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

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Communications

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• As the number of orphan wells increase, so does the expected cost for cleaning up environmental liabilities. Our estimated cost of cleaning oil and gas wells, on a national level, is expected to rise from 361 million in 2020 to 1.1 billion by 2025.

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{"id":26,"created_at":"2022-01-24T17:01:23-05:00","updated_at":"2022-01-25T08:59:07-05:00","slug":"pbo-estimates-that-the-cost-of-orphan-well-clean-up-will-reach-11-billion-by-2025-le-dpb-estime-que-les-couts-des-puits-orphelins-atteindront-11-milliard-de-dollars-dici-2025","title_en":"PBO estimates that the cost of orphan well clean-up will reach $1.1 billion by 2025","title_fr":"Le DPB estime que les co\u00fbts des puits orphelins atteindront 1,1 milliard de dollars d\u2019ici 2025","body_en":"The Parliamentary Budget Officer (PBO) today released an independent estimate of the cost of cleaning Canada\u2019s orphan oil and gas wells. The wells are mainly located in Alberta and Saskatchewan. Plugging wells protects underground and surface waters and avoids greenhouse gas emissions.\n\nProvincial regulators require oil and natural gas companies to close inactive well sites. In cases where there is no known, financially viable operator capable of addressing the environmental liabilities associated with closing their wells, these wells are deemed orphaned. In Alberta, the number of orphaned wells has increased from 700 in 2010 to more than 8,600 in 2020, while in Saskatchewan it has increased from roughly 300 wells in 2015 to 1,500 in 2020. Most of this growth occurred in the last 5 years, with an average growth rate of 35 per cent per year. We estimate that more than 10,000 wells could become orphaned over the next five years, resulting in a total of almost 18,000 wells that would be deemed orphaned.\n\n\u201cAs the number of orphan wells increase, so does the expected cost for cleaning up environmental liabilities. Our estimated cost of cleaning oil and gas wells, on a national level, is expected to rise from 361 million in 2020 to 1.1 billion by 2025\u201d says Yves Giroux, PBO. \u201c\n\nIn 2020, the federal government provided $1.7 billion to the governments of Alberta, Saskatchewan and British Columbia to fund the clean-up of inactive oil and gas wells, which suggests there should be sufficient funds to cover the liability. However, recent experience indicates that close to half of the funds in Alberta were disbursed to clean up wells owned by companies that are financially viable. If this trend of helping viable companies persist, existing funding could be insufficient to clean up wells that are orphaned.","body_fr":"Le directeur parlementaire du budget (DPB) a publi\u00e9 aujourd\u2019hui une estimation ind\u00e9pendante du co\u00fbt de nettoyage des puits de p\u00e9trole et de gaz orphelins du Canada. La plupart de ces puits se trouvent en Alberta et en Saskatchewan. Leur fermeture permet de prot\u00e9ger les eaux souterraines et de surface, et de r\u00e9duire les \u00e9missions de gaz \u00e0 effet de serre.\n\nLes organismes de r\u00e9glementation provinciaux exigent des soci\u00e9t\u00e9s p\u00e9troli\u00e8res et gazi\u00e8res qu\u2019elles ferment les sites de puits inactifs. Dans les cas o\u00f9 il n\u2019y a pas d\u2019exploitant connu, financi\u00e8rement viable ou capable de s\u2019acquitter des responsabilit\u00e9s environnementales associ\u00e9es \u00e0 la fermeture des puits, ceux-ci seront consid\u00e9r\u00e9s comme orphelins. En Alberta, le nombre de puits orphelins est pass\u00e9 de 700, en 2010, \u00e0 plus de 8 600 en 2020, tandis qu\u2019en Saskatchewan, il est pass\u00e9 d\u2019environ 300 puits en 2015 \u00e0 1 500 en 2020. La majeure partie de cette hausse s\u2019est produite au cours des cinq derni\u00e8res ann\u00e9es, \u00e0 un rythme moyen de 35 % par ann\u00e9e. Selon nos estimations, plus de 10 000 puits pourraient devenir orphelins dans les cinq prochaines ann\u00e9es, ce qui ferait passer leur nombre total \u00e0 pr\u00e8s de 18 000.\n\n\u00ab Plus le nombre de puits orphelins augmente, plus le co\u00fbt pr\u00e9vu pour le nettoyage et le respect des responsabilit\u00e9s environnementales augmente. Nous estimons que le nettoyage des puits de p\u00e9trole et de gaz, \u00e0 l\u2019\u00e9chelle nationale, passera de 361 millions de dollars en 2020 \u00e0 1,1 milliard de dollars d\u2019ici 2025 \u00bb, indique Yves Giroux, DPB.\n\nEn 2020, le gouvernement f\u00e9d\u00e9ral a vers\u00e9 1,7 milliard de dollars aux gouvernements de l\u2019Alberta, de la Saskatchewan et de la Colombie Britannique pour les aider \u00e0 nettoyer les puits de p\u00e9trole et de gaz inactifs. Il devrait donc y avoir assez d\u2019argent pour respecter les responsabilit\u00e9s environnementales. Mais d\u2019apr\u00e8s ce qui a \u00e9t\u00e9 observ\u00e9 r\u00e9cemment, pr\u00e8s de la moiti\u00e9 des fonds d\u00e9bours\u00e9s en Alberta ont servi \u00e0 nettoyer des puits appartenant \u00e0 des soci\u00e9t\u00e9s financi\u00e8rement viables. Si cette tendance se poursuit, les fonds actuels risquent d\u2019\u00eatre insuffisants pour nettoyer les puits orphelins.","release_date":"2022-01-25T09:00:00-05:00","is_published":"2022-01-25T08:59:07-05:00","internal_id":"COM-2122-026","permalinks":{"en":{"website":"https:\/\/www.pbo-dpb.ca\/en\/blog\/news-releases--communiques-de-presse\/pbo-estimates-that-the-cost-of-orphan-well-clean-up-will-reach-11-billion-by-2025-le-dpb-estime-que-les-couts-des-puits-orphelins-atteindront-11-milliard-de-dollars-dici-2025"},"fr":{"website":"https:\/\/www.pbo-dpb.ca\/fr\/blog\/news-releases--communiques-de-presse\/pbo-estimates-that-the-cost-of-orphan-well-clean-up-will-reach-11-billion-by-2025-le-dpb-estime-que-les-couts-des-puits-orphelins-atteindront-11-milliard-de-dollars-dici-2025"}},"pivot":{"publication_id":641,"news_release_id":26}}