Latest news with #OrphanWellAssociation
Globe and Mail
27-05-2025
- Business
- Globe and Mail
Alberta oil levy too low to cover orphan well costs, report claims
A new report is warning the annual levy charged to Alberta oil companies to fund the cleanup of orphaned oil and gas wells remains too low to keep up with the rate of surrendering. The report, written by former University of Calgary Public Interest Law Clinic lawyer Drew Yewchuk, says this year's levy rate combined with low rates in previous years is leading to an estimated funding shortfall of $1.2-billion. The levy funds the Orphan Well Association, a non-profit entity overseen by industry and regulator officials and tasked with reclaiming wells that are orphaned when oil and gas companies go bankrupt. The association says it currently has more than 3,700 wells on its books that need to be decommissioned and reclaimed, which could cost more than $860-million. Yewchuk's report says the $144-million in levies the Alberta Energy Regulator recently approved to be collected this fiscal year continues the trend of underfunding for the Orphan Well Association. Since the association will also need to repay more than $300-million in federal and provincial government loans over the next 10 years, Yewchuk says Alberta's orphan well situation will only get further out of hand. A spokesperson for the energy regulator says it hasn't seen the report and was unable to comment on it.
Global News
27-05-2025
- Business
- Global News
Levy charged to Alberta oil companies too low to cover orphan well costs: report
A new report is warning the annual levy charged to Alberta oil companies to fund the cleanup of orphaned oil and gas wells remains too low to keep up with the rate of surrendering. The report, written by former University of Calgary Public Interest Law Clinic lawyer Drew Yewchuk, says this year's levy rate combined with low rates in previous years is leading to an estimated funding shortfall of $1.2 billion. The levy funds the Orphan Well Association, a non-profit entity overseen by industry and regulator officials and tasked with reclaiming wells that are orphaned when oil and gas companies go bankrupt. The association says it currently has more than 3,700 wells on its books that need to be decommissioned and reclaimed, which could cost more than $860 million. View image in full screen Alberta's Orphan Well Association says it has more than 3,700 abandoned well that need to be cleaned up, but a new report says the annual levy oil companies are charged to fund the cleanup is far less than what it will actually cost. Global News Yewchuk's report says the $144 million in levies the Alberta Energy Regulator recently approved to be collected this fiscal year continues the trend of underfunding for the Orphan Well Association. Story continues below advertisement Since the association will also need to repay more than $300 million in federal and provincial government loans over the next 10 years, Yewchuk says Alberta's orphan well situation will only get further out of hand. Get breaking National news For news impacting Canada and around the world, sign up for breaking news alerts delivered directly to you when they happen. Sign up for breaking National newsletter Sign Up By providing your email address, you have read and agree to Global News' Terms and Conditions and Privacy Policy A spokesperson for the energy regulator says it hasn't seen the report and was unable to comment on it. 2:01 University of Calgary study looks at abandoned oil well burden in Alberta Another study, produced by the University of Calgary's School of Public Policy in May 2021, put the number of inactive and abandoned wells much higher. That study estimated there were 97,000 inactive wells in the province and 71,000 abandoned wells. With files from Global News.
CBC
27-05-2025
- Business
- CBC
Levy charged to Alberta oil companies too low to cover orphan well costs, says report
A new report is warning the annual levy charged to Alberta oil companies to fund the cleanup of orphaned oil and gas wells remains too low to keep up with the rate of surrendering. The report written by Drew Yewchuk, formerly a staff lawyer with the University of Calgary's Public Interest Law Clinic, says this year's levy rate combined with low rates in previous years is leading to an estimated funding shortfall of $1.2 billion. The levy funds the Orphan Well Association, a non-profit entity overseen by industry and regulator officials and tasked with reclaiming wells that are orphaned when oil and gas companies go bankrupt. The association says it has more than 3,700 wells on its books that need to be decommissioned and reclaimed, which could cost more than $860 million. Yewchuk's report says the $144 million in levies the Alberta Energy Regulator recently approved to be collected this fiscal year continues the trend of underfunding for the Orphan Well Association. Since the association will also need to repay more than $300 million in federal and provincial government loans over the next 10 years, Yewchuk says Alberta's orphan well situation will only get further out of hand.
