- Abandoned and orphaned oil and gas wells are wells that have been left inactive by the industry.
- Decades of inadequate regulation have led to a costly global environmental crisis.
- These inactive wells pose significant risks to the environment and public health.
- Alberta has the largest number of abandoned and orphan wells in Canada.
- Countries around the world also face the challenge of dealing with orphan wells.
- Joint efforts are needed to manage orphan wells, ensuring cleanup funds and accountability.
Alberta is the center of Canada’s oil and gas industry. It is home to more than 450,000 oil and gas wells, of which about 10% are considered abandoned or orphaned. Abandoned wells are those that have been deactivated by their owners, but at still have a known owner or operator that is responsible for them. Orphan wells are those that have no viable owner or operator, usually due to bankruptcy or insolvency. The Alberta Energy Regulator (AER) is responsible for overseeing the closure and reclamation of these wells, as well as collecting security deposits from the industry to cover the costs.
Critics have raised concerns about the accuracy and transparency of the AER’s estimates of the environmental liabilities associated with abandoned and orphan wells. According to internal documents obtained by The Canadian Press, the AER’s public estimate of $33 billion in liabilities is based on outdated and questionable assumptions, while a more realistic estimate of $88 billion was kept internal to avoid alarming investors or the public. The documents also suggest that the AER did not have a good handle on the state of other energy infrastructure on the land, such as pipelines and tailings ponds, or the costs of remediating ongoing contamination from underground chemicals or leakage.
The federal government has allocated $1.7 billion to help clean up orphan wells in Alberta, Saskatchewan, and British Columbia, but this is clearly not enough to address the magnitude of the problem. Critics point out that about half of this money has been given to 10 energy companies, including some of the largest ones in Canada. They argue that this amounts to a subsidy for the industry, rather than a polluter pays principle. There are calls for more transparency and accountability from the regulator and the industry.
Orphaned and abandoned oil and gas wells pose several environmental and safety hazards:
- Water Contamination: These inactive oil and gas wells can contaminate water supplies with toxins, affecting the entire food chain.
- Soil Contamination: Oil and gas lease sites can be heavily contaminated, requiring the removal of many tons of gravel and soil.
- Ecosystem Degradation: They have the potential to severely degrade the ecosystem for a large area.
- Air Pollution: They often leak methane, H2S, and other gasses that are harmful to wildlife and human health.
- Safety Hazards: If an orphaned well is not properly plugged, it can collapse or explode, causing damage to property and injury to people.
- Methane Emissions: Orphaned wells are a major source of methane emissions, a potent greenhouse gas.
Alberta is certainly not alone in facing the challenge of orphan wells. Around the world there are tens of millions of oil and gas wells that have been abandoned by the industry without proper closure or remediation. In countries with less stringent, or no environmental regulations, the safety risks and environmental impact can be far greater.
In the United States, there are an estimated 3.2 million abandoned oil and gas wells, of which about 2 million are orphaned. The federal government has allocated $4.7 billion to help states clean up these wells, but this is only a tiny fraction of the estimated $280 billion in liabilities. The states have different regulations and funding mechanisms for dealing with orphan wells, but most of them are inadequate or underfunded.
In Australia, there are about 50,000 oil and gas wells, of which about 10% are abandoned or orphaned. The federal government has no specific policy or funding for orphan well cleanup, leaving it to the states and territories to regulate and enforce. However, some states have weak or inconsistent regulations and lack sufficient data on the location and condition of orphan wells.
In India, there are about 18,000 oil and gas wells, of which about 15% are abandoned or orphaned. The federal government has a policy framework for well closure and reclamation, but it is not well implemented or enforced. There is no dedicated fund or agency for orphan well cleanup, and there is a lack of data and monitoring on the environmental impacts of these wells.
In dozens of countries without environmental regulations, or without monitoring and enforcement, there are very few numbers available. Without international pressure and funding, orphan wells are unlikely to be cleaned up.
Abandoned and orphaned oil and gas wells are a global environmental challenge that requires urgent attention and action. These wells represent a legacy of environmental damage and financial liability that has been left by the oil and gas industry without proper closure or remediation. They pose serious risks to the environment and public health, such as groundwater contamination, methane emissions, and explosions.
The costs are high to plug a well and remove all traces of a well site, and quite often exceed the funds allocated for this purpose. Nobody wants to pay for reclamation, because reclamation doesn’t pay. Managing orphaned and abandoned oil and gas wells is a major challenge that requires joint efforts from governments, regulatory bodies, and the industry to ensure adequate funding and accountability for their cleanup. All countries need to adopt a polluter pays principle that holds the industry responsible for its environmental liabilities instead of taxpayers, including reclamation bonds for new projects. Industry and regulators need to improve their data collection and reporting on the location and condition of orphan wells. Regulations on well closure and reclamation must be strengthened, and enforcement must be funded. Most jurisdictions would benefit from increased transparency and public engagement on the issue of orphan wells.
Committing to the remediation of these orphaned sites not only safeguards the environment and public health, but also generates employment and economic growth for those communities impacted by the oil and gas sector.