The Alberta government announced March 2 a $100 million loan to the Orphan Well Association for use in reclaiming abandoned oil and gas well sites. A repayment schedule is still being developed.
The move is expected to create up to 500 direct and indirect jobs in the oil services sector, according to a government news release.
The loan should enable the OWA to decommission about 1,000 orphan wells and start more than 1,000 environmental assessments on other sites preparatory to reclamation, the government said.
An orphan well is one that does not have any legally responsible or financially able party to conduct reclamation. Reclamation involves returning the site as much as possible to a state equivalent to what it was before it was disturbed.
The OWA received a $235 million interest free loan in the past, which it started to repay in 2019 using money from the orphan fund levy it places against oil and gas companies.
The Orphan Well Association has 3,496 wells on its list that need decommissioning and about 2,900 sites awaiting reclamation. About 4,200 pipeline segments require decommissioning as well.
We’re getting Alberta back to work. As the first step in A Blueprint for Jobs, we’re extending the loan to the Orphan Well Association by up to $100M. It will create up to 500 jobs and help reduce the number of orphan wells across Alberta: https://t.co/S49QGqp7ks #ableg #abbudget pic.twitter.com/RIsVplDXYy
— Alberta Government (@YourAlberta) March 2, 2020
The issue of orphaned and abandoned oil and gas wells is a concern among farmers, ranchers and other rural landowners because of potential land contamination, weed encroachment and hazards related to infrastructure sitting unused on private land.
“By staying on top of the orphaned well inventory, we’re helping to ensure a sustainable energy industry in Alberta,” said OWA executive director Lars De Pauw in the news release.
“The Orphan Well Association continues to increase our efficiencies while also increasing the number of sites we are addressing. This loan will help us further these efforts while helping Alberta’s service sector and reducing the impact on affected landowners.”