Oil companies could avoid well cleanup costs by installing solar panels: report

Oil well. (File)

Oil and gas companies could avoid full reclamation of old well sites in Alberta if they put renewable energy projects on the disturbed land.

That’s one of several dozen ideas offered in a new report commissioned by the Alberta government.

The report looks at how to manage the province’s persistent oil and gas pollution problem, and contrasts sharply with moves by the same government to restrict renewable energy following a seven-month moratorium, and ensure companies provide full clean-up costs upfront for wind and solar projects.

The report, written by current Alberta Energy Regulator board member and long-time industry insider David Yager, says oil and gas well sites could be “utilized for solar power generation instead of undergoing full reclamation, delivering both environmental and economic benefits.”

Critics say the idea contradicts other government policies, especially around renewables, which could make it unrealistic.

“They justified that moratorium and the restrictions on the basis of end-of-life cleanup. Now they’re saying that, in a way, renewables could be used to help the oil and gas industry avoid its reclamation,” Phillip Meintzer, a spokesperson for the Coalition for Responsible Energy, said in an interview.

“Would someone even be allowed to put renewables on these well sites because of the restrictions that were put in place? I don’t know,” he said. The coalition, made up of environmental organizations, focuses on energy regulation.

It’s unclear how much remediation a company could avoid by installing renewables on its leases, which is only one of many recommendations and ideas presented in the report.

Meintzer wants more details to understand what’s on the table and just how much cleanup a company could avoid.

Meintzer says this organization focuses on ensuring the polluter pays principle — the idea that a company is responsible for cleaning up the mess it leaves behind — is upheld and costs are not downloaded onto taxpayers.

“Companies have been able to profit off of these assets, and this risks them dodging the responsibility for cleanup and pushing it onto us,” he said.

‘A narrow focus on keeping companies and wells profitable’: rural municipalities association

Renewable projects have been curtailed in Alberta since the government made a surprise announcement in 2023 that it was suspending all new approvals for seven months.

Once that moratorium was lifted, the government imposed restrictions on where projects could be located, barring installations on prime agricultural land or in what the government dubbed “pristine viewscapes.”

The Alberta government also put in new rules to ensure renewable companies cover their reclamation obligations through security deposits — something not required of oil and gas companies.

An official with the energy ministry, speaking on background, said the idea of solar installations on old sites was raised by groups who wanted to take over leases from oil and gas companies, particularly on sites with small gas plants.

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The official said the companies taking over the leases for solar installations would assume the reclamation costs. They would also require landowner consent.

It’s not just environmental groups that have taken issue with Yager’s report, which is formally called the Mature Asset Strategy.

In a news release, Kara Westerlund, president of Rural Municipalities Alberta, said her organization supports a strategy that both supports industry and addresses liabilities.

Inactive wells — sites that aren’t producing oil or gas and haven’t been properly sealed — are a significant problem in Alberta.

Even after a five per cent reduction in the number of those wells, according to the latest report from the regulator, there are still almost 80,000 across the province.

“Unfortunately, what (Rural Municipalities Alberta) has witnessed throughout the mature asset strategy process and in the final report is a narrow focus on keeping companies and wells profitable at any cost to other stakeholders, with no corresponding industry accountability, or consideration of impacts on everyone else,” Westerlund said.

Some proposed ideas could ‘weaken the integrity’ of Alberta’s environmental policies: expert

Putting solar installations on old oil and gas sites is just one of several ideas around repurposing old energy leases. Others include natural gas micro-generation, geothermal wells and lithium extraction operations, all of which would require new regulations.

The report says focusing on provincial demand for natural gas electricity could help drive up prices and help producers. The report does not address the impact to consumers.

It also considers whether carbon offset credits or tapping into the fund collecting the province’s industrial carbon tax — known as the Transmission Innovation and Emissions Reduction (or TIER) regulation — could help oil and gas companies meet their obligations.

“I think using the emissions reduction regulation to deal with the issue of a bunch of aging oil and gas infrastructure has the potential to weaken the integrity of both of those approaches,” Janetta McKenzie, director of the oil and gas program at the Pembina Institute, said.

The carbon price is meant to financially incentivize companies to reduce emissions and make producing emissions pricey enough that companies reduce them voluntarily, and the funds are to be used for decarbonization projects.

McKenzie, like Meintzer, pointed to a lack of details in the report and how the ideas would be implemented.

“The strategy has a lot in it,” she said. “The details are missing from a lot of them as to how they would work in practice, or sort of what we would (need to) get from A to B.”

Total costs to clean up old oil and gas sites in tens of billions

The cost of cleaning up all the oil and gas liabilities littered across the landscape is officially $36 billion, according to the Alberta Energy Regulator, but could be significantly higher. That figure does not include the oilsands.

The Yager report says there are 274,215 wells that are either marginally active, inactive or sealed but not yet fully reclaimed, plus 54,000 wells that are currently producing at a higher capacity.

The Alberta Energy Regulator introduced new systems to try to deal with the liability issue in 2021 and has issued two annual reports into progress made under its new liability management framework, but the Yager report calls into question its effectiveness.

It says the new closure liability framework is “very rigid” and creates “hurdles for smaller operators.”

Suggestions ‘not universally welcomed’: report’s author

Yager noted the challenges of introducing a new process in his introduction to the report, saying public trust has been broken and industry is wary.

“In an industry and province characterized by continuous change and uncertainty, the prospect of further changes as outlined in the (mature asset strategy) process was not universally welcomed,” he wrote.

The energy ministry official said they like the ideas in the report that are directly within the ministry’s control, but many of the proposals would require cross-ministry collaboration and likely several pieces of new legislation to bring forward most of the changes.

It’s unclear how many recommendations, if any, the United Conservative Party government will accept, or when. The report, which highlights the premier’s support, was officially released on April 3.

“I think the onus is now on the government and on the Alberta regulator to indicate very, very clearly how what’s been proposed here could lead to a reduction or a better management of this aging infrastructure without putting the burden of reclamation onto taxpayers,” McKenzie said.

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This story is available for use by Canadian Press clients through an agreement with The Narwhal. It was originally published in The Narwhal, a non-profit online magazine that publishes in-depth journalism about the natural world in Canada. Sign up for weekly updates at thenarwhal.ca/newsletter.

Drew Anderson, The Narwhal