The Cost of Abandoned and Orphaned Wells

Canada contains over 127,992 inactive or orphaned wells just across three of its provinces. Alberta contains the most with over 91,000 inactive and 9,992 orphaned wells. Following behind, Saskatchewan contains 24,000 inactive or abandoned wells and British Columbia has around 10,000. These abandoned wells are raising many concerns as the aging wells impose risks of polluting the soil and water of ranches, farms, and forests that exist on old well sites.

Industry standards require that companies must pay for the clean up of wells that are not currently in use. The company that owned the site would remain reasonable for the site until the area has been completely reclaimed. Although, in recent years there has been a downward trend in the use of fossil fuels, while instead prioritizing in a cleaner energy source. Because of this, some companies have gone bankrupt and can not cover the high costs of clean up, creating an orphan well.

The cost associated with cleaning up inactive or abandon wells is extremely high, especially for Alberta, where the clean up costs are as high as $260 billion. British Columbia and Saskatchewan have estimated costs of $3 billion and $4 billion. These numbers are alarming, but those costs lay in the company’s hands. Orphan wells on the other hand no longer have any parties responsible for cleanup, where the costs associated are extremely high. The International Institute for Sustainable (IISD) Development states Alberta’s orphan wells cleanup cost, “a staggering $100 billion, but the actual amount to clean up Alberta’s oil patch could be much higher”. This puts the Canadian Government in charge of the cleanup and the costs, instilling frustration in many Canadian citizens.

Much of the animosity from the citizens comes from the fact that their taxes will be raised to pay for the cleanup, instead of the companies who are responsible. To make matters worse, the inactive wells already pose massive threats to the surrounding communities well-being and health, such as ranchers and farmers who are stuck with wells that leak contaminants on their soil. Due to this, it is crucial that the oil industry must remain responsible for the liabilities.

If the liabilities are left up to the government to handle, they will bail out oil and gas companies that have profited off Canada’s public resources without funding any cleanup, essentially making oil and gas companies free riders. To curb this behavior, the government can apply the “polluter-pays” principal which places the liabilities back on to the companies at fault. Even if the companies are bankrupt, former owners of the well will take on the responsibility of cleaning up the mess that was made. 

Works Cited

https://www.iisd.org/articles/who-will-pay-albertas-orphan-wells