Orphan wells cleanup funding 'a subsidy to industry,' says Alberta farmer
Daryl Bennett is grateful for the $1.7B fund, but says companies that abandoned the wells should foot the bill
The federal government says it will employ thousands of people to clean up abandoned oil and gas wells — but an Alberta farmer says the companies responsible for the mess should be the ones footing the bill.
Prime Minister Justin Trudeau announced on Friday $1.7 billion to clean up orphaned and abandoned oil and gas wells in Alberta, Saskatchewan and British Columbia, which he estimates will help create 5,200 jobs in Alberta alone.
"Our goal is to create immediate jobs in these provinces while helping companies avoid bankruptcy, and supporting our environmental targets," Trudeau said.
Taber, Alta., farmer Daryl Bennett, a surface rights activist representing landowners across the province, has long had an orphan well on his property. Here is part of his conversation with As It Happens guest host Piya Chattopadhyay.
What do you make of the federal government ponying this $1.7 billion up?
Let's make no mistake. It's a subsidy to industry.
Industry should have put the money aside to do this. So there's lots of executives of those companies that have left with millions of dollars of profits or more, and now they've left the taxpayer to foot the bill.
But society has benefited from the cheap oil and gas development, and it was taken on condition the landowners' lands would be reclaimed. So since society allowed the system to be abused, society has a responsibility to make sure these wells are cleaned up.
How far does the $1.7 billion go?
Well, they haven't really announced exactly how that money is being spent. We're assuming that they might be trying to put some of these sites into renewable energy. Some of the counties might be getting some money.
But if it all went to reclaiming wells, you're probably looking at an average $100,000 to $200,000 per well. So it'll do some wells, but it's certainly not going to solve the problem.
What are your fellow landowners saying about today's announcement?
There's lots of landowners that are happy that these wells will be cleaned up. They've been an eyesore on their lands. They've had weeds around them. They've been a safety hazard, a food safety hazard. So they do like seeing them get reclaimed.
Now, you say this money is coming from taxpayers, but the oil and gas companies that abandon the wells aren't rushing to clean them up. So how else was the problem going to be solved?
Industry was supposed to pay a levy sufficient to reclaim these wells. So, you know, a lot of these companies have gone bankrupt. They've privatized the profits and they've left. And now it's left to the taxpayer or the remaining companies to to pay for the cleanup.
So the system was supposed to ensure that the polluter paid. That system was abused. It was not enforced. And now it's left to the taxpayer
You used the word "abused" there. ... What what exactly do you mean by that?
A lot of these sites have sat there for 30, 40 years. Our landowner associations have been telling government that this was a problem waiting to happen for 20 years. And so they didn't enforce any timelines on when these wells should be reclaimed.
So these companies now have learned that they can abuse a system. They don't have to pay the landowner. They don't have to pay the property tax. And now it appears they don't have to pay to reclaim the land either.
That's a pretty good business model when you're allowed to suck the resources out and not have to pay any of the environmental or social liability costs for doing so.
With more job losses and companies going bankrupt, more orphan wells, what can your province, the province of Alberta, do to force these companies to take responsibility for these abandoned wells?
They probably can't do anything now with the low oil prices. A lot of them aren't even paying the property taxes. They're not paying the orphan well levies. They're not paying the annual rentals. They don't have the money.
If they were forced to pony up the money, they'd all go bankrupt. So it's a catch- 22 situation. The horse is out of the barn.
They should have addressed this a few years ago when oil was $100 a barrel, but they didn't. And now the money's not there. And subsequently, it's left to the taxpayer to foot the bill.
Oil and gas has seen a steep downturn even before COVID-19 came along. Is the orphan well problem about to get worse?
Yes, it is about to get worse.
The prime minister says this project will put 5,200 people back to work in Alberta alone. The Canadian Association of Petroleum Producers is expecting about 10,000 jobs to be created out of this announcement today. How big of a deal is that announcement in Alberta?
It's huge for Alberta. Our economy is way down. A lot of workers in these oil companies have been put out of work. Now they'll at least have a job and they'll be able to pay taxes.
What kind of workers do you expect will be doing the cleanup?
Well, that's interesting, because we've heard that a lot of the contractors that put the wells in are now the ones being hired to take the wells out. And we do know there are some abuses in the system. And we've let the Orphan Well Association know that some of that is occurring.
But it's a lot of the oil service companies that have had to lay off people that will now be able to hire them back and put them to work in reclaiming these wells.
How soon do you expect crews to be on your property cleaning up that orphan well of yours?
The Orphan Well Association has been doing a very good job.
They were about to run out of money in the next two years because the provincial money was going to run out and they're just wondering what they're going to do.
So this $1.7 billion will allow them to continue to operate as they have been, and to do a little bit more than they have been doing.
Written by Sheena Goodyear with files from CBC News. Interview produced by Jeanne Armstrong. Q&A has been edited for length and clarity.
- An earlier version of this story stated that the federal government pledged $1.7 million to clean up orphaned and abandoned oil and gas wells. In fact, the funding totals $1.7 billion.Apr 20, 2020 12:23 PM ET