It’s About Time: Reclamation and managing cumulative effects require quick action

It’s About Time: Reclamation and managing cumulative effects require quick action

12/3/2009

Published in Alberta Oil Magazine December 2009-January 2010

By Jason Unger

It is a sequence of events that has played out thousands of times in Alberta. A surface lease is obtained. Provincial authorizations are acquired. A well is drilled and (hopefully) produces. The well ages, runs down and is suspended. In some instances, where there is a determination that no more oil or gas can be efficiently produced, the well is abandoned.

Once abandoned, liabilities related to the surface lease and reclamation and remediation requirements remain with the operator, until such time that a reclamation certificate is issued and the surface lease expires or is terminated.

The timing for abandonment of the well site and reclamation of the lease is largely left to the discretion of the operator. In some instances, the timeline between abandoning a suspended well and reclaiming an abandoned well can stretch into years (if not decades). This lag has resulted in some landowners turning to the courts in an effort to force abandonment and reclamation. In contrast, other landowners wish to preserve their monthly lease payments and are interested in maintaining the status quo of not reclaiming the well sites.

The cumulative annual abandonment statistics published by the Energy Resources Conservation Board indicates 46,945 well sites sit abandoned as of July 2009. Of those, 2,789 were abandoned in the previous year.

The length of time that the other 44,156 wells have been in their abandoned state was not readily available. The cost of reclaiming and remediating these sites is difficult to estimate. But as time goes on, these expenses are likely to increase. The level of contamination at some sites, particularly older ones that used earthen pits and ponds for storing produced liquids, may require significant cleanup.

These abandoned sites contribute to the cumulative environmental effects on the Alberta landscape, by retaining the broad footprint of the wells and related facilities and facilitating ongoing access to areas that would otherwise be difficult to access. How is the province to tackle cumulative effects if the environmental impacts of the past are not addressed in a systematic and timely fashion?

Addressing these accumulated impacts quickly has not garnered attention in terms of altering policies and laws. This is, in large part, due to there being limited appetite for timely reclamation of sites among many landowners and operators. Depending on the environmental condition and reclamation requirements of the lease, this delay may suit many companies just fine, as it defers significant costs for reclamation.

Landowners who want timely abandonment and reclamation have few legal means to force this to occur. For well sites on public (Crown) land, there appear to be few barriers to timely reclamation, other than operator resistance to having enforceable timelines.

Placing timelines on reclamation is not a novel concept. Several jurisdictions have placed regulatory time limits to recover or reclaim specific lands. Colorado, for instance, requires removal of surface equipment within three months of plugging a well. On crop land, well sites, access roads and associated production, facilities must be “closed, graded and recontoured” within three months. The same must occur for non-crop land within 12 months. Disturbed areas that are no longer in production must be reseeded in the first favorable season. Extensions may be granted where there are extenuating circumstances.

Pennsylvania requires an owner or operator to “remove all production or storage facilities, supplies and equipment and restore the well site” within nine months after plugging a well. Pennsylvania is also pursuing a plan to force the abandonment of hazardous wells that are suspended unless operators take the initiative by taking steps to put problem wells back into production.

As the Alberta government seeks to manage the cumulative effects of development, timely reclamation of well sites and related facilities should be at the top of the list. Pursuing reclamation and remediation in a timely fashion reflects good public policy to manage and minimize public liabilities related to these sites. Quickly restoring land to other beneficial uses makes economic sense and minimizes future liabilities falling to the public purse. In addition, timely reclamation will keep Albertans working, a goal espoused by the minister of energy in announcing an additional $30 million of public money for reclamation earlier this year.

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