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Alberta auditor general gives qualified thumbs-up to oil well cleanup spending

At the end of 2021, there was $420 million left to spend
A pumpjack works at a well head on an oil and gas installation near Cremona, Alta., Saturday, Oct. 29, 2016. THE CANADIAN PRESS/Jeff McIntosh

The Alberta government is getting mostly check marks from the province’s auditor general over how it handled the billion dollars it got from Ottawa to clean up abandoned oil and gas wells and get service contractors back to work.

Doug Wylie said in a report tabled Tuesday that the Site Rehabilitation program was well run and created 2,800 jobs at a time when they were badly needed, but the government wasn’t ready for how quickly things in the energy industry change.

The program began in 2020, when oil prices were so low they briefly dipped into negative territory. They’ve now shot back up to the $100-range.

That has changed the priorities of energy companies, Wylie said.

“Less on closure, more on production.”

Priorities shifted so quickly that the program may not be able to give away all its money. At the end of 2021, there was $420 million left to spend.

Applications for the program close this month.

Wylie also criticized the province for not publishing the number of wells the program has cleaned up. Other jurisdictions that got federal money, such as British Columbia and Saskatchewan, all have, he said.

“We think that’s important.”

Alberta Energy spokesman Alex Puddifant said the program has seen more than 18,000 sites approved for abandonment work and 9,000 for reclamation.

“The Site Rehabilitation Program is successfully doing what it was intended to do: put Albertans to work by speeding up well, pipeline, and site closure efforts across the oil and gas sector,” he said.

Alberta has a major problem with abandoned, orphaned or otherwise unreclaimed wells from decades of energy activity. A recent report from the Alberta Liabilities Disclosure Project estimated there are 300,000 of them.

Regan Boychuk, who helped write that report, called the auditor general’s report too narrow.

It doesn’t deal with which wells were cleaned up, where they were cleaned, how well the work was done or which companies benefited. Previous studies have found the lion’s share went to some of the Alberta oilpatch’s biggest and most profitable players.

“It’s disappointing to see this narrow focus,” said Boychuk.

Wylie said those concerns would be addressed by different actors. The Alberta Energy Regulator, for example, is responsible for issuing reclamation certificates, he said.

—The Canadian Press

RELATED: B.C. tackles dormant oil and gas wells for COVID-19 industry jobs