Report calls for Alberta to put a time limit on inactive oil and gas wells

There are more than 80,000 inactive oil wells in Alberta that have not been plugged or reclaimed. Regulations set no time limit on how long a well can remain inactive, but a new report shows that even if oil prices skyrocket, these wells aren't coming back to life.

Report recommends change to rules allowing old oil or gas wells to sit inactive forever

An oil well sits inactive near Three Hills, Alta. (Tracy Johnson/CBC)

Inactive oil and gas wells remain an intractable problem in Alberta, but a report released this week suggests the solution is probably not that complicated. Alberta could simply follow in the steps of Texas and North Dakota and impose a time limit on how long a well can sit idle.

The province is sprinkled with old wells, more than 150,000 in varying degrees of decline.

Some have been orphaned, meaning their owners are out of business and can't clean up the problem; tens of thousands more have been abandoned and plugged with concrete, but not fully reclaimed; and 82,546 are inactive, meaning no more oil or natural gas is being produced, but the wells haven't been plugged and could, at least theoretically, be brought back to life.

A gas well on Tony Bruder's land has been dormant for 60 years. It can be cheaper for a well owner to pay lease rates than it is to clean up an old well site. (Tracy Johnson/CBC)

Tony Bruder has one such well on his land. It's been sitting inactive since his grandparents owned the land in the 1950s. The owner of the well has changed multiple times, but has never been motivated to clean it up, in part because there are no time limits in Alberta as to how long a well can sit dormant.

It is often more economical to continue to pay lease rates to a landowner than to pay to plug and reclaim a well, the cost of which can be tens or hundreds of thousands of dollars. 

It seems obvious that the well on Bruder's land is never going back into production, but how many other wells in Alberta are in the same situation?

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Higher oil prices not the answer

An economist at the University of Calgary has produced a report that tries to calculate what it would take to get those wells back to work. Lucija Muehlenbachs found that even if oil prices were to increase by 200 per cent, only 12 per cent of the inactive wells would be brought back into production.

"They're allowed to be inactive because you don't want to cut off the productive life of these wells," said Muehlenbachs. "In case prices go up or in case technology changes, something that allows them to be reactivated." 

But she found that "prices could skyrocket or recovery rates could increase and still we don't see a lot of them being reactivated."

Tighter timelines in U.S.

Across the border in the United States, there are no jurisdictions that allow inactive wells to sit indefinitely. In Texas, the limit is six months, although companies can apply for unlimited extensions. In North Dakota, which does not have an abandoned well problem, the limit is 12 months and companies can apply for just one extension of up to two years.

"We've got to get to, as other jurisdictions have, a regulated timeline," said Barry Robinson, a lawyer with EcoJustice, who represents landowners like Bruder.

"If your well doesn't do anything for five years, you have to abandon it and reclaim it. It's especially irking that after abandonment, there's no reason not to reclaim immediately. You're not coming back, the well is gone, you might as well be reclaiming in a year or two."

Muehlenbachs agrees. "The reasoning behind leaving a well inactive, if it is to allow for recovery in the future, the study shows that's probably not going to happen."

Inactive wells are regulated by the Alberta Energy Regulator. However, in a statement, the AER said that time limits are not under its control, but are the responsibility of the provincial government.