Alberta passing the bill for orphan well cleanup to the public: new report

A new report warns Alberta has not properly confronted the massive environmental and financial liabilities left behind by energy development.

Analysis released Thursday by research firm Redwater Insights looks into the impact of decades of unreclaimed oil and gas infrastructure.

It concludes that the government isn’t adequately addressing hundreds of thousands of unplugged and orphan wells, and that its proposed cleanup strategy will make it even easier for companies to offload aging wells and associated liabilities.

“There is a legacy of non-enforcement and so we now have non-compliance,” Report Researcher Rob Schuwerk said.

“Alberta is doing very little — and it’s a problem that will impact (residents here) more than folks and other provinces.”

Dine and dash

The report, Clean Up the MAS: How Alberta’s Mature Asset Strategy Allows a Profitable Industry to Offload Oil and Gas Cleanup to the Public, shows the province faces between $100 and $300 billion in oil and gas cleanup liabilities.

And it shows companies are routinely walking away from their builds and leaving rural residents and municipalities with the fallout.

“A selection of the largest, most well-capitalized companies in Canada gave about $14 to their shareholders last year for every dollar that the entire industry spent on plugging and reclamation,” Schuwerk said.

“That’s enough to cover the regulator’s official lifetime liability estimates for all inactive wells.”

Schuwerk says the province is currently letting companies hide behind weakening energy prices — and Albertans are paying the price. He believes operators were well aware of obligations when they sought to benefit from the industry.

“They didn’t (save) for a rainy day, which we knew was going to come. So now you’ve got to play catch-up once you have a large number of mature wells.”

But the report also presents solutions.

Schuwerk says that should start with savings — and include restricting transfers of late-in-life wells.

“Or at least use that to make sure those aren’t being traded to companies that are just going to dine and dash, so to speak,” he told CTV News.

Increasing production

The report says “Alberta and Canada are planning the next 40 years without cleaning up the last 40.”

Two Hills Landowner Dwight Popowich only worries a promise by the premier to double production could “double the mess.”

He welcomed development on his land in 2008.

In 2017, the company that owned the infrastructure sold to a producer that “almost immediately” went bankrupt.

“Why would the regulator allow thousands of inactive well sites to be transferred to a company like (Sequoia Oil and Gas) that would be out of business in 18 months?” Popowich asked.

The report concludes the recent federal memorandum of understanding development ambitions “risk leaving towns, villages, and landowners responsible for billions more in cleanup costs while industry continues to offload its obligations.”

MAS criticism

The report isn’t the first piece of backlash the provincial strategy has received.

The Coalition for Responsible Energy — or C4RE — is composed of landowners, scientists, surface rights advocates and Indigenous, environmental, human health and civil society organizations.

It has been campaigning against the MAS since a draft was first leaked. It wants to see the plan scrapped.

But the province is sticking to the MAS.

A spokesperson for Alberta’s Energy Ministry sent a statement saying, in part, “This is an issue that was created by governments kicking the problem down the road for almost a century. This government is committed to addressing the issue.”

The statement promises the ministry will continue to work with industry to finalize the MAS framework and move forward on almost all of its recommendations.

“The province continues to support a polluter pay principle,” it reads.

“We have previously bolstered restrictions on transferring bad assets with taxes owing through orders in council.

“In Budget 2025,” it says, “we increased the minimum spend for industry on reclamation through the Liabilities Management Framework from $700 million to $750 million.

“This is up from $465 million in 2022. We also approved an increase in the industry-funded Orphan Well Fund from $130 million to $144.5 million.”

The ministry adds Redwater is an out-of-country firm and believes it lacks context about Alberta government strategies.