Alberta’s headache of orphan oil wells

Alberta’s beautiful landscape is dotted with a lot of oil and gas wells.

A current list of them from the Alberta Energy Regulator (AER) runs to more than 16,000 pages, and there’s an estimated 620,000 of them in total.

They’re collectively a major contributor to Alberta’s economy, and the energy needs of North America and the world.

They can also be a major headache for the owners of the land they are situated on, especially when they’re no longer in use.

Confusing

“We have been on our farm since 2007 and are struggling to get the Orphan Well Association to manage the abandonment and to be honest we are not sure if we have taken all of the correct steps,” wrote Daviduck in an email to Alberta Farmer Express in September.

The Orphan Well Association (OWA) is an independent, industry-funded, non-profit organization that operates under the Alberta Energy Regulator (AER) to close orphaned oil and gas properties.

“We plan to retire to the city in the next 10 years and have a feeling that this abandoned well will affect the sale of our property and worse yet, the environmental impacts that may be further caused because the well has not been taken care of,” Daviduck wrote.

So what can people in similar positions to Daviduck do about unwanted wells on their properties?

The first step may be to learn the jargon. The world of oil and gas infrastructure is complex and involves very specific terminology, said OWA president Lars DePauw.

“Even just having a conversation about what an asset is and whether it’s inactive or abandoned, decommissioned, an orphan or a closure order with an active company is very complicated,” he said.

Ultimately, the owner — be it a company or a group of individuals — is responsible for a well. According to the OWA website at orphanwell.ca, a well is declared an orphan by the AER if it does not have a legally-responsible and/or financially-viable owner to deal with its attendant decommissioning and reclamation responsibilities.

Identifying the owner of a well can be a challenge for the AER.

“There’s a lot of fractional ownership in wells. There’s lots of… sites that are out there that aren’t orphaned and the responsible party is somebody else,” said DePauw.

The point where the AER declares a well an orphan is where the OWA comes in.

“If a company is no longer in existence and the energy regulator goes through and reviews the sites, those sites may be designated as orphans,” he said.

Well details are then entered into an orphan database accessible by the OWA, which notifies the landowner that there’s such a well on their property. It’s generally rare for landowners not to receive this notification. If they don’t receive it, the well in question is likely not an orphan.

However, there are cases where landowners don’t get this information, said DePauw.

“Part of the problem that we have is that not all of the land records are kept up to date. So sometimes it does take us time to figure out the landowner that we need to speak with.

“If it’s an orphan, we do give information to the landowner — not the occupant. So there’s some subtleties in there,” he said.

Triage

“Right now (Oct. 1) we’ve got 2,085 orphan wells that still need to be decommissioned,” said DePauw. “Decommissioning means to permanently seal and take a well out of service.”

Once this step is completed, remediation and reclamation of the site can begin. At this point, the well is considered “abandoned.”

The fact that “decommissioning” and “abandonment” mean the same thing in this context is admittedly confusing, said DePauw.

“‘Abandoned’ is a regulatory term and it’s not the best one if you look back on it. It’s a regulatory term for decommissioning.”

Remediation is the process of managing and removing contaminants. For example, contaminated soil may be hauled to a landfill while the former well site is replaced with clean soil.

Once remediation is complete, reclamation can begin. This process returns the land to how it looked and was used prior to oil and gas development. This may involve recontouring, replacing subsoil and reestablishing vegetation.

That last action can take up to five years or more. When it does, a detailed site assessment takes place to test its eligibility for a reclamation certificate awarded by the AER. Once received, the land can be used as it was prior to the presence of oil or gas facilities.

Contamination issues aren’t the only worries landowners face; a deserted well often goes hand-in-hand with an insolvent company. However, as frustrating as unpaid rent can be, do not look to the OWA to settle these issues.

The best step for farmers and other landowners that are owed surface payments is to contact the Land and Property Rights Tribunal (formerly the Surface Rights Board) by calling toll-free 310-0000, then 780-427-2444 or visiting surfacerights.gov.ab.ca.

Generally, the Land and Property Rights Tribunal is a quasi-judicial process, said DePauw. He recommends contacting the Farmers’ Advocate Office, which is considered a resource for rural Albertans negotiating with energy companies.

Information on the role of the FAO in this process is available at the Alberta government website at alberta.ca/compensation-bankruptcy-and-insolvency.

In the weeds

The OWA only manages well site weeds under specific circumstances, said DePauw.

“We do manage the weeds when it’s in a reclamation phase. It’s part of our ongoing reclamation work,” he said.

“But if the site is not in reclamation, we’re not legally responsible for the weeds.”

The OWA website adds this policy was introduced due to an “unprecedented” number of well sites declared as orphans.

“(This) has made it necessary to direct funding toward direct decommissioning and reclamation. This approach allows us to remove orphan sites from the landscape as quickly as possible,” reads the site.

There are some other circumstances in which the OWA will manage weeds. Reads the website, “We will control weeds prior to the reclamation stage only if we believe that failure to do so will significantly impact our pending reclamation program.”

Daryl Bennett, director with the Action Surface Rights Association, takes a dim view of this stance on weed maintenance.

“With an operator there that’s taking care of the site, the landowner shouldn’t have to go in and mow weeds and spray them and do tons of stuff.”

Landowners and others have another option for well closure in the provincial Closure Nomination program.

The program — managed by the AER — allows “eligible requesters” to nominate oil and gas wells and facilities that have been inactive or abandoned for at least five years for closure.

Reads an email from the AER, “An eligible requester can nominate a well or facility that meets the eligibility criteria by submitting a nomination form through the AER website. Sites that have been orphaned to the OWA and that meet the eligibility criteria can be nominated under this program.”

The following groups are considered eligible requesters:

• landowners,
• council of a band as defined in the Indian Act,
• Metis settlements,
• holders of dispositions under the Public Lands Administration Regulation,
• municipalities, and
• government ministers.

Since Daviduck sent the above letter, she has connected with the OWA and is currently working towards a solution to her predicament.