Estimated Cost of Cleaning Canada’s Orphan Oil and Gas Wells

Published: January 25, 2022
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Abstract

This report provides an independent estimate of the cost of cleaning Canada’s orphan oil and gas wells.

Highlights

  • As of 2020, roughly 36 per cent of all wells in Alberta and Saskatchewan are active, the lowest share in recorded history. Inactive and plugged wells make up roughly 37 per cent of all wells.

  • Provincial regulators require oil and natural gas companies to close inactive well sites. In the case where there is no known, financially viable operator capable of addressing the environmental liabilities associated with closing their wells, the wells under the company are deemed orphaned.

  • In Alberta, the number of orphaned wells has increased from 700 to more than 8,600 over the last 10 years.

  • PBO estimates the cumulative cost for orphan well clean-up, on a national level, to be $361 million as of 2020.

  • PBO estimates the cost of orphan well clean-up in Canada to reach $1.1 billion by 2025.

  • At face value, the $1.7 billion allocated by the federal government through the Covid-19 Economic Response should be sufficient to cover the estimated clean-up of inactive oil and gas wells in the medium term. However, current provincial allocations give rise to an outstanding risk in the medium-term that the projected liability could persist if funding continues to be allocated to firms that do not have acute financial risk.

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