B.C. audit blames 'gaps' in provincial law for growing oilpatch liabilities

Pumpjacks pump crude oil near Halkirk Alta

Pumpjacks pump crude oil near Halkirk Alta

The number of abandoned oil wells in British Columbia nearly doubled between 2007 and 2018 and funds collected from operators to cover cleanup costs for a growing number of orphaned wells are insufficient, the province's auditor general said in a report issued on Thursday.

In B.C., oil and gas operators are not required to decommission wells and restore well sites unless the BC Oil and Gas Commission explicitly orders them to do so to address specific safety or environmental issues on a case-by-case basis.

The audit says there are nearly 7,500 inactive oil and gas wells in B.C. that have not been properly decommissioned.

A Globe and Mail investigation previous year found about 20 per cent of all oil and gas wells in B.C., Alberta and Saskatchewan are inactive, and that there are 54,147 more idle wells in those three provinces than there were in 2005.

The OGC estimates that decommissioning inactive wells and restoring sites to pre-activity conditions will cost operators $3 billion, while Bellringer said the regulator is now on the hook for $55 million in cleanup liabilities for "orphaned" wells, whose owners have gone bankrupt or can not be located.

The B.C. OGC has previously committed to impose legislated timelines for cleanup of inactive sites by this spring. The companies had security deposits totalling about $3.2 million, leaving the oil and gas commission with $82.4 million in decommissioning costs.

"Of course, in the event there is no other source for that, it would indeed be the taxpayer", she said.

The oil and gas commission says the report covers a period from January 2015 to October 2018, but since then the B.C. government amended legislation giving the regulator more power to ensure clean-up of inactive well sites. The OGC anticipates that the number of orphan sites and associated restoration costs will continue to increase.

Bellringer said despite the changes, she's not yet convinced they are enough to tackle the problem.

The Oil and Gas Commission agreed with all the recommendations put forward in the report, including a recommendation to ensure the Oil and Gas Commission completes its work on regulations to ensure "operators decommission and restore wells sites in a timely manner".

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