Canada's orphan oil and gas well problem runs a billion dollars deep
CTV
Canadian companies are spending public funding to clean up their oil and gas wells at a time when the industry is raking in historic profits, yet many wells remain abandoned or unplugged. As the number of these wells rises, so do the environmental costs and the likelihood that taxpayers will be on the hook for them.
Some Canadian companies are spending public funds to clean up their oil and gas wells at a time when the industry is raking in historic profits, yet many wells remain abandoned or unplugged, raising concerns about environmental and health impacts on communities.
As the industry prepares to reinvest the profits from 2022, advocates say not enough is being done to ensure the companies, not taxpayers, cover the cost of remediating and reclaiming wells.
"We haven't been doing it properly for so long now, we're at this kind of crisis moment where we have so much that needs to be cleaned up, and not enough action happening," Vanessa Corkal, policy analyst with the International Institute for Sustainable Development (IISD), told CTVNews.ca in an interview.
And as the number of unplugged, abandoned and orphaned wells rises, so do the opportunity costs, environmental costs and the likelihood that governments will need to spend increasing amounts of money to fund their cleanup, Corkal said. Then, there are the under-studied health implications for people living near wells.
The factors contributing to the issue go beyond any single good or bad financial year for the industry, experts say, and solving the problem will take the co-operation of the industry, regulators and the provincial and federal governments.
Most – 91 per cent – of the onshore oil and gas wells dug in Canada are located in Alberta and Saskatchewan. Of the Prairie provinces' 600,000 wells, only 35 per cent in Alberta and 39 per cent in Saskatchewan were actively producing oil and gas as of 2020, according to a 2022 report by Canada's Parliamentary Budget Officer (PBO).
The same report found there has been a significant increase in the number of inactive and unplugged wells in Alberta and Saskatchewan over the past decade.
