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Pump jacks on the Alberta prairie. (Image: Jeff Wallace via Flickr)

Alberta’s abandoned well problem grows with O&G bankruptcy filings

“They guaranteed us that something would happen in the next six months. We never heard back [from the regulators or the oil companies],” Alberta rancher Tony Bruder told CBC News.

Due to the oil price slump and the resulting O&G bankruptcy filings, Bruder is one of many Canadian landowners that might soon be dealing with the hassle of abandoned oil and gas wells on his own land.

As reported by the CBC, the Redwater Energy court decision “ruled that in the case of a bankruptcy, energy companies must use their remaining assets to pay back their lenders before cleaning up old well sites.”

A landowner lawyer commented on how the decision “effectively neutralizes” the means developed by state regulators for exceptional environmental cleanup efforts. As of early June, Alberta is home to roughly 69,000 capped wells and another 79,000 wells that have been inactive for a year or more. As reported by the CBC, the cost of sealing and reclaiming a well far exceeds the cost of a year’s lease fees.

As the oil price slump persists, many landowners are realizing they hold no power to say no to a well on their property. Additionally, they are unable to sway companies in their decision to clean and cap an old well. The CEO of a financial company owned by Alberta told the CBC, “I think there’s an issue with abandoned wells in Alberta, period.”

However, it was noted that the ruling “was launched for clarity, so that lenders would know if they have appropriate security in place before making loans.” The Alberta Energy Regulator is appealing the ruling. To read more about Alberta’s growing abandoned well problem, read the full story at CBC News.

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