27-05-2025
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.
