Orphan wells in Alberta, Canada

Under current AER regulations, it is legal for operators to leave well reclamation suspended indefinitely, this is not the case in some oil producing states, such as North Dakota.

[25][26] Daryl Bennett, who represents landowners through both My Landman Group and Action Surface Rights "in disputes involving resource companies",[27] said that there were 170,000 unreclaimed sites that require cleaning.

[18] Concerns have been raised about the "murky practice" of offloading liabilities strategically to smaller, junior operators with insufficient funds that are likely to face future insolvency.

[28] A lawyer representing Action Surface Rights, a landowners group, Christine Laing, called on the AER to use the power it has more often and in a timely fashion to "protect the public interest".

[43] The International Institute for Sustainable Development (IISD), which was established in 1990 during the premiership of Brian Mulroney as part of Canada's contribution to the 2002 Rio Earth Summit, drew attention to ways in which Canadian producers have failed on ESG issues.

[47] The New Democratic Party (NDP) provincial government began consulting with the energy industry in 2017 to "introduce new rules that might limit a multi-billion-dollar public liability for reclaiming about 80,000 inactive wells around Alberta.

[47] As part of Alberta's Area-Based Closure program (ABC), which represented 70% of the provinces remediation activity, the oil and gas industry spent approximately $340 million on clean up.

[50] There are thousands of oil and gas well in municipalities and on landowners properties that require plugging or reclamation and have no solvent owner, but have not yet transitioned to orphan status.

[43] Bennett's group was invited by Alberta Energy Minister Peter Guthrie to a February 9, 2023 meeting on Premier's Smith proposed Liability Management Incentive Program.

"[41] According to RMA president, Paul McLauchlin, by 2023, the oil and gas industry owed $268 million in unpaid property taxes to towns and villages across Alberta.

"[67] The oil-industry led Orphan Well Association (OWA) is an independent, non-profit organization, that was established in 2002[68] with a mandate to protect public safety and to manage the "environmental risks of oil and gas properties that do not have a legally or financially responsible party that can be held to account.

[13] The OWA's mandate includes the management of the "decommissioning (abandonment) of upstream oil and gas 'orphan' wells, pipelines, facilities and the remediation and reclamation of their associated sites.

[24] As of 2022, the annual Orphan Fund Levy on oil and gas companies set by the industry-funded Alberta Energy Regulator (AER) is very low in relation to the OWA's responsibilities.

[56][57] As part of the federal government's COVID-19 Economic Response Plan, in April 2020, new financial aid was announced to help sustain employment in the energy sector that also served to respond to environmental concerns in provinces with orphan and inactive oil and gas wells.

[75] In early February 2023, the Premier of Alberta introduced a controversial $100 million dollar Royalty Credit System as part of a new Liability Management Incentive Program (LMIP).

[29][66][76] If fully enacted, it would provide individual oil and gas companies with royalty credits for cleaning their own well sites that have been inactive for two decades or more.

[73] Alberta economist, Andrew Leach, said advocates for the oil industry were the original authors of the generous incentives-based royalty credit program, then called R-Star.

[77][78] According to a Scotiabank report, the incentive program "goes against the core capitalist principle that private companies should take full responsibility for the liabilities they willingly accept.

"[81] The changes gave AER the authority to refuse or grant licenses based on past behaviour, for example licensees with a "history, or a higher risk, of non-compliance".

Citing the case of the insolvent Bellatrix Exploration Ltd, which sold its unwanted wells to a numbered shell company—also under threat of insolvency—a 2021 Financial Post article also said that this "murky practice" of misusing the bankruptcy process to get rid of liabilities while keeping valuable assets is raising concerns.

[28] A lawyer representing Action Surface Rights, a landowners group, Christine Laing, called on the AER to use the power it has more often and in a timely fashion to "protect the public interest".

It also drew attention to the way in which AER licensed, and ATB Financial provided loans, to small limited liability companies that had insufficient financing.

[104][105] Then veteran AER CEO Jim Ellis, admitted in a public statement that the Sequoia "situation has exposed a gap in the system" that needed to be fixed.

[107] In 2021, in response to the concerns filed by he OWA, CNRL, Sunoco, and dozens of landowners, in an "unusual step" AER called for a public hearing on Shell's application to transfer hundreds of its oil well licenses to a junior player with questionable.

[111] Sources of methane emissions due to human activity (year 2020 estimates[112]): The Energy Resources Conservation Board (ERCB) first identified surface casing vent flow (SCVF) and gas migration (GM) issues as a "significant concern" in the Lloydminster, Alberta area in the 1980s.

[33] The IPCC recommended that United Nations member countries track and publish methane leakage from abandoned oil and gas wells as this represented a "global warming risk.

[131] Critics blame the self-regulating nature of energy industry and its close relationship with provincial regulatory bodies for the lack of enforcement of existing regulations which allows oil and gas companies to avoid paying for the clean up.

Suggested solutions to the orphaned and abandoned well crisis, include ensuring that there is enough funding attached to each wellsite for its cleanup paid by those who profited from oil and gas revenue for decades,[78] and enforcing a "use-it-or-lose-it policy as is the case in the neighbouring oil-producing state, North Dakota.

[89] On March 23, 2023 Alberta auditor general, Doug Wylie, published another report critical of the United Conservative Party's (UCP) neglect of orphan wells and other oil patch liabilities in the province.

[132] Martin Olszynski, a University of Calgary resource law professor said the audit shows that this is more than mere "bureaucratic incompetence"; it reveals that the AER has been "captured" by the oil and gas industry.

Fugitive gas emissions are leaking from this "abandoned" [ a ] plugged well, which may be licensed to an operator and suspended, or simply orphaned.
Many of the skyscrapers in downtown Calgary are head offices for Alberta's oil and gas sector, to which the city and the province owe their rapid growth and status as the centre of Canada's oil industry. Alberta provides 80% of Canada's oil. [ 19 ]
Alberta oil derricks, 1920s
The small hamlet of Drayton Valley grew rapidly after Pembina oil was discovered in 1954, and became Alberta's first model oil town. [ 46 ] This was the period when many wells were drilled; by 2017, there were approximately 400,000 in Alberta. [ 47 ]
The area in green, as of 2010, shows only a fraction of the oil fields in Alberta, where 400,000 wells dot the entire province—drilled for conventional oil . By 2022, only 156,031 of these wells were active. [ 50 ] The area in brown, the Athabasca oil sands , now produces most of the oil in Alberta, which is unconventional oil .
While Alberta produces over 2.8 million barrels a day of unconventional oil; conventional oil production is less than 500,000 barrels per day.. [ 19 ] This chart shows percentages of global reserves.
A well in rural Alberta in 2005.
An International Energy Agency graphic showing the potential of various emission reduction policies for addressing global methane emissions.
Causes of Fugitive gas emissions in orphaned and abandoned wells: 1. Cement/rock formation 2. Casing/encompassing cement 3. Casing/cement plug 4. Cement plug 5. Between casing/rock formation 6. between cavities 7. In the casing or well bore. Not all abandoned wells have been plugged like this one. Complete decommissioning includes removing the well head and reclaiming the site.