Trudeau Government Commits $2 Billion To The Energy Sector Creating 10,000 Well Paying Jobs For Canadians
Canada’s Energy Sector
Canada’s energy sector is facing significant challenges as it is dealing simultaneously with a surge in global crude oil supply and a decline in demand as a result of the broad economic slowdown brought on by the COVID-19 pandemic.
To support Canadians working in the energy sector through these challenges the government will take new targeted actions totalling more than $2 billion to create and protect jobs and important environmental benefits, as well as make available new tailored credit solutions for small and medium-sized companies in the sector. The targeted actions are expected to retain and create approximately 10,000 well-paying jobs in the sector.
Orphan and Inactive Oil and Gas Wells
Orphan oil and gas wells arise when the developers cannot be located or do not have the financial means to pay for proper decommissioning and site remediation.
There are currently about 4,700 orphan wells in Alberta, 600 in Saskatchewan, and 350 in B.C. In Alberta, these wells fall under the custodianship of the Alberta Energy Regulator, which delegates its responsibility to clean up those wells to the OWA, a non-profit organization.
In Saskatchewan, orphan wells are managed by the Orphan Fund Procurement Program, which is administered by Saskatchewan’s Ministry of Energy and Resources. In B.C., orphan wells are managed by the Liability Management Branch of the B.C. Oil and Gas Commission.
Inactive oil and gas wells are formerly producing wells. At present, there are approximately 91,000 inactive wells in Alberta, 36,000 in Saskatchewan, and 12,000 in B.C.
Proper well clean-up involves two steps:
- Well abandonment requires sealing and capping wells to prevent any subsurface gas or liquids from leaking below or above ground.
- Site reclamation involves removing all associated site facilities, remediating any contaminated soil or groundwater and returning the site to its original condition.
Clean-up costs can range between $100,000 to several million dollars per well depending on the complexity and size of the well or facility and the amount of contamination that is present.
Clean up work is typically carried out by small and medium-sized oil and gas service firms. Those firms employ nearly 60,000 people across the three provinces. Clean-up work would be considered an essential service under the government’s Guidance on Essential Services and Functions in Canada During the COVID-19 Pandemic.
- Up to $1 billion to the Government of Alberta to support the province’s work to clean up inactive oil and gas wells across the province;
- Up to $400 million to the Government of Saskatchewan to support work to clean up orphan and inactive oil and gas wells across the province;
- Up to $120 million to the Government of British Columbia to support work to clean up orphan and inactive oil and gas wells across the province; and
- $200 million to the Alberta Orphan Wells Association (OWA) to support its work to clean up orphan oil and gas wells and well sites across Alberta. The OWA will fully repay this amount.
As part of this funding, local landowners will have the ability to nominate and prioritize wells for remediation, and funding will be prioritized to companies that are in good standing with respect to municipal taxes.