British Columbia

Risk of abandoned oil and gas wells on the rise in B.C.

With energy prices at rock bottom, B.C.'s energy regulator expects a continuing rise in the number of oil and gas producers at risk of going bust and leaving abandoned wells, pipelines, or facilities behind.

'We're at the bottom of our worst downturn in four decades'

A worker pulls pipe out of the ground at an orphan well site in Alberta. B.C. currently has 45 orphaned sites, only a dozen of which have been fully reclaimed. (CBC)

Northeastern B.C. is now home to 45 abandoned oil and gas sites, according to the province's energy regulator. 

They're dubbed "orphan sites," abandoned by parent companies that go bust and take off before capping or cleaning up their wells, pipelines and facilities.

But a scientist with the David Suzuki Foundation says there are literally thousands of abandoned sites in BC, some impacting local First Nations and farmers.

45 abandoned sites in B.C. — or thousands?

Companies that end production are required to remove surface equipment, cut off, cap and plug wells, clean up any soil and water contamination, and reclaim the land.

That is, unless they can't afford to — and simply walk away.

And now, the number of energy companies at risk of abandoning facilities is up and continues to rise, according to B.C.'s Oil and Gas Commission. 

The B.C. government continues to place its economic hopes in LNG, hopeful that gas fracked in northeastern B.C. will soon be piped to the west coast and exported to Asia.

But no LNG projects are under construction. Oil and gas prices remain at rock bottom. And the dramatic downturn in B.C.'s energy industry continues.

When folks drill a well, they know there's [cost] with its clean up. This doesn't come as a surprise to industry.- Brad Herald, Canadian Association of Petroleum Producers

'Worst downturn in 4 decades'

"We are in some taxing times," said Brad Herald, vice president of Western Canada Operations for the Canadian Association of Petroleum Producers.  "We're at the bottom of our worst downturn in four decades."

But Herald says that doesn't mean companies are off the hook.

"There's clearly an expectation, in our business, when folks drill a well, they know there's an associated liability with its clean up," said Herald.  "This doesn't come as a surprise to industry."

In fact, an industry levy funds the cleanup of abandoned sites.

Industry funds the safety net for cleanup

"Industry funds the safety net to make sure there's no liability to the taxpayer ... and those costs do not flow through to the public in British Columbia," said Herald.

B.C.'s energy regulator also keeps a close eye on the balance sheets of energy producers, processors, and disposers operating in the gasfields. 

A company's assets have to be greater than its liability.

If not, the OGC requires the company to sell off assets, shut down and reclaim wells and facilities, or pay a security deposit.

Number of at-risk companies rises

But with rock-bottom energy prices, Herald said many companies are shutting in or reducing production that's now unprofitable. That impacts their asset calculations, and often triggers the requirement to pay a security deposit. 

Current OGC figures show a growing proportion of companies considered at-risk. They've had to pay $11 million in security deposits over the last year to continue operating.

In addition, seven high-risk companies have failed to pay the required security deposit and are now considered "non compliant." 

Only a dozen wells fully restored

B.C.'s fund to decommission and restore orphan sites sits at $4.2 million. But its estimated liability for future restoration work is far greater: $7.5 million, according to the OGC.

In B.C., according to the OGC, 33 of the 45 orphaned well sites have yet to be fully restored.

No one from the OGC was available to comment.

Environmental group counts thousands of wells that need clean up

The David Suzuki Foundation disputes the OGC's official count.

There were 6,978 abandoned wells and 2,945 suspended wells in B.C. as of November, 2014.according to research conducted by John Werring, senior science and policy advisor with the David Suzuki Foundation.

He estimated the cleanup costs to B.C. taxpayers at $700 million.

The research documented wells abandoned as long as 40 years ago.  And it noted that an entire gas facility at Red Creek is still standing, despite being deemed abandoned by the OGC several years ago. 

ABOUT THE AUTHOR

Betsy Trumpener

Reporter-Editor, CBC News

Betsy Trumpener has won numerous journalism awards, including a national network award for radio documentary and the Adrienne Clarkson Diversity Award. Based in Prince George, B.C., Betsy has reported on everything from hip hop in Tanzania to B.C.'s energy industry and the Paralympics.

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