Calling orphan and inactive oil and gas wells “an environmental stain on British Columbia,” Premier John Horgan announced on Wednesday a plan to clean-up more than 2,000 wells and create 1,200 jobs in northern B.C.
Funding for B.C.’s plan will come from the federal government, which in April announced it will spend $1.7 billion to clean up orphan and inactive wells in Alberta, Saskatchewan and B.C.
Alberta received the lion’s share of the funding — $1.2 billion — while $400 million was designated for Saskatchewan and $120 million for B.C.
Horgan said the federal funding will help B.C. decommission, reclaim or restore oil and gas well sites, noting that B.C.’s Auditor General has repeatedly called on the oil and gas industry and the province “to clean up its act.”
“Today I’m happy to say, with a $120 million injection of funds from the federal government as part of their COVID-19 response — a welcome investment — we will be able to continue the clean-up of orphan wells,” the Premier told reporters.
The bulk of B.C.’s funding — $100 million — is for cleaning up dormant well sites that could still have owners, while $15 million is earmarked to clean up orphan well sites whose owners have gone bankrupt or can’t be found.
The remaining $5 million is tagged for a new program to address the legacy impacts of historical oil and gas activities.
“These are areas that continue to have environmental impacts, such as on wildlife habitat or traditional use by Indigenous peoples,” Bruce Ralston, B.C. Minister of Energy, Mines and Petroleum Resources, told reporters.
Ralston said Indigenous communities, local governments and landowners will be able to “nominate” dormant orphan and legacy sites for priority consideration for decommissioning, reclamation or restoration.
“[It’s] good news for workers and communities in the northeast of our province, for the environment and for our economy during these challenging times,” Ralston said.
Julia Levin, climate and energy program manager for Environmental Defence, said she is concerned that most of B.C.’s funding is earmarked for dormant sites that likely still have owners, rather than to clean up the province’s fast-growing orphan well sites.
“That’s offloading costs from still-viable companies to taxpayers, in a clear example of privatizing profits and socializing costs … the dine and dash model,” Levin told The Narwhal.
“Companies came, ate their meal and made a mess and taxpayers are stuck paying for it.”
B.C. has about 25,000 oil and gas well sites. About 7,700 are dormant, meaning they have been inactive for five consecutive years and are unlikely to return to service.
“This kind of support for cleaning up huge environmental liabilities, while putting people to work in some of these communities that are really dependent on oil and gas and have lost employment, is really positive,” Levin said.
“But it has to be done in a way that still upholds the ‘polluter pays’ principle.”
In April, citing the COVID-19 pandemic, the B.C. Oil and Gas Commission gave oil and gas companies a reprieve from making their annual contributions — worth more than $11 million this year — to a fund for cleaning up orphan wells.
In an emailed response to questions, the commission said on Wednesday that companies will still be charged for the orphan liability levy, but invoicing will be deferred until September 1.
The commission said the new funds will result in the abandonment (proper closure and sealing) of 22 wells, the decommissioning of 65 equipment sites, remediation of 21 contaminated sites and reclamation of 36 sites, along with associated roads and other disturbances.
That’s in addition to previously planned work that will see the abandonment of 80 well sites, investigation of 40 sites, remediation of 20 sites and reclamation of 15 sites — and possibly up to 25, the commission said.
Restoring oil and gas wells is a multi-year process. First, wells need to be decommissioned, or sealed with cement. Full reclamation involves cleaning up contamination and restoring the land to pre-activity conditions.
Calling Canada’s orphan well problem “unacceptable,” B.C. Green Party MLA Sonia Furstenau said it’s important to address environmental liabilities, especially when they affect groundwater.
“An announcement that says money from the federal government is going towards cleaning up these sites is welcomed. However, it is something that should never happen again,” Furstenau, House Leader for the B.C. Green Party, said in an interview.
“Going forward from this moment there has to be the political will and decision making that says no company can drill a new well unless they have the clean-up costs up front and ready to go. And that has to become the new reality.”
Chiefs from four First Nations in the Peace region — which is ground zero for oil and gas development in the province — welcomed the announcement.
Fort Nelson First Nation Chief Sharleen Gale called it a win-win for the oil and gas sector and the environment.
“It will bring much needed local employment for former oil and gas workers and clean up dormant, legacy and orphan wells,” Chief Gale said in a statement.
“We look forward to continuing our collaboration with B.C. to reclaim old wells to the highest standards using innovative techniques that the FNFN [Fort Nelson First Nation] and the BCOGC [BC Oil and Gas Commission] have been piloting over the past two years.”
Saulteau First Nations Chief Ken Cameron said his nation welcomes new programs that support reclamation projects and job creation.
“We are ready to share our traditional knowledge, technical expertise and project management skills,” Chief Cameron said.
“We believe that by working together with government and industry, we can create long-term sustainable economies and restore landscapes to their natural state, after oil and gas activities are completed.”