Alberta to Maintain, Sell Oil Wells Orphaned by Owners

Alberta’s legislature passed a bill to expand the government’s power to maintain, sell, or close oil and gas well that have lost their owners to bankruptcy.

Bill 12, the Liabilities Management Statutes Amendment Act, received final approval from the legislature Thursday. It must still to go through the formality of receiving royal assent from the lieutenant governor to officially become law, a process that normally takes a few days.

The legislation was fast-tracked in recent days because it will provide jobs as Alberta struggles from the economic effects of the global oil price war and the new coronavirus outbreak, House Leader and Environment Minister Jason Nixon said March 31.

The bill will give vast new powers to the Alberta Energy Regulator and the Orphan Well Association, an industry-funded body directed by the regulator, to help tackle the province’s rising number of wells without owners, or orphan wells.

Alberta has given the association C$335 million ($237 million) in loans over the past three years to help it weather the increase. There are 6,353 orphan wells at various stages of the decommissioning and reclamation process, according to the association’s website.

Keeping Wells From Being Orphaned

Under the new act, the association will begin managing producing wells through their life cycle and be able to sell them to oil and gas producers, a technical briefing document from Alberta Energy says. The association currently focuses only on shutting down wells and reclaiming the land around them.

The new powers will keep wells from being orphaned in the first place, the document says.

The legislation also allows the association to go to courts during insolvency proceedings so that would-be orphan wells can be sold to other companies, Kavi Bal, spokesman for Energy Minister Sonya Savage, wrote in an email Thursday.

The federal government is currently preparing an economic support package for Canada’s oil and gas sector that could include measures to expand work on orphan wells, but officials have not given a timeline for its announcement.

Bill 12 will help implement the incoming federal package and an update on talks between the governments could come within days, Nixon said March 31.