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Oil Bust Takes Its Toll On Alberta, Amount Of ‘Orphans’ Increases By 45%

Low oil prices and the growing number of energy companies closing their doors are talking a toll on Alberta, Canada, with the number of abandoned wells jumping by 45 percent in the first half of the year. The Orphan Well Association (OWA), which manages the abandoned wells and related facilities, along with their remediation, has a 25-page long list of orphan wells, 17 pages of reclamation sites, and 26 pages of pipeline segments.

Brad Herald, who is the chairman of the OWA stated “Everybody understands that the inventory is going to go up. We’ve been in this program for a couple of decades, and we’re not going anywhere.” Herald added that not every well reported to the OWA will need immediate attention, as long as it is safe.

According to its website, the non-profit group funds its efforts through the Orphan Fund Levy, which is based on the abandonment and reclamation liabilities of oil companies. That money is collected by the Alberta Energy Regulator and disbursed to the Association. The Association operates under the guidance of its members, including the Canadian Association of Petroleum Producers, The Explorers and Producers Association of Canada, and the Alberta Energy Regulators.

Related: Low Oil Prices Kill Off 7 Billion Barrels Of Oil Production

In its last fiscal year, the OWA remediated 185 wells, under a budget that went from C$15 million to C$30 million. Even then, it could not keep pace with the growing number of abandoned wells. In that same fiscal year, 63 wells were added to the list. The cost to plug a well was approximately C$60,900.

The issue is not a new one. Barry Roberts of Calgary-based Ecojustice stated “This has been a problem they’ve known about since the late 1980s. There’s been a number of programs and they never quite addressed the real issue, which is that companies will go bankrupt so you want to be holding money upfront so when they disappear you’ve got the money to do the cleanup.”

By Lincoln Brown for Oilprice.com

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  • John Clark on July 27 2016 said:
    I would like to know more about the fund set aside to look after re cementing and covering orphan wells. Who controls it? How much money do they actually have?

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