will no longer be an excuse for abandoning wells. Companies will now have pay for land reclamation before they pay back loans to their creditors. The ruling overturns a lower court decision involving Redwater Energy. The Okotoks company that became insolvent in 2015. It tried to abandon old wells in favour of returning $5 million to a creditor.
SPRING 2019 PEG | 61
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