CTV News
27-05-2025
- Business
- CTV News
Levy charged to Alberta oil companies too low to cover orphan well costs: report
A new report is warning the annual levy charged to Alberta oil companies to fund the cleanup of orphaned oil and gas wells remains too low to keep up with the rate of surrendering. The report, written by former University of Calgary Public Interest Law Clinic lawyer Drew Yewchuk, says this year's levy rate combined with low rates in previous years is leading to an estimated funding shortfall of $1.2 billion. The levy funds the Orphan Well Association, a non-profit entity overseen by industry and regulator officials and tasked with reclaiming wells that are orphaned when oil and gas companies go bankrupt. The association says it currently has more than 3,700 wells on its books that need to be decommissioned and reclaimed, which could cost more than $860 million. Yewchuk's report says the $144 million in levies the Alberta Energy Regulator recently approved to be collected this fiscal year continues the trend of underfunding for the Orphan Well Association. Since the association will also need to repay more than $300 million in federal and provincial government loans over the next 10 years, Yewchuk says Alberta's orphan well situation will only get further out of hand. A spokesperson for the energy regulator says it hasn't seen the report and was unable to comment on it. This report by The Canadian Press was first published May 27, 2025. Jack Farrell, The Canadian Press
CBC
04-04-2025
- Business
- CBC
Alberta's plan to manage inactive oil wells now leaves taxpayers off the hook
A new version of a government-commissioned report about Alberta's inactive oil wells and what to do about them now says the province should manage a new insurance fund, rather than backstop it with taxpayer funding. The tweaked language is one of a few changes made to the report, a draft version of which was leaked to media last month leading critics to warn Alberta's government was being pushed to let oil and gas companies off the hook for reclaiming wells, as is legally required. The report, authored by David Yager, a former oilfield services executive and current Alberta Energy Regulator board member, contains over 20 recommendations for dealing with the nearly 80,000 inactive but not reclaimed oil and gas wells littered across the province. One of those recommendations is to create a new industry funded insurance program to cover liabilities related to closed wells. The draft version said this fund was to be "ultimately backstopped by taxpayers." The new report now calls for that insurance program to instead be "managed" by the province. Energy Minister Brian Jean's office didn't directly answer questions about why the wording was changed, instead saying in an email that a province-managed fund could be similar to the government's emissions reduction fund, which collects industrial carbon taxes from polluters. "The report included 21 recommendations, not set-in-stone decisions by the province," Jean's office said. "We are reviewing all of them and will provide more information on which recommendations we intend to implement and how, in the coming months." Another recommendation from Yager's report is to enact legislation to create companies that would take over inactive or waning oil and gas wells and use any resource extraction profits to fund cleanup efforts. Yager wrote that "with additional regulatory and financial support" these types of companies could intercept wells before they're transferred to the Orphan Well Association, the industry-funded agency that assumes responsibility for wells when companies go bankrupt. Jean's office said on Thursday that while no decisions have been made, it is envisioned that the new companies would also be industry funded. What 'managed' means Nagwan Al-Guneid, the Opposition NDP energy critic, said Thursday that it was "hard to trust" the report's recommendations. She said if the government plans to move forward with the insurance fund recommendation it will need to clearly define what "managed" means. "They need to define this very clearly so Albertans understand that they will not be left with a multi-billion dollar ... mess of bankrupt oil and gas companies," she said. Phillip Meintzer, a spokesperson for the Coalition for Responsible Energy, also said he wasn't convinced the report's changes mean Alberta is ruling out the use of public funds to aid in the cleanup of inactive oil and gas wells. "The language is maybe a little bit softer, a little bit watered down, but the province still uses public money to do stuff, so I think it still is proposing public money," Meintzer said, referring to Alberta "managing" an insurance fund. He also questioned the viability of creating companies solely responsible for extracting unknown levels of energy from inactive wells. He pointed to Yager's report, which notes that mature and inactive wells largely come with operating costs that "often exceed revenue." "There's no guarantee that it's going to be profitable to operate or... that it's going to generate any revenue," Meintzer said. Yager, who also serves as a special adviser to Premier Danielle Smith and was a one-time Wildrose Party president who played a key role in merging Alberta's competing conservative parties in 2017, also recommends that Alberta shift its reclamation criteria from a zero-risk framework to a "risk-based" framework. He writes that doing so would mean environmental risks could be evaluated against cost of operations and "the expected benefits to ensure that they are deployed effectively and where they are needed most resulting in responsible ecological outcomes." The Alberta Energy Regulator says there are nearly 500,000 licensed oil and gas wells across the province, although only about 50,000 are active. As a condition of well licences, companies are required to clean up or reclaim the wells once they're drained or determined not to be profitable anymore. A report from the Alberta Energy Regulator late last year said over $1 billion was spent reclaiming inactive wells in 2023. It said roughly 4,000 inactive wells, or five per cent, of the total on record were reclaimed, despite 54 companies not meeting their yearly closure spending requirements.
