Oil and gas infrastructure is seen behind a chain link fence in this undated file photo by Louie Villanueva
The number of abandoned oil wells in British Columbia almost doubled between 2007 and 2018 and funds collected from operators to cover cleanup costs for a growing number of orphaned wells are insufficient, the province’s auditor general said in a report issued on Thursday.
A major reason for that is that the industry’s regulator, the BC Oil and Gas Commission (OGC), lacks the power to compel operators to decommission and restore well sites in a timely way, said Carol Bellringer.
“We found that gaps in the provincial legislation governing the OGC meant operators weren’t required to decommission or restore their inactive well sites unless the OGC explicitly ordered them to do so because of specific safety or environmental issues,” she said.
The provincial government has created a new law that will give the regulator more coercive powers, she said in a phone interview, but the regulations that would allow it to be enforced are still being drafted. MORE
The decision could have implications for banks, apart from junior and intermediate oil producers’ access to capital
Pumpjacks, like this one near Calgary, are used to pump crude oil out of the ground after a well has been drilled. Thousands of oil wells have been abandoned across Alberta without proper remediation. (Todd Korol/Reuters)
Trustees for bankrupt energy companies will learn Thursday whether they can refuse to pay clean up costs for old and inactive oil and gas wells in Alberta.
The Supreme Court of Canada is set to rule on whether the trustee for bankrupt Redwater Energy Corp. can hand over the remediation responsibilities for old and inactive oil and gas wells to Alberta’s Orphan Well Association — while still keeping its more valuable wells and facilities, which can be sold to repay the company’s debt.
The case has been closely watched in the Calgary oilpatch and will have major implications across the country’s resource sectors as the Supreme Court will determine whether debt holders have a higher priority over environmental clean-up responsibilities in bankruptcy cases. MORE