After Oil Majors Sold 150K Dead/Marginal Wells To Duck Cleanup, Alberta Finally (Last Week) Said No
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It starts with a simple fact. In the last five years the Alberta Energy Regulator, which is funded by the industry, has watched cash-rich companies sell or trade off more than 150,000 inactive or uneconomic wells to small firms that didn’t have the financial ability to perform mandated well cleanups. That’s what changed last week. Under intense public pressure, the regulator finally refused to greenlight one such transaction.
The AER ruled that energy behemoth Shell couldn’t download its historic responsibilities for the closure, remediation and reclamation of hundreds of sour gas wells and processing plants onto a smaller company while only retaining lesser responsibility for extensive groundwater contamination. A flaw in the proposed deal, said the regulator, was that it had no way to know how much land and water Shell’s operations had poisoned. The “scope and extent of the contamination at the sites is not well known.” Nor could groundwater contamination be distinguished from other ongoing pollution at Shell’s aging sour gas plants.
“Shell is the polluter,” added the regulator, and also the operator under Alberta’s reclamation laws and “therefore required to conserve and reclaim the sites.” The ruling added, “Trying to manage and enforce different reclamation obligations amongst different approval holders would be inefficient, disorderly and extremely burdensome.”
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One more twist is that the Alberta Investment Management Corp. — the province’s embattled pension fund manager that just lost billions of dollars on the stock market — may lose billions more with investments in ailing oil and gas companies. How large are the wider stakes? Very large indeed. The regulator’s ruling comes amidst a toxic boondoggle in the extreme. In Alberta, the unfunded cost of cleaning up 400,000 wells, half of which are now inactive or uneconomic, is estimated to be $100 billion. Only an inadequate $229 million in security deposits has been set aside for the job. Someone’s got to pay up eventually. Companies, if they can, will stick citizens with the bill.
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https://thetyee.ca/News/2020/05/20/Shell-Game-Sour-Gas-Wells/
