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|Authors:||Duncan Kenyon, Nikki Way, Andrew Read, Barend Dronkers, Benjamin Israel, Binnu Jeyakumar, Nina Lothian|
|Publish Date:||October 2016|
|PDF Download:||[Landowners' Guide] [Landowners' Primer]|
|Pipelines and Other Infrastructure|
|Abandonment and Reclamation|
Closing Down and Reclaiming Wells
Well and Pipeline Abandonment and Related
Reclamation of Well and Other Sites
Operator Insolvency and Orphan Wells
|Compensation, Rights, and Hearings|
Oil and gas activity in the province is regulated by the Alberta Energy Regulator (AER).
A well is considered orphaned when there is no longer a company that’s legally or financially responsible for it. This can happen because a company has financial issues or the AER suspends the well licence. While the majority of wells in Alberta are not orphaned, an increase in companies declaring bankruptcy has led to an increase in orphaned wells. An orphaned well may be transferred to the authority of the Orphan Well Association (OWA) for suspension, abandonment and reclamation.
A farmer found an area on his newly-purchased land where he had to double-seed because crops would not grow properly. The previous landowner asked whether he had “found the spot where nothing will grow.” It turned out it was a well site that had been reclaimed. The new landowner investigated: “I contacted the company that had owned the well site, because I realized there was something wrong.” The company claimed the new landowner had no rights because it had settled concerns with the original landowner.
Reclamation is the end of the life of the well (see previous section). Depending on the age of the well, different reclamation criteria will apply. The AER says companies have a duty to:
A company is eligible for a reclamation certificate when the land is functioning similarly to how it did prior to oil and gas development, and it no longer needs work to be remediated or reclaimed. Even then, the operator remains responsible for the land for 25 years after a reclamation certificate has been issued.
It’s important to make sure your expectations are aligned with the actual reclamation process. Reclamation guidelines require that your land is returned to 85 per cent capacity, not full capacity. (Learn more about this in the in the Landowner’s Guide to Oil and Gas Development).
Issues with reclamation Reclamation can take years, even decades. There are no required timelines for a company to complete reclamation, so the well may sit suspended or abandoned for a long time before reclamation even begins — in some cases, it may sit inactive longer than legislation permits. The process may be further complicated if the well belongs to an operator that’s no longer in business.
In some cases, even if the well is reclaimed, you may not be satisfied with the results. The operator is required to work to address your concerns and should provide you with a Reclamation Certificate Application Package the same day they submit it to the AER. If you feel your worries have not been addressed, you can file a Statement of Concern once the reclamation application has been submitted. If the reclamation certificate is granted anyway and you are still not satisfied, you have one year to appeal the decision. (The form to appeal is on the AER website. The Landowners’ Guide to Oil and Gas Development, the Farmer’s Advocate Office and Action Surface Rights also provide good information on appeals).
The AER may conduct desk based reviews or site visits before issuing reclamation certificates. Although previously the Ministry responsible for Environment aimed to visit 15% of sites, the AER does not have audit targets for reclamation certificates and instead it has been reported that AER field inspectors visit only about 3 per cent of sites given reclamation certificates. The vast majority of reclamation certificates are approved by the AER online, through the OneStop system, which is intended to streamline the application and approval process. This could mean that no AER field inspectors review or examine a site that’s about to get a reclamation certificate. While this increases efficiency and saves costs for the regulator, it may further disadvantage landowners who feel that work has not been done properly.
“I provided access to the company that did the reclamation work through my yard. They had to cross the field and some large transmission pipelines and they needed to get crossing agreements with the (pipeline) companies, so that was a bit of a nuisance.”