The idea of putting federal money toward cleaning up old oil and gas wells continues to gain support.
Last month, Saskatchewan Premier Brad Wall pitched a request for $156 million in federal funding, to clean up non-producing wells in his province. Then this week, an energy industry group, the Petroleum Services Association of Canada, announced it has asked Ottawa for $500 million in infrastructure dollars, to clean up inactive oil and gas wells.
Alberta Energy Minister Marg McCuaig-Boyd threw her support behind the PSAC’s request, saying, “Good on them. That is one way to get Albertans back to work in the interim and it isn’t unprecedented.”
McCuaig-Boyd was referring to the $30 million the Alberta government contributed to cleaning up orphan wells during the last economic downturn in 2009.
We’ll have to wait and sift through to see if the Trudeau government’s first federal budget, which was announced Tuesday, contains any money for such a proposal, but after Wall made his pitch in early February, Canadian Natural Resources Minister Jim Carr said there was a possibility Ottawa could help pay for such work. Carr noted while restoring habitat around inactive wells is the responsibility of the energy companies, he acknowledged the government is well aware of the need to restore jobs to regions hard hit by slumping oil prices.
The call for federal help to deal with these wells has merit. For one thing, when an oil company goes bankrupt, abandoned wells have no one to look after the rehabilitation process. Alberta reportedly has 700 such wells, and a Saskatchewan government spokesperson told Reuters it anticipates that 1,000 wells will be abandoned in addition to the 100 already-abandoned wells.
Wall said the federal program to assist with well cleanup could result in 1,200 jobs, direct and indirect, in the oil and gas support sector — jobs that are needed in view of the layoffs that have hit the oilpatch during the fall in oil prices.
McCuaig-Boyd also pointed to the jobs aspect of the idea.
“I think we could put a lot of folks to work in a fairly quick time because the skills are out there right now and it is an issue that needs to be dealt with,” she said.
In all, Alberta has some 75,000 wells that are no longer producing and $500 million would cover only a fraction of the work necessary to decommission that many wells, according to a Canadian Press story.
But it would be a start, and as the proponents note, it would create jobs – jobs that are badly needed in the oilpatch right now, and for Alberta’s economy as a whole.
If the federal government has room in its 2016 budget for this proposal, it could be money well spent.