Alberta Has Not Ruled Out Asking For Help With Orphan Oil, Gas Wells

Reuters

CALGARY, Alberta, March 17 (Reuters) - The Canadian crude-producing province of Alberta has not ruled out asking the federal government for funding to clean up orphan oil and gas wells, the provincial government said on Thursday, although no formal request has yet been made.

Alberta Energy Minister Marg McCuaig-Boyd said the province would welcome financial assistance for well reclamation but that specific funding requests so far were related to support for pipeline approvals, infrastructure projects and extensions to employment insurance for unemployed Albertans.

"If the federal government is interested in helping clean up the environment and put people back to work by funding the cleanup of those wells, we would welcome that," she said.

The issue of orphan wells - which are inactive and have no legally responsible owner - faces increasing scrutiny in Alberta, the No. 1 exporter of crude to the United States, as the global oil price slump forces more producers to shut in uneconomic wells and pushes some into bankruptcy.

There are about 700 orphan wells in Alberta. The financial burden of decommissioning them is shouldered by the industry-funded Orphan Well Association, which saw the number of wells under its care quadruple last year.

In addition, there are an estimated 75,000 to 80,000 inactive wells in the province, some of which have been temporarily suspended because they are uneconomic at current prices, and others that have not produced for years.

Alberta has been battered by weak oil prices as companies slashed investment, suspended new projects and laid off tens of thousands of workers, and the concern is the number of orphan wells could spike as more companies go out of business.

Earlier this week, the Petroleum Services Association of Canada asked the federal government for C$500 million ($384.85 million) in funding for well decommissioning in Alberta to help support employment and retain skilled workers.

PSAC Chief Executive Mark Salkeld said about 10 to 15 percent of the 75,000 inactive wells in the province could be decommissioned for good.

"It has the potential to put thousands of people back to work, not just rig crews but cementing, logging, wire line crews, all the services required to properly decommission a well," he said.

The request echoes a recent call by Saskatchewan Premier Brad Wall for C$156 million to fund a two-year reclamation program in his province that could reclaim 1,000 inactive wells and create 1,200 jobs. ($1 = 1.2992 Canadian dollars)

(Reporting by Nia Williams; Editing by Peter Cooney)

Copyright 2016 Thomson Reuters. Click for Restrictions.

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