Calgary

$1.7B to clean up orphaned and abandoned wells could create thousands of jobs

The federal government will spend $1.7 billion to help clean up orphaned and abandoned oil and gas wells in Alberta, Saskatchewan and B.C. 

Justin Trudeau announced program, along with emissions reduction fund on Friday

Alberta has approximately 95,000 inactive wells and 69,000 abandoned wells, according to the Alberta Energy Regulator. (Kyle Bakx/CBC)

The federal government will spend $1.7 billion to help clean up orphaned and abandoned oil and gas wells in Alberta, Saskatchewan and B.C. 

The program is intended to provide aid to the energy sector and maintain or increase jobs. It's anticipated the cleanup fund will create 5,200 jobs in Alberta alone.

"Cleaning them up will bring people back to work and help many landowners who have had these wells on their property for years but haven't been able to get them taken care of and the land restored," said Prime Minister Justin Trudeau, announcing the plans on Friday. 

"Our goal is to create immediate jobs in these provinces, while helping companies avoid bankruptcy, and supporting our environmental targets."

Crude price crash

Alberta and the oil sector have been pushing hard for help since the dual calamity of an international price war and falling demand stemming from the COVID-19 pandemic sent the value of crude into free fall. 

The price crash has left a hole several billion dollars wide in the recently passed Alberta budget and unemployment is expected to reach record levels. 

"We've gotten commitments by the government of Alberta to strengthen regulations so we see fewer orphan and inactive wells in the future," said Trudeau.

The United Conservative government in Alberta has already extended a $100-million loan to the Orphan Wells Association to accelerate reclamation work, which it anticipates will create 500 jobs. 

The scale of the problem

As of March 2020, Alberta has approximately 95,000 inactive wells and 69,000 abandoned wells, according to the Alberta Energy Regulator.

Two of those wells are on Tony Bruder's property in the Pincher Creek area. Both were drilled in the 1950s. One hasn't seen any activity since the '60s, while the other has been sitting idle since the early '90s.  

He says Friday's announcement is good news and he's happy more work will be done to clean up what he calls "eyesores on the land."

"It's really sad that they've let the companies get off scot-free that actually own the wells and did the drilling. But the fact that they're actually putting some money into getting them cleaned up is a good thing," said Bruder.

"It's definitely mismanagement on the part of the government for allowing it to happen. They're the regulator, they're the ones that make the policies and bylaws and rules that the companies have to follow."

Kenney reacts

Premier Jason Kenney said the federal program is a "great first step" but more needs to be done to support Alberta's largest industry.

"This funding will immediately save or create thousands of jobs, keeping energy service companies going during these devastating times," he said in an emailed statement. 

"It will also help us bring sites back to their original condition, leaving a cleaner environment for future generations."

In addition to that program, Ottawa will establish a $750-million fund intended to reduce emissions, with a focus on methane. 

Trudeau said that would provide "primarily repayable contributions to firms to make them more competitive, reduce waste and pollution, and most importantly protect jobs."

The two programs together will maintain "roughly 10,000 jobs across the country," Trudeau said. 

Loans for mid-size companies

Ottawa will also continue working with Business Development Canada and Export Development Canada to expand credit support for at-risk medium-sized energy companies. 

Providing financial backing to those companies has been a near-constant demand from the Alberta government as it tries to shore up the industry. 

The announcement comes after weeks of intense lobbying by the Canadian Association of Petroleum Producers, which was pushing for a relaxation on environmental regulations in the face of the crisis. 

The organization said it was pleased with Friday's announcement, as were other industry groups, including the Petroleum Services Association of Canada, which has been pushing for cleanup funding in order to keep its members working. 

Climate crisis

But Trudeau said on Friday that the climate crisis can not be ignored because of the pandemic crisis. 

That view was echoe by the Pembina Institute, which applauded the government announcement. 

"It's essential that as we address one global crisis, we don't exacerbate another," reads a news release. 

"While these investments seem to be pointing us in the right direction, we're looking at the details to ensure the outcomes will put oil and gas workers back to work while advancing our efforts to reduce climate pollution.

Meanwhile, back in Pincher Creek, Bruder isn't getting his hopes up that the federal and provincial cash infusions will reach him. 

"We're a long ways from Edmonton. So will the ones that are closer to towns and cities and stuff like that, the people with the bigger voice, are they going to be taken care of first and ours is going to sit here for another 50 years?" he said.

"Who knows. We'll see."

With files from Stephanie Rousseau

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